This rule is issued under Marketing Agreement and Order No. 930 (7 CFR part 930), regulating the handling of tart cherries grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter referred to as the “order.” The marketing agreement and order are effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

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

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

This rule revises the current procedures for handlers to receive exempt use/diversion credit in meeting their volume regulation obligations as follows: (1) It provides more specific criteria to help handlers take better advantage of exempt use/diversion credit activities and to help the Board better assess the validity of handler requests for diversion credit; (2) It clarifies the current definitions of “new product development” and “new market development” activities eligible diversion credit, and adds “market expansion” to the definition of “new market development”; (3) It also specifies an industry-wide limit for market expansion activities totaling 10 million pounds per crop year. This limitation reflects the Board's concern that these activities should be developed gradually. The limitation would be allocated on a pro rata basis among the handlers who requested diversion credit for market expansion activities and were approved by the Board; and (4) Handlers requesting diversion credit under these provisions would have to provide evidence to the Board that they have been actively involved in the development of the new product, new market, or market expansion activity, or have financially supported the development efforts. This is to assure that the handlers initiating such efforts are the ones who earn the resulting diversion credits.

Handler diversion is authorized under § 930.59 of the order and, when volume regulation is in effect, handlers may fulfill restricted percentage requirements by diverting cherries or cherry products rather than placing tart cherries in an inventory reserve. Volume regulation is intended to help the tart cherry industry stabilize supplies and prices in years of excess production. The volume regulation provisions of the order provide for a combination of processor owned inventory reserves and grower or handler diversion of excess tart cherries. Reserve cherries may be released for sale into commercial outlets when the current crop is not expected to fill demand. Under certain circumstances, such cherries may also be used for charity, experimental purposes, nonhuman use, and other approved purposes.

Section 930.59(b) of the order provides for the designation of allowable forms of handler diversion. These include: uses exempt under § 930.62; contribution to a Board approved food bank or other approved charitable organization; acquisition of grower diversion certificates that have been issued in accordance with § 930.58; or other uses, including diversion by destruction of the cherries at the handler's facilities. Section 930.62 provides that the Board, with the approval of the Secretary, may exempt from the provisions of §§ 930.41 (Assessments), 930.44 (Quality control), 930.51 (Issuance of volume regulations), 930.53 (Modification, suspension, or termination of regulations), and 930.55 through 930.57 (Reserve regulations) cherries which are diverted in accordance with § 930.59, which are used for new product and new market development, which are used for experimental purposes, or which are used for any other purpose designated by the Board, including cherries processed into products for markets for which less then 5 percent of the preceding 5-year average production of cherries were utilized.

When applying to the Board to receive exemptions for cherries or cherry products used for exempt purposes, the handler must detail the nature of the product or market, how it differs from the current, existing products and/or markets, and the estimated short and long term sales volume for the exemption. In addition, in order to obtain diversion credit for cherries used for exempt purposes, the application must also contain an agreement that the proposed exempt use diversion is to be carried out under the supervision of the Board, and that the cost of any such supervision that is needed is paid by the applicant. The fees for such USDA or Board supervision as previously stated, will be the current hourly rate of $41.00, which is subject to change, under USDA's inspection fee schedule (7 CFR 54.42).

The information which is provided allows the Board to assess the request for exemption and render a determination concerning its approval or disapproval. Any information received by the Board which is of a confidential and/or proprietary nature is protected from disclosure pursuant to § 930.73 of the order.

Each handler that is granted an exemption must submit to the Board an annual progress report, due May 1 of each year. The progress report shall include the results of the exemption activity (comparison of intended activity with actual activity) for the year in its entirety, the volume of exempted fruit, an analysis of the success of the exemption program, and such other information the Board may request.

For the purposes of regulation concerning exempt uses and diversion credit, assisting handlers in obtaining exempt use/diversion credit under § 930.162, and assisting the Board in properly administering these provisions, the terms “new product development”, “new market development”, “development of export markets”, and “experimental purposes” are defined.

Currently, “new product development” is defined as the production or processing of new tart cherry products or foods or other products in which tart cherries or tart cherry products are incorporated which are not presently being produced on a commercial basis. New product development can also include the production or processing of a tart cherry product using a technique not presently being utilized commercially in the tart cherry industry. For example, a handler may ask for an exemption for a product such as ground meat in combination with raw tart cherries to form a leaner meat product. When a new product is commercially viable, which is defined as the time when total industry utilization for the product exceeds 2 percent of the 5-year average production of tart cherries, the product is no longer eligible for a new product development exemption and diversion credit.

“New market development” means the development of markets for cherry products which are not commercially established markets and which are not competitive with commercial outlets presently utilized by the tart cherry industry (including the development of new export markets). For example, a handler may seek to establish sales of cherry preserves to India or China, currently undeveloped markets. New markets become commercially established when the total industry utilization in the market exceeds 2 percent of the 5-year average production of tart cherries. When the new markets become commercially viable they are no longer eligible as an exempt use outlet or diversion credit.

“Development of export markets” is defined as the sale of cherries or cherry products, including the development of sales for new or different tart cherry products or the expansion of sales for existing tart cherry products, to countries other than Canada and Mexico. An example of development of sales for new or different tart cherry products could be a handler seeking to establish sales of dried cherries in Germany, which is primarily a hot pack market (canned tart cherries). No quantity limitations are specified for development of export markets. The Board did not want to put any constraints on handlers seeking to establish export markets. Moreover, the optimum supply formula which is used by the Board to calculate the desirable volume of tart cherries that should be available for sale does not apply to product that can be diverted or used in exempt outlets. Thus, the Board felt that handlers in meeting their restricted percentage obligations during volume regulation seasons, should be free to move exempted/diverted cherries to export markets without constraints.

“Experimental purposes” is defined as the use of cherries or cherry products in preliminary and/or developmental activities intended to result in new products, new applications and/or new markets for tart cherry products, such as a handler working with cereal companies to develop a cereal using dried cherries. Any exemption for experimental work must be limited in scope, duration, and volume based on information supplied by the applicant at the time a request for exemption is made. In no case, shall an individual exemption for experimental purposes last longer than 5 years or exceed 100,000 pounds raw product equivalent of tart cherries.

To improve the administration of the exempt use/diversion credit procedures, the Board believes that the current definitions of what constitutes new product development and new market development should be clarified, and that a new definition for market expansion should be included in the definition of “new market development” in § 930.162(b). It also recommended that an industry-wide limit for market expansion activities be established totaling 10 million pounds per crop year to be allocated pro rata among the approved handler applicants. Under the recommended procedures, handlers applying for exempt use/diversion credit would have to provide the Board evidence that they have been actively involved in the development of the new product, new market, or market expansion activities, or have financially supported the development efforts. A definition of the term “involvement” has been added to the provisions specifying these conditions in § 930.162(c)(5).

The Board believes that these changes will provide handlers better guidance in making marketing decisions and in earning exempt use/diversion credits, and help the Board in assessing handler applications and in determining when handlers have satisfactorily accomplished diversion and rightfully earned credits against their restricted percentage obligations during a crop year with volume regulation percentages. No changes were recommended in the definitions of the terms “development of export markets” or “experimental purposes”.

These issues were discussed at the Board's January 2003 meeting, they were then reconsidered at an April 2003 meeting, and a final recommendation was reached at the Board's June 26, 2003, meeting.

There have been differences of opinion between industry members and the Board concerning the existing provisions. The Board developed the recommended changes to provide handlers with clearer and more detailed guidelines to help them better understand the procedures when applying for such credits, and to provide the Board members on the New Product/New Market (NPNM) subcommittee with more specific guidance on granting and denying applications for such diversion credits.

The Board believes that it is important to expand the demand for tart cherries to better keep supplies in line with market needs. To accomplish this, the Board thinks that the development of new markets and products and that the expansion of current markets for tart cherries and tart cherry products should be encouraged to the fullest extent possible. The changes to the exempt use/diversion credit procedures made by this rule are expected to help the tart cherry industry further the Board's objectives and help producers and handlers accordingly.

This rule specifies a revised definition for “new product development,” “new market development,” adds the concept of “market expansion” to the definition of “new market development,” and adds a new condition of participation in obtaining exempt use/diversion credit for new product development, new market development, and market expansion referred to as “involvement”.

As previously stated, “new product development” is currently defined as the production or processing of new tart cherry products or foods or other products in which tart cherries or tart cherry products are incorporated which are not presently being produced on a commercial basis. New product development can also include the production or processing of a tart cherry product using a technique not presently being utilized commercially in the tart cherry industry. Once total industry utilization for the product exceeds 2 percent of the 5-year average production of tart cherries, the product will no longer be eligible for a new product development exemption.

This action adds to the current definition of “new product development” the following clarification: (1) New product development can also include an end product of the processing of raw tart cherries created by handlers at pack time either for resale or for re-manufacturing which has not previously been manufactured by handlers in the industry (for example, dried tart cherries (dehydrated) were marketed as a new product after first undergoing processing as a five plus one product (25 pounds of cherries topped with 5 pounds of sugar)); or (2) a processed, value-added, item that includes tart cherry products as an ingredient which has never been marketed to consumers either by a handler within the industry or by a food manufacturer. For example, during the 2002-03 crop year, a new cookie with a tart cherry filling was sold in retail markets for the first time.

As previously mentioned, language within § 930.162(b)(1) provides a volume limit of 2 percent of the five year average of production of tart cherries. Once this total industry utilization for a new product exceeds this amount, the product is no longer considered under development and is not eligible for a new product development exemption and diversion credit. This limitation remains the same. However, an additional limitation recommended by the Board for new product and new market development is added to limit the duration of any diversion credit to three years from the first date of shipment of the new product. The Board believes that limiting the eligibility of the exemption for 3 years from the first date of shipment of the new product provides a handler time to adequately develop the market for the product. After 3 years, regardless whether markets have been developed for the new product or not, the product will no longer qualify for an exemption and diversion credit.

Adding such references and volume limitations to the current definition of “new product development” will clarify what new product activities can qualify for exempt use/diversion credit and how long such credit can be obtained by the handler once the Board approves the handler's application and sales and shipments of the product are made.

Under the order, “new market development” is defined as the development of markets for tart cherry products which are not commercially established markets and which are not competitive with commercial outlets presently utilized by the tart cherry industry (including the development of new export markets). For instance, a handler who developed a new market for tart cherries that is also an export market would get credit for either the new market development or development of the export market but could not get credit for both. A new market becomes commercially established, when total industry utilization in the market exceeds 2 percent of the five year average production of tart cherries, and is not eligible for exempt use/diversion credit.

This action also clarifies the current definition of “new market development” by adding to that definition a proviso that “new market development” should be a geographic area into which tart cherries or products derived from them have not previously been sold. Included within the revised “new market development” definition are “market expansion activities”, which are defined as activities that incrementally expand the sale of either tart cherries or the products in which tart cherries are an ingredient. Such activities include, but are not limited to: (1) Expansions of the geographic areas in which products are marketed; (2) product line extensions; (3) significant improvements to or revisions of existing products; (4) packaging innovations; (5) segmentation of markets along geographic, demographic, or other definable characteristics; and (6) product repositionings.

Examples of these activities follow: (1) Expansions of the geographic areas in which products are marketed would include shipping tart cherries to the Ukraine and then on to Uzbekistan; (2) product line extensions would include taking tart cherry pie and making it an apple-cherry-berry pie fill; (3) significant improvements to or revisions of existing products would include using non-sugar sweeteners or reduced sugar content to processed tart cherry products; (4) packaging innovations would include using square containers instead of round 2.5 pound poly bags; (5) an example of segmentation of markets along geographic, demographic, or other definable characteristics would include tart cherry juice concentrate marketed specifically to consumers who suffer with arthritis or gout; and (6) product repositionings would mean that retailers would move pie-fill out of the dessert category to be used as a topping. These examples are intended to provide guidance of potential marketing opportunities and not to limit the marketing creativity of the handlers in the tart cherry industry.

To earn new market development or new product development exempt use/diversion credits for cherries or cherry products a handler must demonstrate involvement in the activity for which credits are sought. To demonstrate involvement, for the purpose of earning market development or new product development diversion credits, the requesting handler must either (1) be or have been involved in development of the product or the market for which the credits are sought or (2) have had financial involvement in these processes. This involvement must be demonstrated and established to the satisfaction of the NPNM subcommittee by the handler requesting the diversion credits.

This action also makes a conforming change to § 930.162(a) to be consistent with a formal rulemaking order amendment completed in 2002. Language within § 930.162(a) states, in summary, that tart cherry juice and juice concentrate products are not eligible for exempt use/diversion credit in domestic markets but such products for export can receive exempt use/diversion credit. This language is no longer correct because juice and juice concentrate shipped into domestic markets can now receive exempt use/diversion credit as provided by the 2002 order amendment.

The Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities and has prepared this initial regulatory flexibility analysis. The Regulatory Flexibility Act (RFA) allows AMS to certify that regulations do not have a significant economic impact on a substantial number of small entities. However, as a matter of general policy, AMS' Fruit and Vegetable Programs (Programs) no longer opts for such certification, but rather performs regulatory flexibility analyses for any rulemaking that would generate the interest of a significant number of small entities. Performing such analyses shifts the Programs' efforts from determining whether regulatory flexibility analyses are required to the consideration of regulatory options and economic or regulatory impacts.

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

There are approximately 40 handlers of tart cherries who are subject to regulation under the order and approximately 900 producers of tart cherries in the regulated area. Small agricultural service firms have been defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts less than $5,000,000, and small agricultural producers are those whose annual receipts are less than $750,000. A majority of the tart cherry handlers and producers may be classified as small entities.

Pursuant to a unanimous recommendation of the Board, this rule specifies a revised definition for “new product development,” “new market development,” adds the concept of “market expansion” to the definition of “new market development,” adds a new condition of handler participation in obtaining exempt use/diversion credit for new product development, new market development, and market expansion referred to as “involvement”, and specifies an industry-wide limit on market expansion activities for exempt use/diversion credit.

The rule provides more specific criteria to help handlers take better advantage of exempt use/diversion credit activities and to help the Board better assess the validity of handler requests for diversion credit. It clarifies the current definitions of “new product development” and “new market development” activities eligible diversion credit, and adds “market expansion” to the definition of “new market development”. It also specifies an industry-wide limit for market expansion activities totaling 10 million pounds per crop year. This limitation reflects the Board's concern that these activities should be developed gradually. The limitation would be allocated on a pro rata basis among the handlers who requested diversion credit for market expansion activities and were approved by the Board. Handlers requesting exempt use/diversion credit under these provisions would have to provide evidence to the Board that they have been actively involved in the development of the new product, new market, or market expansion activity, or have financially supported the development efforts. This is to assure that the handlers initiating such efforts are the ones earning the diversion credits.

With regard to alternatives, the Board discussed leaving the exempt use/diversion credit procedures unchanged. However, the Board determined that this course of action would not be satisfactory and recommended adding specific guidelines for consideration when reviewing handler applications for exempt use/diversion credit activities.

The principal demand for tart cherries is in the form of processed products. Tart cherries are dried, frozen, canned, juiced, and pureed. During the period 1998/99 through 2002/03, approximately 91 percent of the U.S. tart cherry crop, or 240.6 million pounds, was processed annually. Of the 240.6 million pounds of tart cherries processed, 55 percent was frozen, 30 percent was canned, and 15 percent was utilized for juice and other products.

Based on National Agricultural Statistics Service data, acreage in the United States devoted to tart cherry production has been trending downward. Bearing acreage has declined from a high of 50,050 acres in 1987/88 to 36,900 acres in 2002/03. This represents a 26 percent decrease in total bearing acres. Michigan leads the nation in tart cherry acreage with 70 percent of the total and produces about 75 percent of the U.S. tart cherry crop each year.

The 2003/04 crop is moderate in size at 222.1 million pounds. The largest crop occurred in 1995 with production in the regulated districts reaching a record 395.6 million pounds. The price per pound received by tart cherry growers ranged from a low of 7.3 cents in 1987 to a high of 46.4 cents in 1991.

This action will not impose additional costs on handlers, regardless of size, because the changes are intended to clarify and improve the Board's current procedures on approving exempt use/diversion credit requests. The recommended changes are intended to assure that all exempt use/diversion credit requests are handled in a more consistent and equitable manner.

The Board's meetings were widely publicized throughout the tart cherry industry and all interested persons were invited to attend the meeting and participate in Board deliberations on all issues. Like all Board meetings, the January 23, April 24, and June 26, 2003, meetings were public meetings and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

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

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

This rule invites comments on the revision of the current procedures for tart cherry handlers to receive exempt use/diversion credit for new product development, new market development, and market expansion activities under the Federal marketing order for tart cherries.

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

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

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 60 days after publication in the Federal Register because: (1) This rule revises current rules and regulations to provide clearer procedures for handlers and the Board to follow in making exempt use/diversion credit decisions; (2) volume regulations are in place for the 2003-04 season and this rule should be effective as soon as possible; (3) the Board recommended this change at a public meeting and interested parties had an opportunity to provide input; and (4) this rule provides a 60-day comment period and any comments received will be considered prior to finalization of this rule.

(1) New product development. This term includes the development of new tart cherry products or of foods or other products in which tart cherries or tart cherry products are incorporated which are not presently being produced on a commercial basis. New product development can also include the production or processing of a tart cherry product using a technique not presently being utilized commercially in the tart cherry industry; an end product of the processing of raw tart cherries done by the industry at pack time either for resale or for re-manufacturing which has not been manufactured previously by the industry; or a processed, value-added item that includes tart cherry products as an ingredient which has never been marketed to consumers either by a handler within the industry or by a food manufacturer. Once total industry utilization for a new product exceeds 2 percent of the five year average production of tart cherries, the product shall no longer be considered under development and not eligible for a new product development exemption. In addition, the maximum duration of any credit activity is three years from the first date of shipment.

(2) New market development and market expansion. This term includes the development of markets for tart cherry products which are not commercially established markets and which are not competitive with commercial outlets presently utilized by the tart cherry industry (including the development of new export markets): Provided, That these markets are a geographic area into which tart cherries or products derived from them have not previously been sold. The term “market expansion”, includes activities that incrementally expand the sale of either tart cherries or the products in which tart cherries are an ingredient, such as, but not be limited to: Expansions of the geographic areas into which tart cherries or tart cherry products are marketed; product line extensions; significant improvements to or revisions of existing products; packaging innovations; segmentation of markets along geographic, demographic, or other definable characteristics; and product repositionings. There is an annual, industry-wide maximum diversion credit volume of ten million RPE pounds (Raw Product Equivalent pounds) of cherry products for all expansion activities which will be allocated pro rata among participating handlers.

This document adopts as a final rule, with changes, an interim final rule, concerning pooling provisions of the Mideast Federal milk order. Specifically, this final rule continues to amend the Pool plant provisions which: Eliminate automatic pool plant status for the 6-month period of March through August, eliminate milk shipments to a distributing plant regulated by another Federal milk order as pool-qualifying shipments under the Mideast order, eliminate the “split plant” feature, eliminate including diversions made by a pool supply plant located outside the marketing area to a second pool plant, and establish a “net shipments” provision for pool supply plants not operated by a cooperative. For the Producer milk provisions, this final rule continues amendments which: Seasonally adjust and increase the number of days that the milk of a producer needs to be delivered to a pool plant and establish year-round diversion limits, adjusted seasonally, for producer milk for handlers pooled under the Mideast order.

This administrative rule is governed by the provisions of Sections 556 and 557 of Title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Order 12866.

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

The Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may request modification or exemption from such order by filing with the Department of Agriculture (USDA) a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with the law. A handler is afforded the opportunity for a hearing on the petition. After a hearing, the Department would rule on the petition. The Act provides that the District Court of the United States in any district in which the handler is an inhabitant, or has its principal place of business, has jurisdiction in equity to review the Department's ruling on the petition, provided a bill in equity is filed not later than 20 days after the date of the entry of the ruling.

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the Agricultural Marketing Service has considered the economic impact of this action on small entities and has certified that this rule will not have a significant economic impact on a substantial number of small entities. For the purpose of the Regulatory Flexibility Act, a dairy farm is considered a “small business” if it has an annual gross revenue of less than $750,000, and a dairy products manufacturer is a “small business” if it has fewer than 500 employees.

For the purposes of determining which dairy farms are “small businesses,” the $750,000 per year criterion was used to establish a production guideline of 500,000 pounds per month. Although this guideline does not factor in additional monies that may be received by dairy producers, it should be an inclusive standard for most “small” dairy farmers. For purposes of determining a handler's size, if the plant is part of a larger company operating multiple plants that collectively exceed the 500-employee limit, the plant will be considered a large business even if the local plant has fewer than 500 employees.

On the producer side, 10,756 of the 11,133 dairy farmers, or 97 percent, whose milk was pooled under the Mideast order at the time of the hearing (October 2001) would meet the definition of small businesses. On the processing side, 27 of the 58 milk plants associated with the Mideast order during October 2001 would qualify as small businesses, constituting 47 percent of the total. Based on these criteria, the vast majority of the producers and handlers would be considered as small businesses.

The adoption of the proposed pooling standards serve to revise established criteria that determine those producers, producer milk, and plants that have a reasonable association with, and are consistently serving the fluid needs of, the Mideast milk marketing area and are not associated with other marketwide pools concerning the same milk. Criteria for pooling are established on the basis of performance levels that are considered adequate to meet the Class I fluid needs and, by doing so, determine those that are eligible to share in the revenue that arises from the classified pricing of milk. Criteria for pooling are established without regard to the size of any dairy industry organization or entity. The criteria established are applied in an identical fashion to both large and small businesses and do not have any different economic impact on small entities as opposed to large entities. Therefore, the amendments will not have a significant economic impact on a substantial number of small entities.

A review of reporting requirements was completed under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). It was determined that these amendments would have no impact on reporting, recordkeeping, or other compliance requirements because they would remain identical to the current requirements. No new forms are proposed and no additional reporting requirements would be necessary.

This action does not require additional information collection that requires clearance by the Office of Management and Budget (OMB) beyond currently approved information collection. The primary sources of data used to complete the forms are routinely used in most business transactions. Forms require only a minimal amount of information which can be supplied without data processing equipment or a trained statistical staff. Thus, the information collection and reporting burden is relatively small. Requiring the same reports for all handlers does not significantly disadvantage any handler that is smaller than the industry average.

Prior documents in this proceeding:

Notice of Hearing: Issued September 21, 2001; published September 28, 2001 (66 FR 49571).

Tentative Final Decision: Issued June 4, 2002; published June 11, 2002 (67 FR 39871).

Interim Final Rule: Issued July 22, 2002; published July 26, 2002 (67 FR 48743).

Final Decision: Issued April 5, 2004; published April 12, 2004 (69 FR 19291).

A conforming change is made to section 1033.13(d)(7) to clarify that the delivery day requirements that may be increased by the market administrator are specified in paragraphs (d)(2) and (d)(3) of this section and that the diversion percentages are specified in paragraph (d)(4) of this section.

The findings and determinations hereinafter set forth supplement those that were made when the Mideast order was first issued and when it was amended. The previous findings and determinations are hereby ratified and confirmed, except where they may conflict with those set forth herein.

The following findings are hereby made with respect to the Mideast order:

(a) Findings upon the basis of the hearing record. Pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), and the applicable rules of practice and procedure governing the formulation of marketing agreements and marketing orders (7 CFR part 900), a public hearing was held upon certain proposed amendments to the tentative marketing agreement and to the order regulating the handling of milk in the Mideast marketing area.

Upon the basis of the evidence introduced at such hearing and the record thereof it is found that:

(1) The Mideast order, as hereby amended, and all of the terms and conditions thereof, will tend to effectuate the declared policy of the Act;

(2) The parity prices of milk, as determined pursuant to section 2 of the Act, are not reasonable in view of the price of feeds, available supplies of feeds, and other economic conditions which affect market supply and demand for milk in the marketing area, and the minimum prices specified in the order, as hereby amended, are such prices as will reflect the aforesaid factors, insure a sufficient quantity of pure and wholesome milk, and be in the public interest; and

(3) The Mideast order, as hereby amended, regulates the handling of milk in the same manner as, and is applicable only to persons in the respective classes of industrial and commercial activity specified in, a marketing agreement upon which a hearing has been held.

(b) Additional Findings. It is necessary in the public interest to make these amendments to the Mideast order effective July 1, 2004. Any delay beyond that date would tend to disrupt the orderly marketing of milk in the aforesaid marketing area.

The amendments to these order are known to handlers. The final decision containing the proposed amendments to these orders was issued on April 5, 2004 (69 FR 19291).

The changes that result from these amendments will not require extensive preparation or substantial alteration in the method of operation for handlers. In view of the foregoing, it is hereby found and determined that good cause exists for making these order amendments effective July 1, 2004. It would be contrary to the public interest to delay the effective date of these amendments for 30 days after their publication in the Federal Register . (sec. 553(D), Administrative Procedure Act, 5 U.S.C. 551-559.)

(C) Determinations . It is hereby determined that:

(1) The refusal or failure of handlers (excluding cooperative associations specified in sec. 8c(9) of the Act) of more than 50 percent of the milk, which is marketed within the specified marketing area, to sign a proposed marketing agreement, tends to prevent the effectuation of the declared policy of the Act;

(2) The issuance of this order amending the Mideast order is the only practical means pursuant to the declared policy of the Act of advancing the interests of producers as defined in the order(s) as hereby amended;

(3) The issuance of the order amending the Mideast order is favored by at least two-thirds of the producers who were engaged in the production of milk for sale in the marketing area.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain EMBRAER Model EMB-120 series airplanes was published in the Federal Register on April 6, 2004 (69 FR 17991). That action proposed to require installing three new vertical cargo nets in cargo-configured cabins.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.

The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

The FAA estimates that 153 airplanes of U.S. registry will be affected by this AD, that it will take approximately 5 work hours per airplane to accomplish the required installation, and that the average labor rate is $65 per work hour. Required parts will cost between $2,250 and $4,570, depending on the configuration of the airplane. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be between $393,975 and $748,935, or between $2,575 and $4,895 per airplane.

The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

Currently, there are no affected “CTA Version” airplanes on the U.S. Register (as listed in the applicability of EMBRAER Service Bulletin 120-25-0257, dated April 30, 2002). However, if an affected airplane is imported and placed on the U.S. Register in the future, the required actions will take about 9 work hours, at an average labor rate of $65 per work hour. Required parts will cost about $6,663 per airplane. Based on these figures, we estimate the cost of this AD to be $7,248 per airplane.

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Boeing Model 757-200 series airplanes was published in the Federal Register on December 11, 2003 (68 FR 69053). That action proposed to require repetitive inspections of the intercostals that back up the door stops and hinges at door 2 left and door 2 right for cracks, and corrective action, if necessary. That action also proposed to provide for an optional terminating action for the repetitive inspections.

Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the single comment received.

One commenter requests that the repetitive inspection interval specified in paragraph (c) of the proposed AD be increased from 3,000 flight cycles to 9,000 flight cycles. The commenter states that its in-service experiences demonstrate that a 9,000 flight cycle inspection interval is adequate to ensure that cracks are detected in a timely manner prior to becoming critical. The commenter justifies its recommendation based on its initial visual inspections conducted on 14 airplanes having around 15,000 total flight cycles, during which no cracking was found. Subsequent repeat inspections conducted on those airplanes at about 8,000 flight cycles later (at about 23,000 total flight cycles) found cracking. On average, the commenter found cracks on two out of six intercostals per side, per airplane, and the cracks were generally less than 1.5 inches. The commenter also states that the worst-case safety concern is the loss of cabin pressure, which is a lesser concern than loss of airplane. The commenter notes that access is more difficult than stated in the proposed AD because a lavatory and coat closet must be removed to gain access to the subject area.

The FAA does not agree to increase the repetitive inspection interval required by paragraph (c) of the final rule from 3,000 flight cycles to 9,000 flight cycles. The commenter did not provide enough data to support an inspection interval of 9,000 flight cycles. The commenter's statement that it found multiple cracks occurring within an 8,000 flight cycle inspection interval indicates that an appropriate inspection interval would be less than 8,000 flight cycles. In addition, based on the commenter's findings that an average of two out of six intercostals were cracked per door, it is more than likely that half of the intercostals would be cracked on some airplanes within the commenter's proposed 9,000 flight cycle interval. While a loss of cabin pressure may occur prior to losing a door, the detection of multiple cracked intercostals within the commenter's proposed inspection interval increases the possibility of losing a door. We have determined that the inspection interval of 3,000 flight cycles required by paragraph (c) of the final rule will ensure an acceptable level of safety. In developing an appropriate inspection interval for this AD, we considered the safety issues resulting from the loss of a door in flight and possible subsequent rapid decompression, as well as the recommendations of the manufacturer and the effectiveness of the inspection procedure. Also, the final rule provides optional terminating actions, as stated in paragraphs (g) and (h) of the final rule, for the repetitive inspections required by paragraph (c) of the final rule. No change is made to the final rule in this regard. However, according to the provisions of paragraph (i) of the final rule, we may approve requests to adjust the inspection interval if the request includes data that prove that the new inspection interval would provide an acceptable level of safety.

After careful review of the available data, including the comment noted above, the FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

There are approximately 95 airplanes of the affected design in the worldwide fleet. The FAA estimates that 55 airplanes of U.S. registry will be affected by this AD.

We estimate that it will take approximately 8 work hours per airplane to accomplish the required inspection, and that the average labor rate is $65 per work hour. Based on these figures, the cost impact of the required inspection on U.S. operators is estimated to be $28,600, or $520 per airplane, per inspection cycle.

The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

The optional preventative modification terminating action, if done, will take approximately 50 work hours per airplane at an average labor rate of $65 per work hour. Based on these figures, we estimate the cost of this optional terminating action to be $3,250 per airplane.

Parts for the optional replacement terminating action will cost approximately $692 for each Top Kit-Door Stop 1 Intercostal (L/H or R/H) and $4,581 for each Top Kit-Intercostal Replacement (L/H or R/H).

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Airbus Model A319, A320, and A321 series airplanes, was published in the Federal Register on January 29, 2004 (69 FR 4255). That action proposed to require replacement of a certain transformer rectifier unit (TRU) with a certain new TRU.

Interested persons have been afforded an opportunity to participate in the making of this amendment. The FAA has duly considered the comments received.

Two commenters support the proposed AD.

One commenter requests that we revise Note 1 of the proposed AD to refer to French airworthiness directive 2002-554(B), dated November 13, 2002, instead of 2002-544(B). We concur. The reference to French airworthiness directive 2002-544(B) in Note 1 of the proposed AD was a typographical error. The preamble of the proposed AD correctly referred to 2002-554(B). We have revised Note 1 of this final rule accordingly.

One commenter requests that we revise the cost impact estimate from 1 work hour to 3 work hours. The commenter's rationale is that the time necessary for the modification of the affected TRU should be included in the cost impact estimate.

We do not concur. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. This AD requires replacement of a certain TRU with a certain new TRU. The intent of this AD may be done through a modification of the TRU, which may be done by the operator or by a qualified vendor, or the intent may be done through installation of a new TRU. For this reason, we find that it is not appropriate to include the time for modification of the TRU in the cost impact estimate for this AD. No change to the final rule is necessary in this regard.

After careful review of the available data, including the comments noted above, we have determined that air safety and the public interest require the adoption of the rule with the change described previously. We have determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.

We estimate that 553 airplanes of U.S. registry will be affected by this AD, that it will take approximately 1 work hour per airplane to accomplish the required actions, and that the average labor rate is $65 per work hour. Required parts will be supplied by the airplane manufacturer at no cost to the operators. Based on these figures, the cost impact of this AD on U.S. operators is estimated to be $35,945, or $65 per airplane.

The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) by superseding AD 2002-01-28, Amendment 39-12623 (67 FR 4351, January 30, 2002), that applies to Dowty Type R334/4-82-F/13 propeller assemblies was published in the Federal Register on April 28, 2003 (68 FR 22339). That action proposed to require initial and repetitive ultrasonic inspections of propeller hubs, P/N 660709201, that are installed on airplanes, and for hubs and propellers in storage, initial ultrasonic inspection of propeller hubs before placing in service. That action proposed to perform inspections in accordance with Dowty Mandatory Service Bulletin (MSB) No. 61-1119, Revision 3, dated March 8, 2002; MSB No. 61-1124, Revision 1, dated October 8, 2002; MSB No. 61-1125, Revision 1, dated October 9, 2002; and MSB No. 61-1126, Revision 1, dated October 9, 2002. The Civil Aviation Authority (CAA), which is the airworthiness authority for the United Kingdom (UK), classified these service bulletins as mandatory and issued CAA UK AD No. 003-11-2001, dated November 30, 2001; CAA UK AD No. 009-05-2002, dated April 15, 2003; CAA UK AD No. 010-05-2002, dated April 15, 2003; and CAA UK AD No. 011-05-2002, dated April 15, 2003 in order to ensure the airworthiness of these Dowty Propellers in the UK.

Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received.

One commenter states that the initial inspection interval in the NPRM of 50 hours is unrealistically short to complete the inspection on a large, geographically wide-spread fleet. The commenter believes that the initial inspection interval should be increased to 200 hours.

We do not agree that we need to change the compliance time for the initial inspection. Dowty issued an MSB on May 7, 2002, and directed operators to conduct the initial inspection. Dowty also stated that the calendar compliance time for that inspection was within six months after the issue date of that MSB. Based on the issuance date of that MSB, all propellers should already be inspected. We have not changed the AD.

One commenter requests that the repetitive inspection interval in the NPRM be increased from 1,000 hours to 2,000 hours based on the fact that only one crack was found in their fleet.

We do not agree. Dowty based the compliance time on an engineering evaluation of the 16 cracks found by this inspection. Five cracks were found on the same propeller model as flown by the commenter. We have not changed the AD.

One commenter states that the previous inspections on the propeller should be applicable to all models, not just the R334/4-82-F13 propeller.

We agree. We have changed the Applicability in the Regulatory text of the AD by adding Dowty Propeller Types R321/4-82-F/8, R324/4-82-F/9, and R333/4-82-F/12.

One commenter states that the FAA underestimated the cost of the AD to U.S. operators. The commenter also provides additional information to better estimate the cost of the inspection.

We agree. Our revised estimate retains the 11 work hours per propeller and modifies the part cost from $1,650 per propeller to $300 per propeller. In addition, we increased the estimated number of airplanes from 10 airplanes to 50 airplanes and raised the labor rate to $65 per hour. Based on these revisions, the total cost for the inspection for U.S. operators will be about $126,875 for the fleet of affected airplanes.

We inadvertently left out three CAA UK ADs in Note 3 of the NRPM supersedure. We have added the three CAA UK ADs in Note 3 of the AD.

After careful review of the available data, including the comments noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the changes described previously. The FAA has determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.

These propeller models are manufactured in the UK and are Type certificated for operation in the United States under the provisions of Section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the CAA has kept the FAA informed of the situation described above. The FAA has examined the findings of the CAA, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.

There are about 275 airplanes with propellers of the affected design in the worldwide fleet. The FAA estimates that there are about 125 Dowty Propellers Type R321/4-82-F/8, R324/4-82-F/9, R333/4-82-F/12, and R334/4-82-F/13 installed on airplanes of U.S. registry that would be affected by this AD. The FAA also estimates that it would take approximately 11 work hours per propeller to perform one inspection and replacement, and that the average labor rate is $65 per work hour. Required shipping and parts would cost approximately $300 per propeller. Based on these figures, the total cost of the AD to known U.S. operators is estimated to be $126,875.

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

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

The Civil Aviation Authority (CAA), which is the airworthiness authority for the United Kingdom (UK), recently notified the FAA that an unsafe condition may exist on RR model Viper Mk.601-22 turbojet engines. The CAA advises that inspections of 1st stage turbine rotor blades, part numbers (P/Ns) V926000, V926293, and V926319, from engines that were returned from the field have identified cracks in the blade airfoil at an increasing rate. Under the current requirements to replace the blades at 7,000 hours TIS, the risk of dual-engine shutdowns is unacceptable. Reducing the class B life of these 1st stage turbine blades, recommended in Chapter 5 of the engine manual, from 7,000 hours TIS to a mandatory life limit of 4,600 hours TIS reduces the risk of dual-engine shutdowns.

We have reviewed and approved the technical contents of RR Alert Service Bulletin (ASB) 72-A184, dated January 2001, that describes procedures for managing engine configurations to reduce the risk of dual-engine shutdowns. The CAA classified this service bulletin as mandatory and issued AD 004-01-2001 in order to ensure the airworthiness of these RR engines in the UK.

RR ASB 72-A184, dated January 2001, specifies the date of receipt of the ASB as the baseline for the compliance time. This AD specifies the effective date of this AD as the baseline for the compliance time.

This engine model is manufactured in the UK and is type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Under this bilateral airworthiness agreement, the CAA has kept the FAA informed of the situation described above. We have examined the findings of the CAA, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.

The unsafe condition described previously is likely to exist or develop on other RR Viper Mk.601-22 turbojet engines of the same type design. We are issuing this AD to prevent multiple failures of 1st stage turbine rotor blades that could result in a dual-engine shutdown. This AD:

• Reduces the recommended class B life of certain 1st stage turbine blades, P/Ns V926000, V926293 and V926319, from 7,000 hours TIS to a mandatory life limit of 4,600 hours TIS, and

• Provides a drawdown schedule for blades that have already exceeded the new reduced life limit.

Since an unsafe condition exists that requires the immediate adoption of this AD, we have found that notice and opportunity for public comment before issuing this AD are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

We have implemented new procedures for maintaining AD dockets electronically. As of May 17, 2004, we posted new AD actions on the DMS and assigned a DMS docket number. We track each action and assign a corresponding Directorate identifier. The DMS docket No. is in the form “Docket No. FAA-200X-XXXXX.” Each DMS docket also lists the Directorate identifier (“Old Docket Number”) as a cross-reference for searching purposes.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to submit any written relevant data, views, or arguments regarding this AD. Send your comments to an address listed under ADDRESSES. Include “AD Docket No. FAA-2004-18024; Directorate Identifier 2003-NE-39-AD” in the subject line of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify it.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this AD. Using the search function of the DMS Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78) or you may visit http://dms.dot.gov.

We are reviewing the writing style we currently use in regulatory documents. We are interested in your comments on whether the style of this document is clear, and your suggestions to improve the clarity of our communications with you. You can get more information about plain language at http://www.faa.gov/language and http://www.plainlanguage.gov.

You may examine the docket that contains the AD, any comments received, and any final disposition in person at the DMS Docket Offices between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone (800) 647-5227) is located on the plaza level of the Department of Transportation Nassif Building at the street address stated in ADDRESSES. Comments will be available in the AD docket shortly after the DMS receives them.

We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that the regulation:

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

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

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket.

Background

On October 10, 2003, the President announced the creation of the Commission for Assistance to a Free Cuba. The purpose of the Commission was to identify ways to hasten Cuba's transition to a free and open society and identify U.S. Government programs that could assist the Cuban people during the transition. The Commission was tasked with preparing a report to the President recommending a comprehensive plan to achieve these aims. The report was delivered to the President on May 1, 2004.

Among other things, the Commission found that, although gift parcels provide a critical humanitarian benefit to the Cuban people, they directly benefit the Castro regime in two ways. Such parcels decrease the burden on the Cuban regime to provide for the basic needs of its people, enabling the regime to dedicate more of its limited resources to strengthening its repressive apparatus. Moreover, through delivery charges, the regime is able to generate additional sources of much needed hard foreign currency. As a result, the Commission set forth a number of recommendations for addressing these issues.

On May 6, 2004, the President directed the implementation of certain of the Commission Report's recommendations. This rule is being published to implement those recommendations as they related to the Export Administration Regulations (EAR).

This rule narrows the list of eligible commodities that can be included in gift parcels to Cuba under License Exception GFT (§ 740.12 of the EAR). The eligible categories are now limited to: food (including vitamins), medicine, medical supplies and equipment (including hospital supplies and equipment and equipment for the handicapped), receive-only radio equipment for reception of commercial/civil AM/FM and short wave publicly available frequency bands, and batteries for such equipment. This rule removes, seeds, clothing, personal hygiene items, veterinary medicines and supplies, fishing equipment and supplies, and soap-making equipment from the list of commodities that may be sent to Cuba in gift parcels. This rule does not limit the export of food to Cuba, except for eliminating the use of License Exception GFT to send any item to certain Cuban Communist Party or Government officials.

This rule limits the delivery of gift parcels to Cuba containing items other than food to once per month per household, instead of once per month per individual recipient. A household, for purposes of gift parcels to Cuba, is defined as all individuals living in common at a unique address. This rule also specifies that a gift parcel recipient must be a grandparent, grandchild, parent, sibling, spouse, or child of the donor. Finally, this rule makes License Exception GFT unavailable to send gift parcels to certain Cuban government officials or Communist Party members. This rule is not intended to limit the ability of non-governmental organizations to provide humanitarian support or assistance to pro-democracy or civil society groups. Therefore, it does not change the “humanitarian donations” provisions of License Exception GFT (§ 740.12(b) of the EAR) nor does it place any new limits on the review policy for applications for licenses for exports and reexports to provide support for the Cuban people as described in § 746.2(b)(4) of the EAR.

This rule also makes all commodities listed on the Commerce Control List (CCL) ineligible for export or reexport to Cuba under the gift parcel provisions of License Exception GFT. For all other destinations, only commodities listed on the CCL with a reason for control based on one or more multilateral export control regimes ( i.e. , the Wassenaar Arrangement (reason for control: National Security—NS); the Nuclear Suppliers' Group (reason for control: Nuclear Nonproliferation—NP); the Australia Group (reasons for control: Chemical and Biological Weapons—CB); and the Missile Technology Control Regime (reason for control: Missile Technology—MT)) are ineligible for inclusion in a gift parcel sent under this license exception. This rule does not change the requirement that commodities sent in gift parcels be of a type and in quantities normally given as gifts between individuals and that non-food items be limited in value to $200 per gift parcel.

This rule also limits the amount of baggage taken by individuals leaving the United States for travel to Cuba pursuant to License Exception BAG (§ 740.14 of the EAR) to 44 pounds per traveler, except if authorized by the Office of Foreign Assets Control of the Department of the Treasury to engage in travel-related transactions pursuant to a general or specific license in one of the following categories: 31 CFR 515.562 (official business of the U.S. government, foreign governments, and certain intergovernmental organizations), 31 CFR 515.563 (journalistic activity), 31 CFR 515.566 (religious activities), 31 CFR 515.574 (support for the Cuban people), 31 CFR 515.575 (humanitarian projects), or 31 CFR 515.545 (exportation, importation, or transmission of informational material).

This rule also eliminates the illustrative Composite Theoretical Performance (CTP) level from the licensing policy criteria in § 746.2(b) of the EAR regarding applications for licenses to export or reexport computers to human rights groups, or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba.

Prior to this rule, all aircraft or vessels (boats) traveling from the United States to Cuba required a BIS license and were subject to a general policy of denial under § 746.2(b) of the EAR. This rule states a new licensing policy for applications for exports of aircraft or vessels on temporary sojourn to Cuba. Such applications will be considered on a case-by-case basis if the purpose of the export is to deliver humanitarian goods or services, or if the approval of such application is consistent with the foreign policy interests of the United States.

Although the Export Administration Act of 1979 (EAA), as amended, expired on August 20, 2001, Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp., p. 783 (2002)) as extended by the Notice of August 7, 2003 (3 CFR, 2003 Comp., p. 328 (2004)), continues the EAR in effect under the International Emergency Economic Powers Act (IEEPA).

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

2. Notwithstanding any other provision of law, no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves collections previously approved by the OMB under control numbers 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 58 minutes to prepare and submit form BIS-748 . Miscellaneous and recordkeeping activities account for 12 minutes per submission. Burden hours associated with the Paperwork Reduction Act and Office of Management and Budget control number 0694-0088 are not impacted by this regulation. Send comments regarding these burden estimates or any other aspect of these collections of information, including suggestions for reducing the burden, to David Rostker, OMB Desk Officer, by e-mail at david_rostker@omb.eop.gov or by fax to (202) 395-7285; and to the Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044.

3. This rule does not contain policies with Federalism implications as this term is defined in Executive Order 13132.

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military or foreign affairs function of the United States (see 5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. , are not applicable.

The Federal Energy Regulatory Commission published in the Federal Register of February 26, 2004, Order No. 646, a final rule amending the Commission's financial reporting regulations to establish new quarterly financial reporting for respondents that currently file Annual Reports with the Commission. 69 FR 9030 (2004). The filing date for non-major public utilities and licensees to submit the quarterly financial report for the period January 1 through March 31, 2004, shown in section 141.400, paragraph (b)(3)(i) was incorrect. This filing date should read July 23, 2004, instead of June 23, 2004. This document corrects the final rule by revising this date.

On October 10, 2003, the Drug Enforcement Administration (DEA) published a Final Rule in the Federal Register adjusting its controlled substances registration and reregistration fees pursuant to the Controlled Substances Act (21 U.S.C. 821, 886a). In that Final Rule, DEA indicated that Firebird, DEA's information system, was funded through appropriated funds, not through the Drug Diversion Control Fee Account (DDCFA) (68 FR 58591-58592, October 10, 2003).

As published, the Final Rule contains an error which may prove to be misleading and is in need of clarification. In DEA's Fiscal Year 2004 budget, costs attributable to DEA's ADP System (Firebird) were included in the DCFA cost module. Because the Firebird information system is directly used by Diversion personnel to register controlled substances handlers, establish quotas, and conduct regulatory audits and investigations, funding of this system is attributable to the DDCFA rather than appropriated funds. Since Firebird is now funded as part of expenses within the Diversion Control Program, DEA should not have included Firebird in its discussion of costs that are excluded from DDCFA funding.

As costs associated with the Firebird information system were included in the budget calculations used to establish the registration and reregistration fees for Fiscal Years 2004, 2005, and 2006, as finalized in DEA's October 10, 2003 Final Rule (68 FR 58587), it is not necessary for DEA to increase the fees charged to registrants to cover the costs of the Firebird information system.

On April 5, 2004, we published a notice of proposed rulemaking (NPRM) entitled Drawbridge Operation Regulations; Long Island, New York Inland Waterway from East Rockaway Inlet to Shinnecock Canal, New York, in the Federal Register (69 FR 17618). We received no comments in response to the notice of proposed rulemaking. No public hearing was requested and none was held.

Under 5 U.S.C. the Coast Guard finds good cause exists for making this rule effective less than 30 days after publication in the Federal Register . The NPRM provided a 60-day comment period for the public to comment on this rule change. We received no comments in response to the NPRM. It is necessary to make this rule effective less than 30 days from the date of publication in order to provide for public safety during this years Forth of July fireworks display, which is scheduled for July 4, 2004.

The Meadowbrook State Parkway Bridge has a vertical clearance of 22 feet at mean high water and 25 feet at mean low water in the closed position, unlimited vertical clearance in the full open position. The existing regulations are listed at 33 CFR § 117.799(h).

The New York State Office of Parks, Recreation and Historic Preservation, requested that the bridge be allowed to remain closed from 9 p.m. to midnight, during the annual Fourth of July fireworks event at the Jones Beach State Park. The bridge has been closed for the past several years to facilitate this annual event.

Traditionally, this bridge closure was accomplished each year by publishing a temporary final rule in the Federal Register . This final rule makes the traditional Fourth of July bridge closure part of the permanent drawbridge operation regulations.

The Coast Guard believes this rule is reasonable because it would simplify the traditional bridge closure process that has become a traditional closure each year on the Fourth of July.

The Coast Guard received no comments in response to the notice of proposed rulemaking and as a result, no changes have been made to this final rule.

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

This conclusion is based on the fact that the bridge closure is of short duration for the purpose of public safety during the annual Fourth of July Fireworks display at Jones Beach.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” 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 less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b), that this rule will not have a significant economic impact on a substantial number of small entities.

This conclusion is based on the fact that the bridge closure is of short duration for the purpose of public safety during the annual Fourth of July Fireworks display at Jones Beach.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process.

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

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

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

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

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

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

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

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. It has not been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this final rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (32)(e), of the Instruction, from further environmental documentation. It has been determined that this final rule does not significantly impact the environment.

The Delta Farms Reclamation District 2030 has requested to secure the Zuckerman Brothers Drawbridge, mile 2.3, Turner Cut, near Stockton, CA, in the closed-to-navigation position from 7 a.m. on June 23, 2004 to 5 p.m. on June 24, 2004, during essential operating machinery repair, to prevent unexpected failure of the drawspan. The drawbridge provides unlimited vertical clearance in the full open-to-navigation position, and 16 ft. vertical clearance above Mean High Water when closed. The drawbridge opens on signal from approaching vessels, as required by 33 CFR 117.5.

The proposed work was coordinated with waterway users. It was determined that potential navigational impacts will be reduced if the repairs are performed during midweek, resulting in Coast Guard approval of the proposed work from 7 a.m. on June 23, 2004 to 5 p.m. on June 24, 2004.

During these times, the drawspan may be secured in the closed-to-navigation position and need not open for vessels. The drawspan shall resume normal operation at the conclusion of the essential repair work. Mariners should contact the Zuckerman Brothers Drawbridge, via VHF-FM Ch. 9, or by telephone at (209) 464-1253, in advance to determine conditions at the bridge.

The drawspan will be unable to open during the repair. Vessels that can safely pass through the closed drawbridge may continue to do so at any time. An alternative route is available for vessels that can safely navigate around McDonald Island, via Columbia Cut. In accordance with 33 CFR 117.35(c), this work will be performed with all due speed to return the drawbridge to normal operation as soon as possible.

This deviation from the operating regulations is approved under the provisions of 33 CFR 117.35.

On April 6, 2004, we published a notice of proposed rulemaking (NPRM) entitled Drawbridge Operation Regulations; Harlem River, Newtown Creek, New York, in the Federal Register (69 FR 18004). We received no comments in response to the notice of proposed rulemaking. No public hearing was requested and none was held.

The Willis Avenue Bridge, mile 1.5, across the Harlem River has a vertical clearance of 24 feet at mean high water (MHW) and 30 feet at mean low water (MLW) in the closed position.

The Madison Avenue Bridge, at mile 2.3, across the Harlem River has a vertical clearance of 25 feet at mean high water and 29 feet at mean low water in the closed position.

The Third Avenue Bridge, at mile 1.9, across the Harlem River has a vertical clearance of 25 feet at mean high water and 30 feet at mean low water in the closed position.

The Pulaski Bridge across Newtown Creek, mile 0.6, has a vertical clearance of 39 feet at MHW and 43 feet at MLW in the closed position. The current operating regulations for the Pulaski Bridge listed at 117.801(g) require it to open on signal if at least a two-hour advance notice is given.

The current operating regulations for the Willis Avenue, Third Avenue, and Madison Avenue bridges, require the bridges to open on signal from 10 a.m. to 5 p.m., if at least four-hours notice is given.

The owner of the bridges, New York City Department of Transportation requested a change to the operating regulations for the Willis Avenue Bridge, the Third Avenue Bridge, the Madison Avenue Bridge, and the Pulaski Bridge, to facilitate the running of the Five Borough Bike Tour and the New York City Marathon on the first Sunday in both May and November, respectively. They requested the bridges be closed for various extended periods of time between the hours of 8 a.m. and 5 p.m.

Traditionally, these bridge closures were accomplished each year by publishing a temporary final rule in the Federal Register with the bridge closures occurring at various times ranging from 8 a.m. through 5 p.m. The closure times were established to coincide with the race route through the city.

This final rule makes the traditional closures part of the permanent drawbridge operation regulations. New York City Department of Transportation will provide the exact dates and times for each bridge several weeks in advance of the race. Those dates and times will be published in the Local Notice to Mariners.

The Coast Guard believes this rule is reasonable because it would simplify the traditional bridge closure process. Additionally, the bridge closures are on Sundays when the bridges normally receive no requests to open.

The Coast Guard received no comments in response to the notice of proposed rulemaking and as a result, no changes have been made to this final rule.

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

This conclusion is based on the fact that the bridge closures are of short duration on a Sunday in May and November when the bridges normally do not receive any requests to open.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” 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 less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b), that this rule will not have a significant economic impact on a substantial number of small entities.

This conclusion is based on the fact that the bridge closures are of short duration on a Sunday in May and November when the bridges normally do not receive any requests to open.

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

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

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

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

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

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

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

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

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this final rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (32)(e), of the Instruction, from further environmental documentation. It has been determined that this final rule does not significantly impact the environment.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B) and under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for not publishing an NPRM and for making this rule effective less than 30 days after publication in the Federal Register . The permit application was not received in time to publish an NPRM followed by a final rule before the effective date. Delaying this rule would be contrary to the public interest of ensuring the safety of spectators and vessels during this event and immediate action is necessary to prevent possible loss of life or property. The Coast Guard has not received any complaints or negative comments previously with regard to this event.

Temporary safety zones are necessary to ensure the safety of vessels and spectators from the hazards associated with fireworks displays. Based on recent accidents that have occurred in other Captain of the Port zones, and the explosive hazard of fireworks, the Captain of the Port Buffalo has determined fireworks launches in close proximity to watercraft pose significant risks to public safety and property. The likely combination of large numbers of recreational vessels, congested waterways, darkness punctuated by bright flashes of light, alcohol use, and debris falling into the water could easily result in serious injuries or fatalities. Establishing a safety zone to control vessel movement around the locations of the launch platforms will help ensure the safety of persons and property at these events and help minimize the associated risk.

The safety zone consists of all navigable waters of Lake Ontario within a 200-yard radius of the fireworks display at Bear Creek Harbor located in position 43° 16′ 39″ N, 077° 16′ 35″ W. All Geographic coordinates are North American Datum of 1983 (NAD 83). The size of this zone was determined using the National Fire Prevention Association guidelines and local knowledge concerning wind, waves, and currents.

All persons and vessels shall comply with the instructions of the Coast Guard Captain of the Port or his designated on-scene patrol representative. The designated on-scene patrol representative will be the patrol commander. Entry into, transiting, or anchoring within this safety zone is prohibited unless authorized by the Captain of the Port Buffalo or his designated on-scene representative. The Captain of the Port or his designated on-scene representative may be contacted via VHF Channel 16.

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

This determination is based on the minimal time that vessels will be restricted from the zone.

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

This rule would affect the following entities, some of which might be small entities: the owners or operators of vessels intending to transit or anchor in this portion of Bear Creek Harbor from 9:30 p.m. until 11:30 p.m. on July 3, 2004.

This safety zone will not have a significant economic impact on a substantial number of small entities for the following reason: This safety zone is only in effect from 8 p.m. (local) until 10 p.m. (local) on the day of the event.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule so that they can better evaluate its effects and participate in the rulemaking process. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Marine Safety Office Buffalo ( see ADDRESSES. )

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

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

We have analyzed this rule under Executive Order 13132 and have determined that this rule does not have implications for federalism under that Order.

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

The Coast Guard has 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 concern an environmental risk to health or risk to safety that may disproportionately affect children.

We have considered the environmental impact of this rule and concluded that, under figure 2-1 of Commandant Instruction M16475.1D, this rule is categorically excluded from further environmental documentation. A written categorical exclusion determination is available in the docket for inspection or copying where indicated under ADDRESSES.

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.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

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.

Regulatory Information

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B) and under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for not publishing an NPRM and for making this rule effective less than 30 days after publication in the Federal Register . The permit application was not received in time to publish an NPRM followed by a final rule before the effective date. Delaying this rule would be contrary to the public interest of ensuring the safety of spectators and vessels during this event and immediate action is necessary to prevent possible loss of life or property. The Coast Guard has not received any complaints or negative comments previously with regard to this event.

Temporary safety zones are necessary to ensure the safety of vessels and spectators from the hazards associated with fireworks displays. Based on recent accidents that have occurred in other Captain of the Port zones, and the explosive hazard of fireworks, the Captain of the Port Buffalo has determined fireworks launches in close proximity to watercraft pose significant risks to public safety and property. The likely combination of large numbers of recreational vessels, congested waterways, darkness punctuated by bright flashes of light, alcohol use, and debris falling into the water could easily result in serious injuries or fatalities. Establishing a safety zone to control vessel movement around the locations of the launch platforms will help ensure the safety of persons and property at these events and help minimize the associated risk.

The safety zone consists of all navigable waters of Rochester Harbor and the Genesee River encompassed by an area 400-yards around the West Jetty pier in approximate position: 43°15′40″ N, 077°36′05″ W. All Geographic coordinates are North American Datum of 1983 (NAD 83). The size of this proposed zone was determined using the National Fire Prevention Association guidelines and local knowledge concerning wind, waves, and currents.

The Coast Guard believes this regulation will not pose any new problems for commercial vessels transiting the area. In the unlikely event that shipping is affected by this proposed regulation, commercial vessels may request permission from the Captain of the Port Buffalo to transit through the safety zone.

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

This determination is based on the minimal time that vessels will be restricted from the zone.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule may affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit in the navigable waters of Rochester Harbor and the Genesee River within a 400-yard radius around the West Jetty Pier.

This safety zone would not have a significant economic impact on a substantial number of small entities for the following reasons: This safety zone is only in effect from 9:30 p.m. (local) until 11:30 p.m. (local) on June 26, 2004.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment ( see ADDRESSES ) explaining why you think it qualifies and how and to what degree this proposed 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 rule so that they can better evaluate its effects and participate in the rulemaking process. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Marine Safety Office Buffalo ( see ADDRESSES. )

Small businesses may send comments on 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 would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

We have analyzed this rule under Executive Order 13132 and have determined that this rule does not have implications for federalism under that Order.

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

The Coast Guard has 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 concern an environmental risk to health or risk to safety that may disproportionately affect children.

We have considered the environmental impact of this rule and concluded that, under figure 2-1 of Commandant Instruction M16475.1D, this rule is categorically excluded from further environmental documentation. A written categorical exclusion determination is available in the docket for inspection or copying where indicated under ADDRESSES.

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.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

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.

Temporary safety zones are necessary to ensure the safety of vessels and spectators from the hazards associated with fireworks displays. Based on recent accidents that have occurred in other Captain of the Port zones, and the explosive hazard of fireworks, the Captain of the Port Buffalo has determined fireworks launches in close proximity to watercraft pose significant risks to public safety and property. The likely combination of large numbers of recreational vessels, congested waterways, darkness punctuated by bright flashes of light, alcohol use, and debris falling into the water could easily result in serious injuries or fatalities. Establishing a safety zone to control vessel movement around the locations of the launch platforms will help ensure the safety of persons and property at these events and help minimize the associated risk.

The safety zone consists of all navigable waters of the Niagara River within the following boundaries: 43°01′07″ N, 078°53'′53″ W; to 43°01′00″ N, 078°53′29″ W; to 43°01′20″ N, 078°53′03″ W; to 43°01′30″ N, 078°53′30″ W; then following the shoreline back to the beginning (NAD 1983). The fireworks display will originate from a barge moored in the center of this zone at 43°01′16″ N, 078°53′32″ W. All Geographic coordinates are North American Datum of 1983 (NAD 83). The size of this zone was determined using the National Fire Prevention Association guidelines and local knowledge concerning wind, waves, and currents.

The Coast Guard believes this regulation will not pose any new problems for commercial vessels transiting the area. In the unlikely event that shipping is affected by this regulation, commercial vessels may request permission from the Captain of the Port Buffalo to transit through the safety zone.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 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 this rule under that order. It is not significant under the regulatory policies and procedures of the Department of Homeland Security (DHS) We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under paragraph 10(e) of the regulatory policies and procedures of DHS is unnecessary.

This determination is based on the minimal time that vessels will be restricted from the zones, and all of the zones are in areas where the Coast Guard expects insignificant adverse impact to mariners from the zones' activation.

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

This rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit within the activated safety zone on the Niagara River between 9:30 p.m. (local) and 11:30 p.m. (local) on July 25, 2004.

This safety zone would not have a significant economic impact on a substantial number of small entities for the following reasons: This safety zone is only in effect from 9:30 p.m. (local) until 11:30 p.m. (local) on the day of the event. Vessel traffic can safely pass outside the safety zone during the event. In cases where traffic congestion is greater than expected and/or blocks shipping channels, traffic may be allowed to pass through the safety zone under Coast Guard or assisting agency escort with the permission of the Captain of the Port Buffalo. Additionally, the Coast Guard has not received any negative reports from small entities affected during these displays in previous years.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this rule so that they can better evaluate its effects and participate in the rulemaking process. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Marine Safety Office Buffalo ( see ADDRESSES. )

Small businesses may send comments on 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 would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

We have analyzed this rule under Executive Order 13132 and have determined that this rule does not have implications for federalism under that Order.

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

The Coast Guard has 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 concern an environmental risk to health or risk to safety that may disproportionately affect children.

We have considered the environmental impact of this rule and concluded that, under figure 2-1 of Commandant Instruction M16475.1D, this rule is categorically excluded from further environmental documentation. A written categorical exclusion determination is available in the docket for inspection or copying where indicated under ADDRESSES.

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.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

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.

Section 115 of the Copyright Act, 17 U.S.C., provides that “[w]hen phonorecords of a nondramatic musical work have been distributed to the public in the United States under the authority of the copyright owner, any other person * * * may, by complying with the provisions of this section, obtain a compulsory license to make and distribute phonorecords of the work.” 17 U.S.C. 115(a)(1). The compulsory license set forth in section 115 permits the use of a nondramatic musical work in a phonorecord without the consent of the copyright owner if certain conditions are met and royalties are paid.

Section 115 was subsequently amended on November 1, 1995, with the enactment of the Digital Performance Right in Sound Recordings Act of 1995 (“DPRA”), Public Law 104-39 (1995). Among other things, this law expanded the section 115 compulsory license for making and distributing phonorecords to include not only the traditional use of the musical work to make an original sound recording, but also the distribution of a phonorecord of a nondramatic musical work by means of a digital phonorecord delivery (“DPD”). 1 See 17 U.S.C. 115(c)(3)(A). As defined in the law, a digital phonorecord delivery (DPD) is:

The DMCA did not change or alter the longstanding notice requirement set forth in section 115(b) which requires a person who wishes to obtain a compulsory license under section 115 to notify the copyright owner of his or her intention to use the copyright owner's musical work to make and distribute phonorecords under the section 115 license. However, the amendments did require the Copyright Office to amend its regulations governing the content and service of the required Notices of Intention to use the license to include the making of a digital phonorecord delivery, and the Office did so in 1999. See 64 FR 41286 (July 30, 1999). It is now evident that these changes did not go far enough to address the needs of certain digital music services which anticipate using most, if not all, of the musical works embodied in the sound recordings readily available in today's marketplace under the section 115 license.

Consequently, on August 28, 2001, the Copyright Office published a second notice of proposed rulemaking (“NPRM”) in which it suggested further amendments to those rules associated with service of a notice to use the section 115 license and filing of such notice with the office. 66 FR 45241 (August 28, 2001). After considering the comments from the record industry, music publishers and potential new users of the license who seek to make digital phonorecord deliveries under the section 115 license, the Office published a set of proposed regulations that would allow, among other things, service on an agent, the listing of multiple works on a single notice, and use of an address other than the one listed in the Copyright Office records. In proposing these rules, however, the Office identified three issues pertinent to the rulemaking that either had not been presented to the public for comment or that required further comment from the parties before the Office could issue a final rule. For this reason, the Office published yet another NPRM for the purpose of offering interested parties an opportunity to comment on these three issues: (1) Whether licensees should be required to send statements of account and royalty payments to the agent to whom the notice of intention was sent until the agent or the copyright owner advises the licensee that the statements and payments should be sent elsewhere; (2) whether it is advisable to simplify the requirement that a licensee provide information concerning its ownership, officers and directors; and (3) the sufficiency of a Notice to cover all possible configurations, including those not listed specifically on the notice. 69 FR 11566 (March 11, 2004).

The Copyright Office received six comments in response to the March 11 notice from the National Music Publishers' Association, Inc. (“NMPA”) and The Harry Fox Agency, Inc. (“HFA”), jointly; the Digital Media Association (“DiMA”); Yemi Adegbonmire; the Recording Industry Association of America, Inc. (“RIAA”); NMPA/HFA/RIAA, jointly; and Music Reports, Inc. (“MRI”). 2

All commenters who expressed an opinion supported proposed rule § 201.18(b), which would require the authorized agent of a copyright owner, within two weeks of receiving a notice, to provide the licensee the name and address of the person to whom the licensee shall submit Statements of Account and royalty payments. They agreed that the rule balanced the equities fairly between the licensee, who bears the responsibility for serving the notice on the proper party in the first instance, and the copyright owner. RIAA/NMPA/HFA went on to note that the alternative proposal—to allow a licensee to make payments and file statements on the agent authorized to accept the notice—would open the door to disputes concerning misdirected payments which could be difficult and time consuming to resolve after the fact. We find this reasoning compelling.

The second proposal—to eliminate the requirement that a licensee provide certain information concerning its ownership, officers and directors, and substitute greatly simplified requirements—also generated no controversy. RIAA/NMPA/HFA had maintained that the current rules require more information than needed to meet the copyright owner's legitimate right to know with whom it is dealing and may well impose a needless burden on licensees. In light of these assertions by both copyright owners and users, the Office proposed to amend the rule and adopt the RIAA/NMPA/HFA proposal which requires that a licensee provide only the name and title of the licensee's CEO, managing partner or the like, and identifying information for the primary entity (such as a record company or digital music service) expected to be actively engaged in business under the license, if that entity is other than the licensee itself. Because the proposed amendment to the rules provide sufficient information to identify the licensee and no party opposes the proposed changes, the Copyright Office is adopting the proposed amendments as announced in the March 11 notice.

The only issue over which the commenters disagreed was whether a single Notice of Intention to use a particular work is sufficient notice to cover all possible format configurations, including both those specifically identified on the notice and those which could be used although not listed on the notice. The question arose because of a comment DiMA made in its initial comment suggesting that the Office promulgate “a minimal set of regulations for the common situation in which online entities will be distributing digital phonorecord deliveries of sound recordings already covered by a mechanical license.” Because DiMA's suggestion was unclear, the Office opined that DiMA's suggestion may have been intended to permit a licensee to rely upon an earlier-filed notice, e.g. , one filed in order to use the license to make physical phonorecords, to cover the making of DPDs even though the digital phonorecord format configuration was not listed on that notice. We had stated in the March 11 notice that while it was highly unlikely the final rule promulgated in this proceeding would include any further amendments to address DiMA's suggestion, we would consider DiMA's proposal and comments received on this issue for possible future action.

DiMA, however, did not elaborate on its earlier comment, obviating the need to consider its suggestion further. On the other hand, HFA/NMPA and RIAA did file comments on the Office's proposed interpretation of DiMA's suggestion. Interestingly, the record company representatives and the publishing interests representatives take diametrically opposed positions on whether a single notice covers all configuration formats or whether additional Notices need to be filed each time the licensee expects to use the musical work in a format not previously identified.

RIAA maintains that the current regulations already “permit a licensee under section 115 to rely upon a Notice of Intention that had been previously served or filed to make DPDs.” It notes that the Copyright Act recognizes a single compulsory license within section 115 and covers the making and distribution of a nondramatic musical work by means of a digital audio transmission that results in a digital phonorecord delivery (“DPD”) and that the regulations treat DPDs as merely another phonorecord configuration. RIAA then turns to the regulatory text, focusing on the provision that requires the licensee to identify those phonorecord configurations already made and those expected to be made under the license. See 37 CFR 201.18(c)(1)(iv). It maintains that the phrase “expected to be made” does not require absolute precision and that the licensee need only provide the information “in good faith and on the basis of the best knowledge, information, and belief of the person signing the Notice. If so given, later developments affecting the accuracy of such information shall not affect the validity of the Notice.” 37 CFR 201.18(d)(3), as amended. According to RIAA, these provisions when taken together do not require the filing of subsequent notices merely because a new type of phonorecord configuration is being made and distributed under the section 115 license.

RIAA then cites to an HFA comment offered during the initial rulemaking proceeding, 3 the purpose of which was to establish notice and recordkeeping requirements for use of the section 115 license, where HFA stated that it could accept the filing of a single notice which listed all phonorecord configurations contemplated at the time of the notice, provided that “the regulations insure adequate notice of use of additional forms to be filed for each type of phonorecord configuration of a particular sound recording of a particular song (which we feel is necessary for purposes of clarity and sensible accounting in any event).” Supplemental Statement Concerning Regulations to be Promulgated by the Copyright Office Relative to the Compulsory License Provisions of the Copyright Act (section 115), submitted by the Harry Fox Agency, Inc., May 26, 1977. RIAA opines that the Office adopted HFA's position and promulgated §§ 201.19(e)(3)(ii)(D) and (f)(4), at least in part, to serve this purpose. These two provisions of the rules require that specific accounting information be reported separately for each phonorecord configuration, thus giving the publishers accurate and timely information about the number and types of phonorecords being made and distributed under the compulsory license.

NMPA and HFA take a radically different view of the current notice requirements. They now argue that any provision or interpretation which would allow the filing of a single Notice of Intention to cover format configurations beyond those identified on the notice, “would disrupt longstanding industry practice and conflict directly with established jurisprudence.” They maintain that it is standard industry practice to require each licensee to specify the configuration for which the licensee seeks the license. They argue that the reason for imposing configuration limitations is to provide the publishers with a means to track the licensee's use of the musical work and to insure that the appropriate royalty rate attaches to the different configurations. In support of their position, NMPA and HFA cite two court cases which held that the scope of a mechanical license was limited to the express terms of the license. See Rodgers & Hammerstein Org. v. UMG Recordings, Inc., 00 Civ. 9322 (JSM), 2001 U.S. Dist. LEXIS 16111 (S.D.N.Y. Sept. 26, 2001), and Fred Ahlert Music Corp. v. Warner/Chappell Music, Inc., 958 F. Supp. 170 (S.D.N.Y. 1997). Neither court, however, discusses the terms of use applicable to a section 115 statutory license.

The Office acknowledges that HFA and NMPA offer a well-articulated presentation of the current state of affairs with respect to mechanical licenses negotiated in the marketplace but finds that their discussion misses the mark. As a primary matter, HFA and NMPA overlook the fact that a voluntary license negotiated in the marketplace between a willing buyer and a willing seller are not the same as the license Congress granted to licensees who make and distribute phonorecords under the terms set forth in section 115 of the Copyright Act. The terms of the statutory license are set by Congress and are not subject to modification at will by the parties. Parties may use the statutory license as a starting point, adopting those provisions that meet their needs and modifying or eliminating those that do not. But, the result is a negotiated license which varies from the section 115 statutory license in significant ways.

NMPA and HFA, however, treat the statutory and negotiated licenses as one and the same. Thus, they rely on the courts' interpretation of voluntary license terms to inform the interpretation of similar statutory and regulatory provisions that govern the statutory license, but they fail to explain how the courts' interpretation of private commercial licenses relates to the regulatory framework and the policy considerations which underlie the notice and accounting requirements adopted by the Register of Copyrights in 1980.

The relevant question is whether the current regulations adopted in 1980 require a compulsory licensee to file a new notice in the case where the licensee seeks to expand its use of the section 115 license to cover phonorecord configurations not listed on the Notice of Intention to Use. A review of the comments and testimony from the rulemaking proceeding by which the current regulations were promulgated show that the question engendered some debate. During the early phase of that proceeding, publishers sought a rule that would require a licensee to file a separate notice for each separate type of phonorecord configuration, but they backed away from that position in their later comments. In Supplemental Comments filed on May 26, 1977, the Harry Fox Agency stated its willingness to permit use of a single notice listing those configurations the licensee is contemplating using at the time of service, provided that the licensee subsequently identified the use of new configurations on the accounting forms.

They may have changed their position in light of statements made by the Register of Copyrights during public hearings held by the Copyright Office in April 1977. In her comments, the Register spoke directly to the question and made the observation that the notice was to contain information that “would be given as of the date that the Notice was filed, and there [was] no obligation that it be kept up-to-date.” In taking this position, she contrasted the lack of a legal requirement to update a notice served under section 115 with the notice requirements for use of the cable compulsory license “where there is a requirement that it be kept up-to-date.” Transcript of Second Hearing on Implementation of the Copyright Law Revision, Docket No. 77-3, at 46. (April 26, 1977).

Beyond the early exchanges, the parties did not address the question further and the Copyright Office issued interim regulations on December 29, 1977. 42 FR 64889 (December 29, 1977). These regulations did not include any provision that would require a licensee to submit a further formal notice to the copyright owner of actual use beyond the initial notice that listed format configurations the licensee was using at the time or expected to use in the future. The rules, however, did include, and still do, a requirement that the licensee provide the accounting information specified in §§ 201.19(e)(3)(ii)(D) and (f)(4)(i) for each phonorecord configuration actually made, thus seeming to adopt the HFA suggestion for using statements of account to provide further information on actual use.

In light of the fact that the purpose of the Notice of Intention is merely to give notice to the copyright owner of a licensee's intention to use the copyright owner's musical work to make and distribute phonorecords subject to the terms of the section 115 compulsory license, additional notices to update information that was correct at the time of service are not part of the statutory scheme. Once a notice is served, the copyright owner is on notice that the licensee will be using the identified musical work to make phonorecords. The licensee is then obligated to provide specific information about the types and numbers of phonorecords made and distributed as part of the monthly and annual statements of account, making it unnecessary to file follow-up notices for this purpose.

1. Further revisions to § 201.19. DiMA offered no specific comment on the three questions posed in the March 11 notice, but it has requested that the Office modify § 201.19 as follows: (1) To permit statements of account to be signed and delivered by the compulsory licensee or a duly authorized agent preparing the statement; (2) to eliminate the requirement for a handwritten signature, given the ability to work through an agent; and (3) to permit service of the statements of account by regular mail or electronic delivery. MRI requests the same three modifications.

In the current rulemaking, the Office sought to amend its rules to expedite the filing of notices pursuant to section 115(b)(1) of the Copyright Act and offered proposed amendments to § 201.18 to achieve this goal, while at the same time proposing limited changes to § 201.19 in order to harmonize the service requirements between the two sections. See 66 FR 45241 (August 28, 2001). This notice expressly stated that the Office was not considering further changes to § 201.19 in this proceeding. Id. at 45242. While we understand DiMA's interest in pursuing additional amendments in the interest of streamlining the reporting process and will consider initiating a new rulemaking proceeding to address these issues, we will not place the current rulemaking on hold to consider new questions. The process with respect to amending the rules to streamline the process for serving notices under § 201.18 has come to an end, and it is in the interest of all parties that these final rules be adopted without delay.

As part of this proceeding, however, amendments have already been made to allow service of statements of account by regular mail. See 37 CFR 201.19(e)(7)(i), (ii) and (f)(7)(i) and (iii). Formerly, these provisions required service by certified mail or registered mail, but they have been amended to allow for service “by mail or by reputable courier service.” However, the proposed rules did not include a provision to permit service of statements of account by electronic delivery because this proceeding had not considered amendments to § 201.19 beyond those needed to provide the licensee with options for sending the Statements as currently prepared. The rules governing the Statements of Account differ significantly from those governing a Notice of Intention in that they require the person signing the document to certify the accuracy of the information in the Statements of Account. Consequently, it would appear that the signature of the certifying official constitutes a legal representation on behalf of the licensee that should not be dismissed lightly without comment from the affected parties and, thus, should be considered along with the other issues identified by DiMA and MRI in a separate rulemaking.

2. Date of filing. Adegbonmire noted that the amended rules did not clarify that a receipt from a reputable courier indicating the date of attempted delivery would be acceptable as evidence of the date of service, even though the March 11 notice stated that such proof would be sufficient to establish the date of service. He proposes amending proposed § 201.18(f)(5) to include language expressly stating that such receipt is acceptable proof for establishing the date of service. We agree and have made the necessary changes to proposed § 201.18(f)(5) and to §§ 201.19(e)(7)(iv) and (f)(7)(iv).

He also suggested that the rules expressly recognize use of a Delivery Confirmation receipt as proof of the date of service. We are unfamiliar with this service and decline to adopt the suggestion to specifically list a Delivery Confirmation receipt as evidence of the date of service. Sections 201.18(f)(5) and 201.19(e)(7)(iv), however, should not be interpreted as listing the only acceptable forms of proof. In fact, the last sentence in these provisions leaves open the possibility that the licensee may adduce other evidence to establish the date of service. For that reason, we see no reason to list every possible means of proof for establishing the date of service and have only acknowledged the two specific means the parties have already considered by virtue of the earlier notices.

3. Demand for electronic submission. Adegbonmire has also offered comment on the proposed regulation that would permit a copyright owner or its agent to demand that a notice containing more than 50 titles of works be resubmitted in an electronic format. He proposes setting the threshold at 25 titles rather than 50 to facilitate the process, though he does not state how it would do so. Consequently, we see no reason to reconsider the decision to set the threshold at more than 50 titles.

He also suggests that the rule itself violates the statute because the rule would allow a licensee to resubmit its notice in an electronic format within 30 days after receipt of the demand. We disagree. Provided that the initial notice adheres to the rules and is served on the copyright owner or its agent before or within 30 days of making, and before distributing any phonorecords of the listed works, then the licensee has fulfilled the statutory requirement to serve notice. The request for an electronic submission is a subsequent requirement that must be met in accordance with the rules. The requirement itself does not raise questions of whether the filing is timely; rather, it addresses compliance with format and submission requirements. Thus, failure to comply with the copyright owner's demand for an electronic submission would constitute a violation of the rules governing use of the license and could provide the basis for a copyright infringement suit.

There being no other matters for consideration, the Office is announcing final rules—incorporating the amendments discussed—governing the filing of Notices of Intention to Use a section 115 license for the making and distribution of phonorecords.

Although the Copyright Office, as a department of the Library of Congress and part of the legislative branch, is not an “agency subject to the Regulatory Flexibility Act,” 5 U.S.C. 601-612, the Register of Copyrights has considered the effect of the amendments to §§ 201.18 and 201.19 on individual authors and small entities. The Register has determined that the final regulations will not have a significant economic impact on a substantial number of individual compulsory licensees or small entities that would require provision of special relief for small entities in the regulations, and that the final regulations are, to the extent consistent with the stated objectives of applicable statutes, designed to minimize any significant economic impact on small entities.

The modified BFEs are not listed for each community in this interim rule. However, the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection is provided.

Any request for reconsideration must be based on knowledge of changed conditions or new scientific or technical data.

The modifications are made pursuant to section 201 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq. , and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required to either adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own, or pursuant to policies established by the other Federal, State, or regional entities.

The changes BFEs are in accordance with 44 CFR 65.4.

This rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. No environmental impact assessment has been prepared.

The Mitigation Division Director for the Emergency Preparedness and Response Directorate certifies that this rule is exempt from the requirements of the Regulatory Flexibility Act because modified BFEs are required by the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are required to maintain community eligibility in the NFIP. No regulatory flexibility analysis has been prepared.

This interim rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

This rule involves no policies that have federalism implications under Executive Order 12612, Federalism, dated October 26, 1987.

This rule meets the applicable standards of section 2(b)(2) of Executive Order 12778.

FEMA makes the final determinations listed below of BFEs and modified BFEs for each community listed. The proposed BFEs and proposed modified BFEs were published in newspapers of local circulation and an opportunity for the community or individuals to appeal the proposed determinations to or through the community was provided for a period of ninety (90) days. The proposed BFEs and proposed modified BFEs were also published in the Federal Register .

This final rule is issued in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR part 67.

FEMA has developed criteria for floodplain management in floodprone areas in accordance with 44 CFR part 60.

Interested lessees and owners of real property are encouraged to review the proof Flood Insurance Study and FIRM available at the address cited below for each community.

The BFEs and modified BFEs are made final in the communities listed below. Elevations at selected locations in each community are shown.

This rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. No environmental impact assessment has been prepared.

The Mitigation Division Director of the Emergency Preparedness and Response Directorate certifies that this rule is exempt from the requirements of the Regulatory Flexibility Act because final or modified BFEs are required by the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and are required to establish and maintain community eligibility in the NFIP. No regulatory flexibility analysis has been prepared.

This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

This rule involves no policies that have federalism implications under Executive Order 12612, Federalism, dated October 26, 1987.

This proposed rule meets the applicable standards of section 2(b)(2) of Executive Order 12778.

This is a summary of the Commission's Report and Order in WC Docket No. 03-109 released on April 29, 2004. A Companion Further Notice of Proposed Rulemaking was also released in WC Docket No. 03-109 released April 29, 2004. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 Twelfth Street, SW., Washington, DC, 20554.

1. In this Report and Order, we modify our rules to improve the effectiveness of the low-income support mechanism, which ensures that quality telecommunications services are available to low-income consumers at just, reasonable, and affordable rates. Since its inception, Lifeline/Link-Up has provided support for telephone service to millions of low-income consumers. Nationally, the telephone penetration rate is 94.7%, in large part due to the success of the Lifeline/Link-Up program and our other universal service programs. Nevertheless, we believe there is more that we can do to make telephone service affordable for more low-income households. Only one-third of households currently eligible for Lifeline/Link-Up assistance actually subscribe to this program. We agree with the Federal-State Joint Board on Universal Service (Joint Board) that the current Lifeline/Link-Up program could be modified to serve the goals of universal service better.

2. Consistent with the Joint Board's recommendation, we expand the federal default eligibility criteria to include an income-based criterion and additional means-tested programs. We adopt federal certification and verification procedures, and require states, under certain circumstances, to establish certification and verification procedures to minimize potential abuse of these programs. To target low-income consumers more effectively, we adopt outreach guidelines for the Lifeline/Link-Up program. We issue a voluntary survey to gather data and information from states regarding the administration of Lifeline/Link-Up programs. The actions we take will result in a more inclusive and robust Lifeline/Link-Up program, consistent with the statutory goals of maintaining affordability and access of low-income consumers to supported services, while ensuring that support is used for its intended purpose.

3. We adopt the Joint Board's recommendation that a consumer be eligible to participate in Lifeline/Link-Up if the consumer's income is at or below 135% of the Federal Poverty Guidelines (FPG). We agree with the Joint Board that adding an income-based criterion to the federal default eligibility criteria may increase participation in the Lifeline/Link-Up program. This will enable, for example, a family of four whose annual income is at or below $24,840 to qualify for Lifeline/Link-Up support even if they do not participate in one of the current qualifying assistance programs. We have included estimated income requirements for various sizes of households at or below 135% of the FPG. Our staff analysis estimates that adding an income-based criterion of 135% of the FPG could result in approximately 1.17 million to 1.29 million new Lifeline/Link-Up subscribers. Of these new Lifeline/Link-Up subscribers, the analysis projects that approximately one in five likely would be new subscribers to telephone service. Therefore, in addition to ensuring that many low-income subscribers may be better able to afford to maintain their existing service; this criterion will enable many low-income subscribers to have service for the first time. Adding an income-based standard should thereby promote universal service by increasing subscribership and making rates more affordable for existing low-income subscribers.

4. We agree with the majority of commenters that support adding an income-based standard to the current program-based criteria. We also agree with the Joint Board and several commenters that adding an income-based standard likely will capture some low-income consumers who are not eligible for Lifeline/Link-Up because they no longer participate in the qualifying assistance programs. In 1996, Congress passed “The Personal Responsibility and Work Opportunity Reconciliation Act,” also known by the acronym “PRWORA.” PRWORA instituted sweeping changes to several federal public assistance programs, including time limits and work requirements backed by sanctions. In the 1997 Universal Service Order, 62 FR 32862, June 17, 1997, the Commission indicated it would monitor the impact of PRWORA on participation in Lifeline/Link-Up qualifying programs and revise eligibility criteria if the program-based criteria model “becomes an unworkable standard.” In the Twelfth Report and Order, 65 FR 47941, August 4, 2000, the Commission also noted it would consider adding an income-based criterion in the future because it might “reach more low-income consumers, including low-income tribal members, than the current method of conditioning eligibility on participation in particular low-income assistance programs.” We understand that participation is decreasing in many public assistance programs, including at least one program used to determine eligibility for Lifeline/Link-Up. At the same time, poverty rates in the U.S. are increasing by the traditional measure. In 2002, 12.1% or 34.6 million people fell below the poverty threshold, compared to 11.3% or 31.1 million people in 2000. At the same time, however, the Census Bureau has published six alternative measures of poverty, none of which appear to show a statistically significant increase in poverty rates between 2001 and 2002. Regardless of factual differences in the data, broadening eligibility criteria to include an income-based standard at this time should ensure continued participation in Lifeline/Link-Up among low-income households, which, in turn, should increase subscribership to the network. Several commenters also state that individuals who are no longer eligible to receive welfare or benefits under federal assistance programs may still be too poor to afford the cost of local telephone service. Adding an income-based standard could increase subscribership among low-income individuals affected by PRWORA. Thus, this action will further the goals of section 254.

5. Consistent with the Joint Board recommendation, we initially set the income-based standard at 135% of the FPG, while we further develop the record on the costs and benefits of adopting a 150% FPG standard. The Joint Board concluded that an income-based standard at 135% of the FPG struck an appropriate balance between increasing subscribership without significantly overburdening the universal service fund. It noted that most commenters supported adoption of an income-based standard ranging from 125% to 150% of the FPG, and that many other federal welfare programs, and state Lifeline programs, base eligibility on a standard within that range. We note that our staff analysis projects that if all states were to adopt an income-based standard at or below 135% of the FPG, federal Lifeline expenditures could increase by $127 to $140 million over current levels; in contrast, if we were to adopt an income-based standard at or below 150% of the FPG, federal Lifeline expenditures could increase by $316 to $348 million. We also note that while our staff analysis projects that adoption of an income-based standard at or below 135% of the FPG could result in more than 200,000 households newly subscribing to telephone service, that study also projects no net increase in new subscribers under an income-based standard at or below 150% of the FPG. We recognize that a few commenters are concerned about the potential financial burdens placed on the universal service fund due to increased participation in the Lifeline/Link-Up program, but we conclude that the benefits of adopting a 135% income-based standard now—namely, adding new low-income subscribers and retaining existing low-income subscribers on the network—outweigh the potential increased costs. In sum, we conclude that adopting a 135% income-based standard at this time represents a reasonable and cautious approach, while we explore further whether to adopt a 150% income standard.

6. We also adopt the Joint Board's recommendation that the Temporary Assistance to Needy Families program (TANF) and the National School Lunch's free lunch program (NSL) be added to the federal default eligibility criteria. We believe adding these programs is likely to help improve participation in the Lifeline/Link-Up program, and in doing so, would increase telephone subscribership and/or make rates more affordable for low-income households. Additionally, low-income consumers that come into contact with state agencies while enrolling in one public assistance program are often made aware of their eligibility to participate in another public assistance program. Therefore, participation in Lifeline/Link-Up could be increased by adding these public assistance programs to the current program-based criteria because it increases the possibility that low-income consumers could be made aware of Lifeline/Link-Up when they enroll in TANF and NSL and thereby increases or maintains subscribership.

7. Under the Commission's current rules, Tribal TANF is an eligibility criterion for enhanced Lifeline/Link-Up. The Commission extended Lifeline/Link-Up eligibility criteria to include the Tribal TANF program, as well as Bureau of Indian Affairs General Assistance, Tribal National School Lunch's free lunch program, and Tribal Head Start program (income qualifying standard only) concluding that the “household income thresholds for these newly added programs range[d] from 100-130 percent of the [FPG]” and were therefore “consistent with the [income thresholds of those] programs included in our current federal default list.” Adding TANF to the current list of eligibility criteria may permit more low-income individuals, not just those living on tribal lands, to qualify for Lifeline/Link-Up support, thereby potentially increasing telephone subscribership and making rates more affordable for existing low-income subscribers. Although 5.1 million recipients currently participate in TANF, like the Joint Board, we cannot project how many additional persons may become eligible for Lifeline/Link-Up under this new criterion because many low-income households participate in more than one assistance program. Nevertheless, we share the Joint Board's belief that extending Lifeline/Link-Up benefits to TANF participants will promote the goals of universal service.

8. We note that, in the 1997 Universal Service Order, the Commission rejected a proposal to add TANF's predecessor, Aid to Families with Dependent Children (AFDC), to the list of qualifying Lifeline/Link-Up programs. At the time, the Commission was concerned about the impact of PRWORA on that particular program. Although TANF participation rates have decreased since fiscal year 1996 and the implementation of PRWORA, participation rates remain high. Accordingly, adding this particular program to the federal default eligibility criteria may still potentially affect significant numbers of low-income consumers.

9. We agree with the Joint Board that one benefit of adding TANF is the broad discretion that states are given to establish eligibility standards for each state's respective TANF program. This broad discretion enables states to tailor the TANF program to meet their constituents' needs. Therefore, we agree with the Joint Board and most commenters that adding TANF as an eligibility criterion for Lifeline/Link-Up will help target the program to appropriate low-income households. Another advantage of adding TANF is that verification of Lifeline/Link-Up eligibility would simply involve checking TANF program records. We agree with NASUCA that monitoring participation in TANF is no more difficult than other programs.

10. We agree with the Joint Board that adding NSL's free lunch program to the current list of federal default eligibility criteria may permit more low-income individuals, not just those living on tribal lands, to qualify for Lifeline/Link-Up support, thereby increasing subscribership and/or making rates more affordable for low-income households. Under the Commission's current rules, Tribal NSL is an eligibility criterion for enhanced Lifeline/Link-Up on tribal lands. In general, NSL's eligibility criteria are the same as for Tribal NSL. To be eligible for NSL's free lunch program, the household income must be at or below 130% of the FPG, which is $23,920 for a family of four. Children are automatically eligible for free school meals if their household receives Food Stamps, benefits under the Food Distribution Program on Indian Reservations or, in most cases, benefits under the TANF program. There were approximately 13.7 million children enrolled in NSL's free lunch program in fiscal year 2003. As with TANF, however, it is difficult to project how many additional persons may become eligible for Lifeline/Link-Up by adopting NSL because many low-income households typically participate in more than one assistance program once they meet the qualifying criteria. We are not aware of any data on the total number of households in which NSL participants reside, because more than one NSL participant may reside in a single household. Nevertheless, we agree with the Joint Board that adding NSL as an eligibility criterion could increase telephone subscribership and/or make rates more affordable for low-income households.

11. There is significant support in the record for adding NSL's free lunch program to the federal default eligibility criteria. We agree with NCLC that adding NSL may improve telephone penetration among low-income subscribers because it may capture many low-income households that may not participate in other Lifeline/Link-Up qualifying public-assistance programs. According to NCLC, many households do not feel that children participating in NSL carries the same social stigma as participation in programs whose aim is assistance for adults. Also, adding NSL's free lunch program is consistent with the Commission's determination in the Twelfth Report and Order that eligibility for enhanced Lifeline/Link-Up should be limited to those qualifying for free lunch from NSL. We note that participation in the NSL program is increasing, unlike other assistance programs where PRWORA may have prompted decreased enrollment. It is also easy to verify eligibility under this criterion because it would simply involve checking NSL program records. We note that in the 1997 Universal Service Order, the Commission found that “in the interest of administrative ease and avoiding fraud, waste, and abuse, the named subscriber to the local telecommunications service must participate in [the] program[ ] to qualify for Lifeline.” Although the child is the named participant in the NSL program, it is the household's income that qualifies the child for participation in the program. No commenters have brought to our attention any evidence of problems with its use in the enhanced Lifeline/Link-Up federal default eligibility criteria for those living on tribal lands. Accordingly, we believe that adding NSL will help to target Lifeline/Link-Up support to the appropriate low-income households.

12. We agree with the Joint Board and several commenters that consumers should be given a period of time in which to show continued eligibility for Lifeline. As described, dispute resolution procedures are necessary to allow consumers to demonstrate continued eligibility. Moreover, such a timeframe will provide Lifeline customers, who may not be aware of a change to their eligibility status, a period of time in which to transition to the full cost of non-Lifeline service should they be found to be ineligible. This transitional period will reduce the likelihood that such customers would be subsequently disconnected from the network. Therefore, an appeal and transition period will promote the goals of section 254. Moreover, allowing Lifeline benefits to continue prior to a final decision to terminate enrollment should not burden the fund excessively, while providing administrative stability.

13. We recognize that some states may have existing dispute resolution procedures between telephone companies and consumers governing termination of telephone service that could apply to termination of Lifeline benefits. For example, the Pennsylvania Public Utility Commission (PaPUC) asserts that “Pennsylvania carriers would treat an appeal regarding termination of Lifeline service as a “dispute” and would follow the PaPUC procedural rules regarding the resolution of disputes[.]” The PaPUC explains that termination of service would be stayed pending resolution of the dispute. Accordingly, in such a state, consumers would have an opportunity to dispute Lifeline termination, and there would be no need for the eligible telecommunication carriers (ETC) to follow the federal default procedures, as described. Therefore, where a state maintains its own procedures that would require, at a minimum, written customer notification of impending termination of Lifeline benefits, similar to the federal default requirements, that state will retain the flexibility to develop its own appeals process. Moreover, we agree with the PaPUC and the Joint Board that preempting a state's existing appeals process could result in customer confusion and unnecessary expense for the carrier. States should make their own determination as to whether the state's existing laws could apply to termination of Lifeline benefits.

14. In states that lack dispute resolution procedures applicable to Lifeline termination, we adopt the Joint Board's recommendation and require ETCs that have a reasonable basis to believe that consumers no longer qualify for Lifeline to notify consumers of their impending termination of Lifeline benefits and implement a 60-day period of time in which to demonstrate continued eligibility. For those states, we adopt the following federal default procedures. ETCs in such states will be required to notify consumers of their impending termination of Lifeline benefits by sending a termination of Lifeline benefits notice in a letter separate from the consumer's monthly bill. If a consumer receives such a termination notice, the consumer would have up to 60 days from the date of the termination letter in which to demonstrate his or her continued eligibility before Lifeline support is discontinued. For example, a consumer who enrolled in Lifeline because he or she participated in Low Income Home Energy Assistance Program (LIHEAP) may nevertheless qualify for Lifeline after discontinuing participation in LIHEAP under a different program-based or income-based criterion. Consumers should be given a period of time in which to make such a showing of continued eligibility if they believe they have received a termination letter in error. The 60-day time period also should ensure that consumers have ample notice to make arrangements to pay the full cost of local service should they wish to continue telephone service after termination of Lifeline benefits. This 60-day time period thus furthers the goal of section 254 to provide access to telecommunications services for low-income consumers. A consumer who appeals must present proof of continued eligibility to the carrier consistent with his or her state's verification requirements or federal verification requirements, if relevant, as modified in the Certification and Verification Procedures section. This procedure is only required when the carrier has initiated termination of benefits. This 60-day period of time is not necessary when the Lifeline subscriber has notified the carrier that he or she is no longer eligible. Presumably such subscribers will be aware of their impending termination of benefits and will be able to budget their resources accordingly.

15. We agree with the Joint Board and encourage all states, including federal default states, to adopt automatic enrollment as a means of certifying that consumers are eligible for Lifeline/Link-Up. In its Recommended Decision, the Joint Board observed that participation rates for Lifeline/Link-Up increased in states that employed automatic enrollment, aggressive outreach, and intrastate multi-agency cooperation. In particular, the Joint Board highlighted three states that have adopted some form of Lifeline/Link-Up automatic enrollment. In two states, an affirmative act by the participant, such as authorization to release qualifying information and submission of letter indicating participation in the qualifying program, is needed to secure enrollment in Lifeline/Link-Up. In a third state, the state automatically enrolls the consumer in Lifeline/Link-Up at the time of enrollment in a qualifying program, but offers the consumer an opt-out provision to cancel participation in Lifeline/Link-Up. Because we agree with the Joint Board that automatic enrollment may facilitate participation in Lifeline/Link-Up, we adopt the Joint Board's recommendation to encourage states to implement such measures.

16. We decline, however, to require states to adopt automatic enrollment at this time. Instead, we encourage those states that currently do not employ automatic enrollment to consider states that operate automatic enrollment as a model for future implementation. As the Joint Board noted, implementation of automatic enrollment could impose significant administrative, technological, and financial burdens on states and ETCs. Although we recognize the benefits of automatic enrollment, we agree with the Joint Board that we should not force states that may be unable to afford to implement automatic enrollment to do so. We also recognize arguments that requiring automatic enrollment may deter ETCs from participating in the Lifeline/Link-Up program because of the technical requirements associated with interfacing with government agencies or third party administrators.

17. We agree with the Joint Board that the current certification procedures for program-based qualification are sufficient. Current rules require self-certification, under penalty of perjury, for the federal default states, and allow states operating their own Lifeline/Link-Up programs to devise more strict measures as they deem appropriate. We agree with the Joint Board that the ease of self-certification encourages eligible consumers to participate in Lifeline/Link-Up. In addition, self-certification imposes minimal burdens on consumers. Finally, we agree with the Joint Board that participation in need-based programs is easily verified. Accordingly, we conclude, consistent with the views of the Joint Board, that certification of qualified program participation, under penalty of perjury, serves as an effective disincentive to abuse the system at this time.

18. We adopt the Joint Board's recommendation to require all states, including federal default states, to adopt certification procedures to document income-based eligibility for Lifeline/Link-Up enrollment. Because it is easier to verify qualifying program enrollment, we share the Joint Board's concerns that there may be a greater potential for fraud and abuse when an individual self-certifies his/her income eligibility. We agree with the many commenters that requiring documentation of income eligibility should protect against waste, fraud, and abuse and ensure that only qualified individuals receive Lifeline/Link-Up assistance. Some commenters, however, contend that self-certification of income, under penalty of perjury, at the enrollment stage is the most cost-effective method to deter abuse of the program. The Florida PSC, on the other hand, notes that California's Lifeline program, which utilizes self-certification of income-based eligibility, appears to have more households receiving the Lifeline discount than the Current Population Survey of Households data would indicate are eligible for the discount. We do not agree with these commenters that argue income certification from another means-tested program should be suitable documentation, because it could be difficult to verify that the means-tested program utilizes the same income eligibility threshold. Therefore, because self-certification of income presents additional vulnerabilities to the Lifeline/Link-Up program, we agree with the Joint Board and several commenters that certification of income-based eligibility must be accompanied by supporting documentation.

19. We agree with the Joint Board that states that operate their own Lifeline/Link-Up programs should maintain the flexibility to develop their own certification procedures other than self-certification, including acceptable documentation to certify consumer eligibility under an income-based criterion, and to determine the certifying entity, whether it is a state agency or an ETC. This flexibility will permit states to develop certification procedures that best accommodate their own Lifeline participants based on the available resources of ETCs and state commissions, each state's eligibility criteria, and local conditions. When developing their certification procedures, we remind states that eligible consumers living on tribal lands may qualify for Lifeline support even if they do not satisfy that state's eligibility criteria. In addition, ETCs must be able to document that they are complying with state regulations and recordkeeping requirements.

20. For federal default states, we adopt rules reflecting the Joint Board's recommendation that consumers must provide documentation of income eligibility at enrollment. Specifically, we agree with the Joint Board's recommendation that the prior year's state, federal, or tribal tax return, current income statement from an employer or paycheck stub, a Social Security statement of benefits, a Veterans Administration statement of benefits, a retirement/pension statement of benefits, an Unemployment/Workmen's Compensation statement of benefits, federal or tribal notice letter of participation in Bureau of Indian Affairs General Assistance, a divorce decree, or child support document serve as the types of documents acceptable for income verification. We conclude that if a consumer chooses to proffer any document other than a previous year's tribal, federal, or state income tax return as evidence of income, such as current pay stubs, the consumer must present three consecutive months worth of the same type of statements within that calendar year. Three consecutive months of income statements represent one quarter of the calendar year and better substantiate the yearly stated income, without overly burdening consumers.

21. For those states governed by the federal default Lifeline/Link-Up rules, we require an officer of the ETC enrolling the consumer in Lifeline/Link-Up to certify, under penalty of perjury, that the ETC has procedures in place to review income documentation and that, to the best of his or her knowledge, the company was presented with documentation that the consumer's household income is at or below 135% of the FPG. Some commenters oppose certification procedures for income-based eligibility because, they insist, such procedures would be overly burdensome to ETCs. AT&T argues that ETC employees are not trained to review and interpret complex government forms, such as tax forms, W-2 statements, or pay stubs. The rules we adopt today, however, do not require difficult computations or interpretations; rather, they require the ETC to compare the annual income represented in the provided documentation and the number of individuals in the household to a FPG chart posted on the Universal Service Administrative Company's (USAC's) website. Moreover, our rules do not require ETCs to retain the consumer's corroborating documentation. ETCs need only retain records of their self-certifications and those made by the applicant. Where states operate their own Lifeline/Link-Up programs, an officer of the ETC must certify that the ETC is in compliance with state Lifeline/Link-Up income certification procedures and that, to the best of his or her knowledge, documentation of income was presented.

22. Finally, all consumers in all states qualifying under an income-based criterion must self-certify their eligibility to participate. Consumers must make this self-certification under penalty of perjury and must also present all required documentation. Specifically, consumers must self-certify, under penalty of perjury, that the presented documentation accurately represents their annual household income. Moreover, we adopt the Joint Board's recommendation that Lifeline/Link-Up applicants in all states qualifying under an income-based criterion should be required to self-certify, under penalty of perjury, the number of individuals in their households. Because the Federal Poverty Guidelines change depending upon the number of individuals in a household, this information is necessary to determine eligibility.

23. We adopt the Joint Board's recommendation that all states, including federal default states, be required to establish procedures to verify consumers' continued eligibility for the Lifeline/Link-Up program under both program and income-based eligibility criteria. Verification procedures could include random beneficiary audits, periodic submission of documents, or annual self-certification. We agree with those commenters that assert that verification of continued eligibility should ensure that the low-income support mechanism is updated, accurate, and carefully targeted to provide support only to eligible consumers. We disagree with other commenters that argue that these benefits do not outweigh the burden associated with a verification requirement. We agree with the Joint Board that verification is an effective way to prevent fraud and abuse and ensure that only eligible consumers receive benefits.

24. We also adopt the Joint Board's recommendation to allow states that administer their own Lifeline/Link-Up programs the flexibility to design and implement their own verification procedures to validate consumers' continued eligibility. We note that several states already engage in verification of continued eligibility for Lifeline/Link-Up. For example, in some states, the ETC is responsible for verifying the consumer's continued eligibility, while other states require their state agencies to devise procedures for eligibility verification. Another state establishes eligibility verification procedures that involve state agency and carrier participation. This flexibility will permit states to develop verification procedures that best accommodate their own Lifeline participants based on the available resources of ETCs and state commissions, each state's eligibility criteria, and local conditions. We also note that eligible consumers living on tribal lands may qualify for Lifeline support even if they do not satisfy that state's eligibility criteria. In addition, ETCs must be able to document that they are complying with state regulations and verification requirements.

25. With respect to federal default states, we adopt the Joint Board's recommendation to require ETCs to verify annually the continued eligibility of a statistically valid sample of their Lifeline subscribers. ETCs are free to verify directly with a state that particular subscribers continue to be eligible by virtue of participation in a qualifying program or income level. Alternatively, to the extent ETCs cannot obtain the necessary information from the state, they may survey the subscriber directly and provide the results of the sample to USAC. Subscribers who are subject to this verification and qualify under program-based eligibility criteria must prove their continued eligibility by presenting in person or sending a copy of their Medicaid card or other Lifeline-qualifying public assistance card and self-certifying, under penalty of perjury, that they continue to participate in the Lifeline-qualifying public assistance program. Subscribers who are subject to this verification and qualify under the income-based eligibility criteria must prove their continued eligibility by presenting current documentation consistent with the federal default certification process, as detailed. These subscribers must also self-certify, under penalty of perjury, the number of individuals in their household and that the documentation presented accurately represents their annual household income. As with certification of income-based eligibility, ETCs need not retain documentation of income; however, an officer of the ETC must certify, under penalty of perjury, that the ETC has income verification procedures in place and that, to the best of his or her knowledge, the company was presented with corroborating documentation and retain these records.

26. In addition, we agree with the Joint Board that states should develop on-line verification systems. Several commenters highlight the effectiveness and efficiency of verifying eligibility via on-line databases. We agree with the Joint Board that an on-line verification process, where states can obtain and provide data to allow ETCs real-time access to a database of low-income assistance program participants or income reports, could be a quick, easy, and accurate solution. Nevertheless, we decline to require states to adopt on-line verification at this time. Despite the benefits of on-line verification, we recognize, as did the Joint Board, that current financial constraints may make it difficult for some states to implement on-line verification.

27. States and ETCs will be required to implement measures to certify income of consumers before enrollment in Lifeline/Link-Up when income is the consumer's basis for Lifeline/Link-Up eligibility, and to implement measures to verify continued eligibility for Lifeline/Link-Up under any criteria within one year from the publication of this Order in the Federal Register . Given the flexibility afforded states to develop certification and verification procedures, we conclude that one year should provide more than enough time to come into full compliance with the rules we adopt today. Indeed, we encourage states and ETCs to implement certification and verification measures as quickly as possible, but no later than one year. For federal default states, level of income will not be acceptable as a means of qualifying for Lifeline/Link-Up until certification procedures are in place.

28. In addition, we specify that ETCs in federal default states must retain certifications regarding a consumer's eligibility for Lifeline for as long as the consumer receives Lifeline service from that ETC or until the ETC is audited by the Administrator. Section 54.409 of the Commission's rules requires ETCs to obtain a self-certification, under penalty of perjury, from a consumer that he or she receives benefits from one of the qualifying means-tested programs. However, this rule does not specify how long ETCs must retain consumer self-certifications regarding eligibility. In this Order, we clarify our rules to require ETCs in federal default states to retain consumers' self-certifications of eligibility, including self-certifications that income documentation accurately reflects household income, for as long as the consumer receives Lifeline service from that ETC or until the ETC is audited by the Administrator. This requirement will strengthen the Commission's ability to ensure program integrity without unduly burdening ETCs. For example, requiring an ETC to retain a single certification document per consumer will allow the Administrator to confirm in any audit that a consumer was properly enrolled in Lifeline, regardless of when he or she was enrolled.

29. Moreover, we codify the requirement that all ETCs must maintain records to document compliance with all Commission and state requirements governing the Lifeline/Link-Up programs and provide that documentation to the Commission or Administrator upon request. These records could include, for example, self-certifications verifying consumers' continued eligibility, documents demonstrating that ETCs have passed through the appropriate discounts to qualifying consumers, proof of advertising of Lifeline/Link-Up service, and billing records for Lifeline customers. All ETCs must retain such documentation for the three full preceding calendar years, e.g. , in December 2004, an ETC would maintain records for calendar years 2001-2003, but in January 2005, that ETC would only maintain records for calendar years 2002-2004.

30. Finally, we clarify the recordkeeping obligations of non-ETC resellers that purchase Lifeline-discounted wholesale services from ETCs to offer discounted services to low-income consumers. In such instances, the ETC would have no information regarding the eligibility of the low-income consumer. Accordingly, in these circumstances, ETCs must obtain certifications from the non-ETC reseller that it is complying with the Commission's Lifeline/Link-Up requirements. Moreover, non-ETC resellers providing discounted services to low-income customers must comply with the applicable federal or state Lifeline/Link-Up requirements, including certification and verification procedures. Thus, such non-ETC resellers would be required to retain the required documentation to demonstrate that they are providing discounted services only to qualifying low-income consumers for the above-specified periods.

31. We agree with the Joint Board that more vigorous outreach efforts could improve Lifeline/Link-Up subscribership and adopt the Joint Board's recommendation to provide outreach guidelines to states and carriers. We agree that we should not require specific outreach procedures, but should instead provide guidelines for states and carriers so that they can adopt their own specific standards and engage in outreach as they see fit. Commenters were supportive of the proposed outreach guidelines, outlined in the Recommended Decision and detailed. We believe that encouraging states to establish partnerships with other state agencies and telephone companies will maximize public awareness and participation in the Lifeline/Link-Up program. We do not believe it is necessary at this time to prescribe specific outreach procedures. Instead, we set forth these guidelines in order to provide states and carriers with examples of how to reach those likely to qualify. States and carriers will still have the flexibility to determine the most appropriate outreach mechanisms for their consumers, as long as they are reasonably designed to reach those likely to qualify for Lifeline/Link-Up.

32. Accordingly, we adopt the following outreach guidelines recommended by the Joint Board: (1) States and carriers should utilize outreach materials and methods designed to reach households that do not currently have telephone service; (2) states and carriers should develop outreach advertising that can be read or accessed by any sizeable non-English speaking populations within a carrier's service area; and (3) states and carriers should coordinate their outreach efforts with governmental agencies/tribes that administer any of the relevant government assistance programs. These guidelines are described in detail. An appendix compiling state practices was included in the Recommended Decision and is reproduced in this document. State practices include establishing marketing boards to devise outreach materials, providing multi-lingual customer support, and implementing innovative tribal outreach practices.

33. The first recommended guideline is that states and carriers should utilize outreach materials and methods designed to reach households that do not currently have telephone service. States or carriers may wish to send regular mailings to eligible households in the form of letters or brochures. Posters could be placed in locations where low-income individuals are likely to visit, such as shelters, soup kitchens, public assistance agencies, and on public transportation. Multi-media outreach approaches could be utilized such as newspaper advertisements, articles in consumer newsletters, press releases, radio commercials, and radio and television public service announcements. For low-income consumers that live in remote areas, including those living on tribal lands, traveling throughout an area or setting up an information booth at a central location may be more suitable outreach methods. States and carriers should ensure that outreach materials and methods accommodate low-income individuals with sight, hearing, and speech disabilities by producing brochures, mailings, and posters in Braille. We also encourage carriers to provide customer service to disabled program participants on an equal basis by using telecommunications relay services (TRS), text telephone (TTY), and speech-to-speech (STS) services. States and carriers should also take into consideration that some low-income consumers may be illiterate or functionally illiterate, and therefore should consider how to supplement outreach materials and methods to accommodate those individuals. States and carriers may post outreach material on the Internet to provide general information; however, the Internet should not be relied on as the sole or primary means of Lifeline/Link-Up outreach. Similarly, although advertising Lifeline/Link-Up in carriers' telephone books may be effective in reaching some low-income individuals, it will not be effective for those without established phone service because carriers only distribute telephone books after phone service is established. States and carriers should also not rely on hotlines as a primary outreach method because many low-income individuals may not have access to a telephone from which to initiate an inquiry on Lifeline/Link-Up benefits.

34. The second recommended guideline is that states and carriers should develop outreach advertising that can be read or accessed by any sizeable non-English speaking populations within the carrier's service area. For example, many of the suggestions can be implemented in languages other than English, including mailings, print advertisements, radio and television commercials, and posters. States with a large ethnically diverse population should have a toll-free call center to answer questions about Lifeline/Link-Up in the low-income population's native languages. Similarly, enrollment applications should be made available in other languages.

35. The third recommended guideline is that states and carriers should coordinate their outreach efforts with governmental agencies that administer any of the relevant government assistance programs. Coordination should also include cooperative outreach efforts with state commissions, tribal organizations, carriers, social service agencies, community centers, nursing homes, public schools, and private organizations that may serve low-income individuals, such as American Association for Retired Persons and the United Way. Cooperative outreach among those most likely to have influential contact with low-income individuals will help to target messages about Lifeline/Link-Up to the low-income community. For example, state agencies that conduct outreach efforts for a state's “earned income tax credit,” an income tax credit for low-income working individuals and families, could conduct simultaneous outreach efforts for Lifeline/Link-Up. Establishing a marketing or consumer advisory board with state, carrier, non-profit and consumer representatives may also be an effective way of developing outreach materials. States and carriers could also issue a joint report to the Commission as to their outreach practices.

36. We also encourage states to utilize USAC as a resource for outreach to states and carriers, similar to USAC's outreach efforts with regard to the Rural Health Care and Schools and Libraries programs. USAC currently engages in outreach for the Lifeline/Link-Up program through its website, <www.lifelinesupport.org>, which has information about state Lifeline/Link-Up programs, eligibility criteria, and information for carriers. USAC also speaks about Lifeline/Link-Up at public events such as the National Association of Regulatory Utility Commissioners (NARUC) conference and the National Congress of American Indians, where USAC staff also meets with tribal members and managers of tribally-owned telephone companies. USAC distributes letters and emails to consumer groups, tribal leaders, and social service organizations to publicize the availability of Lifeline/Link-Up and also sends letters to ETCs to remind them of their outreach obligations. USAC also frequently takes phone calls from consumers and others with questions about the Lifeline/Link-Up program. Finally, we agree with the Joint Board that in addition to USAC's current outreach efforts for Lifeline/Link-Up, USAC should assist in additional outreach efforts for Lifeline/Link-Up similar to what it currently does for the Rural Health Care and Schools and Libraries Programs.

37. We agree with the Joint Board that gathering data and information about state Lifeline/Link-Up programs through a voluntary survey will enable the Commission to make more informed decisions in any future Lifeline/Link-Up orders. In the Notice of Proposed Rulemaking, 68 FR 42333, July 17, 2003, we sought comment on the survey's format and questions to ask.

38. To obtain feedback on the success of the modified Lifeline/Link-Up program, we adopt a voluntary information collection from the states. This voluntary survey form asks states to provide information about the eligibility criteria, certification and verification procedures, and outreach efforts implemented as a result of the changes we adopt in this Order. Collection of this survey will assist us in learning about the reasons for variations in participation rates between and among states, and as a result could help shape Commission policy in the future. We agree with commenters that submission of this survey should be voluntary for states with the first survey due one year following the effective date of this Order. We direct USAC to mail the voluntary survey form to states. We have expanded on some of the Joint Board's recommended questions and added a few questions to the survey, at the suggestion of NCLC.

39. We adopt the Joint Board's recommendation to encourage states to consider implementing rules that require ETCs to offer Lifeline service to consumers who may have been previously disconnected for unpaid toll charges. We acknowledge that ETCs often prohibit consumers who have prior outstanding balances for local and/or long distance services, but who otherwise qualify for Lifeline/Link-Up, from signing up for local telephone service. As a result, these outstanding balances stand as a barrier to expanding subscribership among low-income consumers. However, the Fifth Circuit found that the Commission lacked jurisdiction to prohibit ETCs from disconnecting Lifeline customers for failure to pay toll charges. In light of the Fifth Circuit ruling, we adopt the Joint Board's recommendation and take no action on disconnection requirements at this time. We encourage states, however, to consider ways to address this issue.

40. We adopt the Joint Board's recommendation not to adopt rules prohibiting Lifeline/Link-Up customers from purchasing vertical services, such as Caller ID, Call Waiting, and Three-way Calling. Like the Joint Board, we believe any restriction on the purchase of vertical services may discourage qualified consumers from enrolling and may serve as a barrier to participation in the program. No commenter supported prohibiting Lifeline/Link-Up subscribers from purchasing vertical services. However, some expressed concern that ETCs may be marketing vertical services to low-income customers who may be unable to afford these features. While we understand these concerns, we do not prohibit the marketing of vertical services to Lifeline/Link-Up customers at this time.

41. We agree with the Joint Board that we should decline to establish rules that would provide Lifeline/Link-Up support directly to carriers that are not ETCs. Contrary to AT&T's assertion, establishing such rules would be inconsistent with section 254(e), which states that only ETCs may receive universal service support. Extending Lifeline/Link-Up universal service support to carriers that do not satisfy the requirements for designation as an ETC could also serve as a disincentive for other carriers to comply with their ETC obligations.

42. In the Notice of Proposed Rulemaking, the Commission identified various proposals to clarify and streamline our rules. Specifically, the Commission proposed to modify Part 54 to reference a provision in § 52.33(a)(1)(i)(C) of the Commission's rules that exempts Lifeline Assistance Program customers from monthly number-portability charges. The Commission also solicited comment on whether § 54.401(c) should be amended by replacing “toll blocking” with “toll limitation” to accurately reflect the Commission's determination in the 1997 Universal Service Order that ETCs may not impose service deposit requirements on Lifeline customers who accept toll limitation services. Section 54.401(c) incorrectly limits the service deposit prohibition to customers who accept toll blocking. Finally, the Commission sought comment on whether to delete subpart G of part 36, which states that “[t]his subpart shall be effective through December 31, 1997. On January 1, 1998, Lifeline Connection Assistance shall be provided in accordance with part 54, subpart E of this chapter.” We believe these changes will clarify and streamline our Lifeline/Link-Up rules. Therefore, we adopt these minor rule changes as proposed in the Notice of Proposed Rulemaking.

43. As required by the Regulatory Flexibility Act of 1980, as amended (RFA) an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rulemaking. The Commission sought comment on the proposals in the Notice of Proposed Rulemaking, including comment on the IRFA. The present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

44. In this Order, we adopt rules that expand the federal default eligibility criteria for Lifeline/Link-Up to include an income-based criterion of 135% of the Federal Poverty Guidelines and additional means-tested programs. We also adopt rules requiring certification and verification procedures for eligibility under certain circumstances. In addition, we provide outreach guidelines for carriers and states and a voluntary Lifeline/Link-Up administrative survey to better target low-income consumers and improve program operation. Collectively, these rules will improve the effectiveness of the low-income support mechanism and ensure quality telecommunications services are available to low-income consumers at just, reasonable, and affordable rates.

45. There were no comments filed specifically in response to the IRFA. Nevertheless, the agency has considered the potential impact of the rules proposed in the IRFA on small entities. Adding two means-tested programs, Temporary Assistance to Needy Families (TANF) and National School Lunch's free lunch program (NSL), and household income as a basis for Lifeline/Link-Up eligibility does not raise significant issues for small business entities. Some commenters were concerned that certification and verification procedures might pose significant costs on small entities. However, the rules we adopt today strike a balance between minimizing compliance burdens and costs and preserving the integrity of the Lifeline/Link-Up program.

46. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).

47. The Commission's decision to adopt certification and verification requirements would apply to service providers that provide services to qualifying low-income consumers who receive Lifeline/Link-Up support. According to the Universal Service Administrative Company's (USAC) 2002 Annual Report, only local exchange carriers, cellular/personal communications services (PCS) providers, and competitive access providers would be subject to these requirements. Because many of these service providers could include small entities, we expect that the proposal in this proceeding could have a significant economic impact on local exchange carriers, small incumbent local exchange carriers, cellular/PCS providers, and competitive access providers that are small entities.

48. We have included small incumbent local exchange carriers in this present RFA analysis. As noted, a “small business” under the RFA is on that, inter alia, meets the pertinent small business size standard ( e.g. , a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent local exchange carriers are not dominant in their field of operation because any such dominance is not “national” in scope. We have therefore included small incumbent local exchange carriers in this RFA analysis, although we emphasize that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts.

49. Incumbent Local Exchange Carrier. Neither the Commission nor the SBA has developed a size standard specifically for small providers of local exchange services. The closest applicable size standard under the SBA rules is for wired telecommunications carriers. This provides that a wired telecommunications carrier is a small entity if it employs no more than 1,500 employees. According to Commission data, 1,337 incumbent carriers reported that they were engaged in the provision of local exchange services. Of these 1,337 carriers, an estimated 1,032 have 1,500 or fewer employees and 305 carriers have more than 1,500 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by the rules and policies adopted herein. According to Commission data, 1,337 incumbent carriers reported that they were engaged in the provision of local exchange services. Of these 1,337 carriers, an estimated 1,032 have 1,500 or fewer employees and 305 carriers have more than 1,500 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by the rules and policies adopted herein.

50. Competitive Local Exchange Carriers, Competitive Access Providers, and Other Local Exchange Carriers. Neither the Commission nor the SBA has developed a size standard specifically for small providers of local exchange services. The closest applicable size standard under the SBA rules is for wired telecommunications carriers. This provides that a wired telecommunications carrier is a small entity if it employs no more than 1,500 employees. According to the most recent Commission data, 609 companies reported that they were engaged in the provision of either competitive access provider services or competitive local exchange carrier services. Of these 609 companies, an estimated 458 have 1,500 or fewer employees and 151 have more than 1,500 employees. In addition, 35 carriers reported that they were “Other Local Exchange Carriers.” Of the 35 “Other Local Exchange Carriers,” an estimated 34 have 1,500 or fewer employees and one has more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, and “Other Local Exchange Carriers” are small entities that may be affected by the rules and policies adopted herein.

51. Cellular and Other Wireless Telecommunications. The SBA has developed a small business size standard for Cellular and Other Wireless Telecommunications, which consists of all such firms having 1,500 or fewer employees. According to data for 1997, a total of 977 such firms operated for the entire year. Of those, 965 firms employed 999 or fewer persons for the year, and 12 firms employed of 1,000 or more. Therefore, nearly all such firms were small businesses. In addition, we note that there are 1,807 cellular licenses; however, a cellular licensee may own several licenses. According to Commission data, 858 carriers reported that they were engaged in the provision of cellular service, Personal Communications Service (PCS), or Specialized Mobile Radio telephony service, which are placed together in the data. We have estimated that 291 of these are small under the SBA small business size standard.

52. Broadband Personal Communications Service (PCS). The broadband PCS spectrum is divided into six frequencies designated A through F, and the Commission has held auctions for each block. The Commission defined “small entity” for Blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years. For Block F, an additional classification for “very small business” was added and is defined as an entity that, together with their affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These regulations defining “small entity” in the context of broadband PCS auctions have been approved by the SBA. No small businesses within the SBA- approved definition bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified as small entities in the Block C auctions. A total of 93 small and very small business bidders won approximately 40% of the 1,479 licenses for Blocks D, E, and F. On March 23, 1999, the Commission re-auctioned 347 C, D, E, and F Block licenses; there were 48 small business winning bidders. Based on this information, we conclude that the number of small broadband PCS licensees will include the 90 winning C Block bidders and the 93 qualifying bidders in the D, E, and F blocks, plus the 48 winning bidders in the re-auction, for a total of 231 small entity PCS providers as defined by the SBA and the Commission's auction rules. On January 26, 2001, the Commission completed the auction of 422 C and F Broadband PCS licenses in Auction No. 35. Of the 35 winning bidders in this auction, 29 qualified as small or very small businesses.

53. Expanding the eligibility criteria will not create additional reporting, recordkeeping, or other compliance requirements.

54. Several other requirements adopted in this Order, however, affect recordkeeping requirements. First, ETCs will be required to maintain records to document compliance with all Commission requirements governing the Lifeline/Link-Up programs, including numerous self-certifications, and provide that documentation to the Commission or Administrator upon request for the full three preceding calendar years. Specifically, ETCs in federal default states must retain certifications that documentation of income eligibility was presented when the customer was initially enrolled in Lifeline and when the customer was subject to verification of continued eligibility. ETCs in states operating their own Lifeline/Link-Up program must document compliance with state Lifeline regulations and recordkeeping requirements, including state certification and verification procedures. Second, non-ETC resellers must retain documentation to demonstrate that they are providing discounted services only to qualifying low-income customers. Records of customer eligibility must be maintained for as long as the customer receives Lifeline service from that ETC or until that ETC is audited by the Administrator.

55. Although self-certification of income may be easily administered, we conclude that self-certification of income could invite abuse of the Lifeline/Link-Up program, because it is difficult to verify income. Accordingly, to address concerns of potential waste, fraud, and abuse, we will require consumers qualifying under the income-based criterion to present documentation of income. To minimize burdens on carriers, however, we do not require ETCs in federal default states to maintain this documentation of income. Rather, an officer of the ETC need only self-certify, under penalty of perjury, that the carrier has procedures in place to review income documentation and that, to the best of his or her knowledge, income documentation was presented. In addition, to ensure that only eligible consumers receive Lifeline/Link-Up benefits, we require ETCs in federal default states to verify directly with a state that particular subscribers continue to be eligible or survey subscribers directly by sending annual verification forms to a statistically valid sample of Lifeline subscribers, providing the results of the sample to USAC.

56. We allow states operating their own Lifeline/Link-Up programs flexibility to develop their own certification of income and verification procedures. We note that resources of the carrier, among other things, should be taken into consideration when devising state certification and verification procedures. In addition, an officer of an ETC in states that operate their own Lifeline/Link-Up programs must certify, under of penalty of perjury, that the ETC complies with state certification procedures and that, to the best of his or her knowledge, documentation of income for consumers applying under an income-based criterion was presented.

57. Finally, we provide carriers options regarding retaining records of consumer eligibility. Carriers may either retain such records for as long as the carrier provides Lifeline service to that consumer or until it is audited by the Administrator. These requirements are necessary to ensure program integrity. However, we provide carriers flexibility to choose the more appropriate recordkeeping method.

58. The Commission will send a copy of the Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the Order, including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Order and FRFA (or summaries thereof) will also be published in the Federal Register .

59. The action contained herein has been analyzed with respect to the Paperwork Reduction Act of 1995 and found to impose new or modified reporting and recordkeeping requirements or burdens on the public. Implementation of these new or modified reporting and recordkeeping requirements will be subject to approval by the Office of Management and Budget (OMB) as prescribed by the Act, and will go into effect upon announcement in the Federal Register of OMB approval.

60. Accordingly, it is ordered that, pursuant to the authority contained in sections 1, 4(i), 201-205, 214, 254, and 403 of the Communications Act of 1934, as amended, this Order is adopted.

61. Part 54 of the Commission's rules, is amended as set forth, effective July 22, 2004 except for §§ 54.405(c), 54.405(d), 54.409(d), 54.409(d)(3), 54.410, 54.416, 54.417 which contain information collection requirements that have not been approved by the Office of Management Budget (OMB). The Commission will publish a document in the Federal Register announcing the effective date of those sections.

Part 54 rules are issued pursuant to the Communications Act of 1934, as amended. The purpose of the part 54 rules is to implement section 254 of the Communications Act of 1934, as amended. 47 U.S.C. 254. This action corrects the final regulation implemented at § 54.307 of the Commission's rules. 47 CFR 54.307. Specifically, this action removes paragraph (a)(4) from § 54.307 from the Commission's rules.

The December 1, 1999, Federal Register Summary (64 FR 67372) inadvertently omitted an instruction to remove paragraph (a)(4) from § 54.307. This correction is consistent with the Commission's Order published in the Federal Register Summary.

This is a synopsis of the Commission's Report and Order, MB Docket No. 03-208, adopted May 26, 2004, and released May 28, 2004. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Information Center (Room CY-A257), 445 12th Street, SW., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20054.

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding.

Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts. The Audio Division granted Station KVMI a license to specify operation on Channel 280C3 in lieu of Channel 280A at Arthur, North Dakota on May 21, 2003. See BLH-20030303ACH. The FM Table of Allotment does not reflect this change.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

This is a summary of the Commission's Report and Order, MB Docket No. 03-232 adopted May 19, 2004, and released May 21, 2004. The full text of this Commission decision is available for inspection and copying during normal business hours in the Commission's Reference Center 445 Twelfth Street, SW., Washington, DC 20554. The complete text of this decision may also be purchased from the Commission's duplicating contractor, Qualex International Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.

This is a summary of the Commission's Report and Order, MB Docket No. 04-42, adopted May 19, 2004, and released May 21, 2004. The full text of this Commission decision is available for inspection and copying during regular business hours in the FCC's Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The complete text of this decision may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-863-2893.

This is a synopsis of the Commission's Memorandum Opinion and Order in MM Docket Nos. 96-7, and 96-12, adopted May 25, 2004 and released May 27, 2004. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC. This document may also be purchased from the Commission's duplicating contractors, Best Copy and Printing, Inc. (BCPI), Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC, 20554, Customers may contact BCPI at their Web site: http://www.bcpiweb.com or call 1-800-378-3160.

On July 31, 2003, the Research and Special Programs Administration (RSPA, we) published a final rule under Docket HM-215E (68 FR 44992) revising the HMR to maintain alignment with recent changes to corresponding provisions in international standards. Changes to the International Maritime Dangerous Goods Code (IMDG Code), the International Civil Aviation Organization's Technical Instructions for the Safe Transport of Dangerous Goods by Air (ICAO Technical Instructions), and the United Nations Recommendations on the Transport of Dangerous Goods (UN Recommendations) necessitated amendments to domestic regulations to provide consistency and facilitate the transport of hazardous materials in international commerce. This final rule responds to five appeals and certain comments concerning amendments in the July 31, 2003 final rule. This rulemaking also corrects various errors made during the development of the rule and the printing process. Because the amendments adopted herein impose no new regulatory burden on any person, these amendments are being made effective without the usual 30-day delay following publication.

Five organizations submitted appeals to the July 31, 2003 final rule. The appellants are the American Trucking Associations (ATA), Arch Chemicals, Inc., Argonne National Laboratory (Argonne), Geo Specialty Chemicals (GEO), and the Truckload Carriers Association (TCA).

• “Hydrazine aqueous solution, UN2030,” § 172.101, Hazardous Materials Table (HMT).

In the July 31, 2003 final rule, we revised the HMT entry “Hydrazine, aqueous solution, with more than 37% hydrazine, by mass,” UN2030 by adding Packing Group I and III entries to the previously existing Packing Group II entry. In addition, the Packing Group II special provisions in Column (7) were revised. During the printing process, the bulk special provisions, with the exception of Special Provision 151, were inadvertently omitted in the HMT, in both the NPRM and the final rule. After publication of the final rule, the error was brought to our attention through an appeal submitted by Arch Chemicals. The appellant requested the addition of the following special provisions for “Hydrazine, aqueous solution, with more than 37% hydrazine, by mass,” UN2030: Packing Group I, B16, B53, T10, TP2, TP13; Packing Group II, B16, B53, IB2, T7, TP2, TP13; and Packing Group III, B16, B53, IB3, T4, TP1. We agree with the appellant, and these printing omissions are being corrected in this final rule.

Arch Chemicals also requested that we submit a position paper to the UN Transport of Dangerous Goods Sub-Committee requesting revision of the UN Recommendations to align the T Codes assigned to “Hydrazine, aqueous solution,” UN2030 with the HMR T Codes. We submitted a position paper for consideration at the 24th session to amend the T codes as adopted in this final rule; however, a decision on the paper was deferred until the 25th session, which will be held in July 2004.

• Packaging Type Indication on Shipping Papers, § 172.202. In the July 31, 2003 final rule, we revised § 172.202(a)(6) by requiring the packaging type to be indicated on shipping papers by either the generic type (for example, “drum”) or the specification number type (for example, “UN 1A1”). We received appeals from ATA and TCA requesting that we revise this amendment by requiring the generic packaging type to be mandatory for indication on shipping papers and for the specification number packaging type to be optionally included in parentheses following the generic packaging type. For example, “4 drums” or “4 drums (UN1A1).” The Dangerous Goods Advisory Council (DGAC) also submitted a comment supporting this requested revision.

The appellants state that the additional training that would be required to teach drivers to recognize specification number types would be costly and not practicable for the trucking industry and that the specification number types are not as easily recognizable as the generic type descriptions.

In developing the final rule, our intent was to provide flexibility by authorizing the use of either type of packaging description. We did not intend to impose additional burdens for training employees to recognize the specification numbers for the types of packagings. After reviewing this information, we agree with the appellants and conclude that the more easily recognizable generic type descriptions are also valuable to emergency responders who may not be familiar with packaging specification numbers. We are not, however, specifying that the specification number packaging type must be in parentheses following the generic description as requested by the appellants. To provide for flexibility and for persons who are currently including the specification number without the parentheses, we are providing for the specification number to be included in the description without imposing a format (for example, “12 drums,” “12 1H1 drums,” or “12 drums (1H1).” Based on the merits of the information brought to our attention through the appeals, we are revising paragraph (a)(6) to require a generic packaging type on shipping papers and to allow the specification number packaging type to be included in the description.

• Dicumyl Peroxide, §§ 172.102 and 173.225.

We received an appeal from GEO requesting revisions to the Dicumyl peroxide, UN3110 entries in the § 172.102 Special Provision IB52 Table and the § 173.225 Organic Peroxide Table. In the Special Provision IB52 Table, the appellant requested that we add the previously authorized rigid plastic (31H1) and composite (31HA1) intermediate bulk containers (IBCs). The two types of IBCs were contained in Special Provision IB52, but were inadvertently omitted during the printing of the final rule. We are making the correction as requested.

In the § 173.225 Organic Peroxide Table, GEO questioned the accuracy of the Diluent B column entry, “≤48,” and suggested that it belonged in the Diluent I column for inert solids. We agree and are correcting the error as requested.

• Lithium Batteries and Cells, § 173.185.

We received an appeal from Argonne requesting a revision to § 173.185 to clarify that, except for passenger-carrying aircraft, large batteries packaged in accordance with paragraph (k) in that section may be transported by all other modes of transportation, and that for transport by cargo aircraft, the packaging must be approved by the Associate Administrator. The appellant stated that the wording of the last sentence in paragraph (k) appears to limit the packaging provisions to use by cargo aircraft only and fails to provide for use by highway, rail or vessel. We agree that the sentence is incorrect and are editorially revising the paragraph as requested.

Section 171.14. Paragraphs (d), (d)(1), and (d)(6) are revised as follows:

• Paragraphs (d) and (d)(1) are revised to reflect the publication of the amendments in this final rule.

• Paragraph (d)(6) is revised to clarify that it is the requirement in § 172.202(a)(6) specific to the number and type of packages on shipping papers that will become mandatory on October 1, 2007. In the July 31, 2003 final rule, we referred to the correct paragraph (a)(6), but used the wording “total quantity,” which was in error.

Section 172.101 Hazardous Materials Table (HMT). We are correcting entries in the HMT as follows:

• The entry “Air bag inflators, or Air bag modules, or Seat-belt pretensioners,” UN3268 is revised by correcting the Column (7) Special Provision entry “166” to read “160,” as discussed in the preamble in the July 31, 2003 final rule.

• The entry “N,N-Dimethylcyclo-hexylamine,” UN2264 is corrected to read “N,N-Dimethylcyclohexylamine.” The correction appears as a “Remove/Add” in this rulemaking.

• The entry “Ethylene,” UN1962 is revised to correctly align Columns (7) through (10B).

• The entry “Hydrazine, aqueous solution, with more than 37% hydrazine, by mass, ” UN2030 is corrected by adding the bulk special provisions for the three Packing Group entries. See the preamble discussion under “Discussion and Resolution of Appeals” in this final rule.

• For the Packing Group I entry for “Hydrocarbons, liquid, n.o.s,” UN3295, Column (7) is corrected by adding Special Provision 144. During the printing process “144” was inadvertently omitted. Special Provision 144 was added to the entry in a final rule published April 18, 2003, under RSPA Docket No. 98-3554 (HM-213) (68 FR 19275).

• For the entry “Organophosphorus compound, toxic, flammable, n.o.s.,” UN3279, Columns (9A) and (9B) are corrected to read “1 L” and “30 L,” respectively. The typographical errors in the two quantity limitations occurred during the printing process.

• The entry “Self-reactive liquid type F,” UN3229 is revised by correcting the Column (8B) non-bulk packaging authorization section number “114” to read “224.”

• The entry “1,1,1-Trifluoroethane, compressed or Refrigerant gas, R143a,” UN2035 is corrected by removing the word “compressed.” The correction appears as a “Remove/Add” in this rulemaking. In the July 31, 2003 final rule (page 44995 of the Federal Register ), we revised certain proper shipping names for compressed and liquefied gases that were incorporated into the Twelfth Edition of the UN Recommendations and during the process we overlooked “1,1,1-Trifluoroethane.” For additional preamble discussion see § 173.115 (page 45004) of the July 31, 2003 Federal Register . Additionally, see § 171.14(d)(5) (page 44994) for continued use authorization for including the word “compressed” until October 1, 2007.

Section 172.102, Special Provisions 15, 132 and IB52. We are making corrections to Special Provisions 15 and 132, and to the Special Provision IB52 Table.

In the July 31, 2003 final rule, we revised Special Provision 15 for consistency with packagings authorized for limited quantity exceptions. The special provision is assigned to “Chemical kits,” UN3316 and “First aid kits,” UN3316. We also relocated the authorized packagings to § 173.161. After publication of the final rule, we received comments that the third and fourth sentences in the special provision conflict with the provisions in § 173.161. We agree that the sentences are in error and are removing them in this final rule.

In the July 31, 2003 final rule, we revised Special Provision 132 by adding the criteria for use of the special provision. In a subsequent minor editorial final rule (HM-189U) published on December 31, 2003, the special provision text in effect prior to the July 31, 2003 final rule was inadvertently added back into the regulatory text. We are correcting the error by reinstating the special provision as printed in the July 31, 2003 final rule.

For discussion regarding Special Provision IB52, see the preamble discussion on Dicumyl peroxide under “Discussion and Resolution of Appeals” in this final rule.

Section 172.202(a)(2). We revised paragraph (a)(2) in the July 31, 2003 final rule to require the subsidiary hazard class(es) or subsidiary division number(s) to be entered in parentheses following the primary hazard class or division number on shipping papers. The provision authorizing the hazard class names (for example, “oxidizer”) to be entered following the numerical hazard class or following the basic description was removed. We received a comment from Wilbur-Ellis requesting that we reinstate the provision as an option. Wilbur-Ellis stated that the hazard class names are valuable from a safety perspective because they more easily identify the hazard of the material for certain emergency response personnel. We agree and, with the addition of new paragraph (a)(2)(iii) and minor reformatting of paragraph (a)(2), we are reinstating the provision into the HMR as an option for domestic transport.

Section 172.202(a)(6). See earlier preamble discussion on packaging type indication on shipping papers under “Discussion and Resolution of Appeals” in this final rule.

Section 173.185. See earlier preamble discussion on lithium batteries and cells, under “Discussion and Resolution of Appeals” in this final rule.

Section 173.225. See earlier preamble discussion on Dicumyl peroxide under “Discussion and Resolution of Appeals” in this final rule.

In the July 31, 2003 final rule, we revised paragraph (c)(1)(ii) to clarify the information that the packaging manufacturer and each subsequent distributor are required to provide to packaging users. After publication of the final rule, we received a comment from DGAC requesting the removal of references to §§ 173.24 and 173.27. DGAC stated that the revision imposes an unreasonable and impossible burden on packaging manufacturers by requiring them to ensure that the packaging meets the general requirements in §§ 173.24 and 173.27. DGAC stated that such requirements are the responsibility of the offeror as stated in §§ 173.24 and 173.27. Upon further consideration, we agree that the references to §§ 173.24 and 173.27 may impose an unintended and unwarranted burden on the packaging manufacturer and imply that responsibility for compliance with the requirements of these sections rests with the packaging manufacturer rather than the shipper. The requirements in §§ 173.24, 173.24a and 173.27 are the responsibility of the shipper. A package that meets the performance requirements of Part 178 does not necessarily meet the general requirements of Part 173. The shipper must undertake additional steps to ensure that a hazardous material packaging that is purchased from a packaging manufacturer meets all of the applicable requirements. Therefore, on our own initiative we are removing the phrase “and the general packaging requirements in §§ 173.24 and 173.27 of this subchapter” from the paragraph. To the extent that a packaging manufacturer represents a packaging as meeting a requirement of § 173.24, § 173.27, or any other provision of the HMR, it should be noted that under the provisions of § 171.2(c), the packaging manufacturer is held responsible for any misrepresentation.

Additionally, we are retaining the last sentence which makes reference to the pressure differential requirements in § 173.27. As discussed in the July 31, 2003 final rule, we agree that the shipper must determine that the package is suitable for the intended hazardous material to be transported; however, the requirement for the manufacturer to provide guidance to assist the shipper in ensuring that the packaging meets the relevant air transport pressure differential requirement is not beyond the capability of the packaging manufacturer (see preamble discussion on page 45007 of the July 31, 2003 final rule).

This final rule is not a significant regulatory action under section 3(f) of Executive Order 12866 and was not reviewed by the Office of Management and Budget. This final rule is a non-significant rule under the Regulatory Policies and Procedures of the Department of Transportation [44 FR 11034]. The revisions adopted in this final rule do not alter the cost-benefit analysis and conclusions contained in the Regulatory Evaluation prepared for the July 31, 2003 final rule. The Regulatory Evaluation is available for review in the public docket for this rulemaking.

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

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

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

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

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

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

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

This final rule addresses covered subject items (1), (2), and (3) above and would preempt State, local, and Indian tribe requirements not meeting the “substantively the same” standard. Federal hazardous materials transportation law provides at section 5125(b)(2) that, if DOT issues a regulation concerning any of the covered subjects, DOT must determine and publish in the Federal Register the effective date of Federal preemption. The effective date may not be earlier than the 90th day following the date of issuance of this final rule and not later than two years after the date of issuance. The effective date of Federal preemption is September 20, 2004.

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

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires an agency to review regulations to assess their impact on small entities, unless the agency determines that a rule is not expected to have a significant impact on a substantial number of small entities. This final rule applies to offerors and carriers of hazardous materials, some of whom are small entities, such as chemical users and suppliers, packaging manufacturers, distributors, and battery manufacturers. Based on comments and appeals to the July 31, 2003 final rule that we received from industry and associations representing large and small entities, this final rule revises certain requirements in the HMR to correct or clarify provisions, and is generally intended to provide relief to shippers, carriers and packaging manufacturers, including small entities. Therefore, I certify that these amendments will not have a significant economic impact on a substantial number of small entities.

Need for the final rule. This final rule addresses appeals to a final rule published July 31, 2003, which harmonized certain requirements in the HMR with recently adopted international transportation standards. RPSA's rulemaking procedures permit affected persons to appeal agency final rules if compliance with the final rule is not practical, reasonable, or in the public interest. 49 CFR 106.115.

Description of Actions. In this final rule, we are correcting a number of the provisions adopted in the July 31, 2003 final rule. The corrections are necessary to address inadvertent errors and omissions and printing mistakes and to clarify certain of the provisions adopted in the July 31, 2003 final rule. Further, we are permitting shippers additional flexibility in preparing shipping papers by reinstating a provision that permits inclusion of hazard class names following the basic shipping description. As well, we are revising the provision for inclusion of package type on a shipping paper to permit use of generic names for package types while permitting inclusion of the packaging specification as an option. Finally, we are clarifying that responsibility for compliance with the general packaging requirements in §§ 173.24 and 173.37 rests with the shipper, not the packaging manufacturer.

Identification of potentially affected small entities. Businesses likely to be affected by the final rule are persons who offer for transportation or transport hazardous materials in commerce, including hazardous materials manufacturers and distributors; transportation companies, including air, highway, rail, and vessel carriers; hazardous waste generators; and container and packaging manufacturers.

Unless alternative definitions have been established by the agency in consultation with the Small Business Administration (SBA), the definition of “small business” has the same meaning as under the Small Business Act. Since no such special definition has been established, we employ the thresholds published by SBA for establishments that will be subject to this final rule. Based on data for 1997 compiled by the U.S. Census Bureau, it appears that upwards of 95 percent of persons affected by this final rule are small businesses. These entities would incur no increased costs to comply with the provisions of this final rule. Rather, the final rule permits these entities additional flexibility to comply with its requirements.

Reporting and recordkeeping requirements. This final rule includes no new requirements for reporting or recordkeeping.

Related Federal rules and regulations. There are no related Federal rules or regulations governing the transportation of hazardous materials in domestic or international commerce.

Alternate proposals for small businesses. The Regulatory Flexibility Act directs agencies to establish exceptions and differing compliance standards for small businesses, where it is possible to do so and still meet the objectives of applicable regulatory statutes. In the case of hazardous materials transportation, it is not possible to establish exceptions or differing standards and still accomplish our safety objectives.

This final rule was developed under the assumption that small businesses make up the overwhelming majority of entities that will be subject to its provisions. Thus, the final rule provides additional flexibility for compliance with its provisions, including alternatives for compliance and extended compliance periods.

Conclusion. We conclude that while this final rule applies to a substantial number of small entities, there will not be a significant economic impact on those small entities. There are no new compliance costs associated with the proposals in this final rule.

This final rule has been developed in accordance with Executive Order 13272 (“Proper Consideration of Small Entities in Agency Rulemaking”) and DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act to ensure that potential impacts of draft rules on small entities are properly considered.

This final rule does not impose new information collection requirements.

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

This final rule does not impose unfunded mandates under the Unfunded Mandates Reform Act of 1995. It does not result in costs of $120.7 million or more to either State, local or tribal governments, in the aggregate, or to the private sector, and is the least burdensome alternative that achieves the objective of the rule.

The National Environmental Policy Act of 1969 (NEPA) requires Federal agencies to consider the consequences of major Federal actions and prepare a detailed statement on actions significantly affecting the quality of the human environment. The environmental assessment prepared for the July 31, 2003 final rule can be found in the public docket for this rulemaking. The revisions adopted in this final rule do not alter the conclusions contained in the environmental assessment. There are no significant environmental impacts associated with this final rule.

On April 6, 2004, the National Highway Traffic Safety Administration (NHTSA) published a final rule extending anti-theft parts marking requirements pursuant to the Anti Car Theft Act of 1992 and subsequent finding by the Attorney General. The final rule extending parts marking requirements applies to all passenger cars; multipurpose passenger vehicles with a gross vehicle weight rating (GVWR) of 6,000 pounds or less; and certain light trucks with a GVWR of 6,000 pounds or less. A portion of the preamble and the regulatory text require additional text to clarify that the final rule applies to all passenger cars regardless of GVWR.

In addition, the final rule contained several typographical errors and outdated citations of authority. NHTSA is publishing this correcting amendment to remedy these errors.

This amendment to the final rule is effective September 1, 2006. Making this clarification and remedying these errors will not impose any additional substantive requirements or burdens on manufacturers. Therefore, NHTSA finds for good cause that notice and opportunity for comment on these amendments are not necessary.

A final rule that implemented the measures contained in Amendment 66 was published in the Federal Register on April 30, 2004 (69 FR 23681), and most of the measures became effective June 1, 2004. On May 18, 2004, OMB approved the reporting requirements submitted under OMB control number 0648-0272 (IFQ Program) that are contained in the final rule implementing Amendment 66. This rule makes the following requirements effective: a Community Quota Entity (CQE) Annual Report (§ 679.5(l)(8)); Approval of Transfer from Governing Body (§ 679.41(l)(4)); Application to Become a Community Quota Entity (CQE) (§ 679.41(l)(3)); Application for Transfer of Quota Share (QS) to CQE (§ 679.41(l)(4)); and Community Petition to Form Governing Body (§ 679.41(l)(3)(v)(E)).

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

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

This rule contains collection-of-information requirements subject to the PRA that have been approved by OMB under control number 0648-0272. The estimated time per response to submit a CQE annual report is 40 hours; Approval of Transfer from Governing Body is 30 minutes; Application to become a CQE is 200 hours; Application for Transfer of QS to CQE is 2 hours; and Community petition to form governing body is 10 hours.