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

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing orders now in effect, California nectarine and peach handlers are subject to assessments. Funds to administer the orders are derived from such assessments. It is intended that the assessment rates as issued herein will be applicable to all assessable nectarines and peaches beginning on March 1, 2004, and continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This rule continues in effect the action that decreased the assessment rates established for the NAC for the 2004-05 and subsequent fiscal periods from $0.20 to $0.195 per 25-pound container or container equivalent of nectarines and for the PCC for the 2004-05 and subsequent fiscal periods from $0.20 to $0.19 per 25-pound container or container equivalent of peaches.

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

The NAC recommended, for the 2004-05 fiscal period, and USDA approved, an assessment rate of $0.195 that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the committee or other information available to USDA.

The NAC met on April 28, 2004, and unanimously recommended 2004-05 fiscal period expenditures of $5,162,866 and an assessment rate of $0.195 per 25-pound container or container equivalent of nectarines. In comparison, last year's expenditures were initially budgeted at $4,173,438. The assessment rate of $0.195 is $0.005 lower than the rate previously in effect.

After the 2003-04 fiscal period budget was formulated and recommended to USDA in May 2003, the committee received one Federal and two State grants which affected both committee income and expenditures. The NAC also used reserve funds to conduct research on the development of a commercial nectarine beverage. The NAC subsequently unanimously recommended an amended budget for the 2003-04 fiscal period. Under this amended budget, the Federal grant of $533,921 and a State grant of $200,557 were applied to the export market development program, and a State grant of $3,667 was applied to the research program, along with $45,000 of reserve funds.

The assessment rate decrease for the 2004-05 fiscal period was recommended because excess funds from the 2003-04 fiscal period totaling $786,521 were carried into 2004-05. This was substantially higher than what the NAC deemed satisfactory. Moreover, the 2004 nectarine crop was expected to be larger than last year's crop. The lower assessment rate also addressed the needs of nectarine growers and handlers who have been affected by low commodity prices for the last few years.

Total income received for the 2004-05 fiscal period is projected to be approximately $5,800,677. Decreasing the assessment rate from $0.20 to $0.195 per 25-pound container is expected to provide about $4,199,453 in assessment revenue, and along with other income, to allow the NAC to start the 2005 season with about $499,811 in reserve funds.

The major expenditures recommended by the NAC for the 2004-05 fiscal period include $219,872 for salaries and benefits, $146,613 for general expenses and industry activities, $1,153,676 for inspection, $208,568 for research, and $3,161,852 for domestic and export market development programs.

Budgeted expenses for these items in the 2003-04 fiscal period were initially estimated to be $226,121 for salaries and benefits, $142,612 for general expenses and industry activities, $1,210,220 for inspection, $138,929 for research, and $2,263,061 for domestic and export market development programs.

The major expenditures under the amended 2003-04 fiscal period budget include $226,121 for salaries and benefits, $142,612 for general expenses and industry activities, $1,210,220 for inspection, $187,596 for research, and $2,997,539 for domestic and export market development programs.

The 2004-05 fiscal period NAC assessment rate was derived after considering the total NAC expenses of $5,162,866; the initial estimated assessable nectarines of 22,245,000 twenty-five-pound containers or container equivalents; the estimated income from other sources, such as interest and grants; and the need for an adequate financial reserve to carry the NAC into the 2005 season. The committee has determined that a carry-in of $400,000 is historically necessary to meet its obligations in the early part of each season, before handler assessments are billed and received. To meet these goals, the NAC recommended an assessment rate of $0.195 per 25-pound container or container equivalent. According to the committee, that assessment rate will result in an adequate carry-in, while maintaining reserves within the maximum permitted by the order (approximately one year's expenses; § 916.42).

The PCC recommended, for the 2004-05 fiscal period, and USDA approved, an assessment rate of $0.19 that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the committee or other information available to USDA.

The PCC also met on April 28, 2004, and recommended 2004-05 fiscal period expenditures of $5,178,002 and an assessment rate of $0.19 per 25-pound container or container equivalent of peaches. In comparison, last year's expenditures were initially budgeted at $4,086,316. The assessment rate of $0.19 is $0.01 lower than the rate previously in effect.

After the 2003-04 fiscal period budget was formulated and recommended to USDA in May 2003, the PCC received one Federal and two State grants which affected both committee income and expenditures. The committee subsequently unanimously recommended an amended budget for the 2003-04 fiscal period on June 23, 2004. Under this amended budget, the Federal grant of $488,845 and a State grant of $149,667 were applied to the export market development program, and a State grant of $3,667 was applied to the cultural research program.

The decrease for the 2004-05 fiscal period was recommended because excess funds from 2003-04 totaling $915,375 were carried into the 2004-05 fiscal period. This is substantially higher than needed by the PCC to cover early season expenses. In addition, the 2004 peach crop was expected to be higher than last year's crop. The lower assessment rate also addressed the needs of peach growers and handlers who have been affected by low commodity prices for the last few years.

Total income received for the 2004-05 fiscal period was projected to be approximately $5,883,385. Decreasing the assessment rate from $0.20 to $0.19 per 25-pound container was expected to provide about $4,153,654 assessment revenue, and along with other income, to allow the PCC to start the 2005 season with about $567,383 in reserve funds.

The major expenditures recommended by the PCC for the 2004-05 fiscal period include $219,872 for salaries and benefits, $148,598 for general expenses and industry activities, $1,240,520 for inspection, $208,570 for research, and $3,188,457 for domestic and export market development programs.

Budgeted expenditures for these items in the 2003-04 fiscal period were initially estimated to be $226,121 for salaries and benefits, $144,743 for general expenses and industry activities, $1,173,480 for inspection, $138,930 for research, and $2,211,346 for domestic and export market development programs.

The major expenditures under the amended budget for 2003-04 fiscal period include $226,121 for salaries and benefits, $144,743 for general expenses and industry activities, $1,173,480 for inspection, $142,597 for research, and $2,849,858 for domestic and export market development programs.

The 2004-05 fiscal period PCC assessment rate was derived after considering the total PCC expenses of $5,178,002; the estimated assessable peaches of 22,601,000 twenty-five-pound container or container equivalents; the estimated income from other sources, such as interest and grants; and the need for an adequate financial reserve to carry the PCC into the 2005 season. The committee has determined that a carry-in of $500,000 is historically necessary to meet its obligations in the early part of each season, before handler assessments are billed and received.

To meet these goals, the PCC recommended an assessment rate of $0.19 per 25-pound container or container equivalent. According to the committee, that assessment rate will result in an adequate carry-in, while maintaining reserves within the maximum permitted by the order (one year's expenses; § 917.38).

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

Although these assessment rates are effective for an indefinite period, the committees will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rates. The dates and times of committee meetings are available from the committees' website or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate the committees' recommendations and other available information to determine whether modification of the assessment rate for each committee is needed. Further rulemaking will be undertaken as necessary. The committee's 2004-05 budget and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

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

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

There are approximately 250 California nectarine and peach handlers subject to regulation under the orders covering nectarines and peaches grown in California, and about 1,800 producers of these fruits in California. The Small Business Administration [13 CFR 121.201] defines small agricultural service firms as those whose annual receipts are less than $5,000,000. The Small Business Administration also defines small agricultural producers as those having annual receipts of less than $750,000. A majority of these handlers and producers may be classified as small entities.

The committees' staff has estimated that there are less than 20 packers in the industry who could be defined as other than small entities. In the 2003 season, the average handler price received was $7.00 per container or container equivalent of nectarines or peaches. A handler would have to ship at least 714,286 containers to have annual receipts of $5,000,000. Given data on shipments maintained by the committees' staff and the average handler price received during the 2003 season, the committees' staff estimates that small packers represent approximately 94 percent of all the packers within the industry.

The committees' staff has also estimated that less than 20 percent of the producers in the industry could be defined as other than small entities. In the 2003 season, the average producer price received was $4.00 per container or container equivalent for nectarines and peaches. A producer would have to produce at least 187,500 containers of nectarines and peaches to have annual receipts of $750,000. Given data maintained by the committees' staff and the average producer price received during the 2003 season, the committees' staff estimates that small producers represent more than 80 percent of the producers within the industry.

The nectarine and peach marketing orders provide authority for the committees, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the programs. The members of the NAC and PCC are producers of California nectarines and peaches, respectively.

This rule continues in effect the action that decreased the assessment rates established for the NAC for the 2004-05 and subsequent fiscal periods from $0.20 to $0.195 per 25-pound container or container equivalent of nectarines and for the PCC for the 2004-05 and subsequent fiscal periods from $0.20 to $0.19 per 25-pound container or container equivalent of peaches.

The NAC recommended 2004-05 fiscal period expenditures of $5,162,866 for nectarines and an assessment rate of $0.195 per 25-pound container or container equivalent of nectarines. The assessment rate of $0.195 is $0.005 lower than the previous rate. The PCC recommended expenditures of $5,178,002 for peaches and an assessment rate of $0.19 per 25-pound container or container equivalent of peaches. The assessment rate of $0.19 is $0.01 lower than the previous rate.

The quantity of assessable nectarines for the 2004-05 fiscal period was estimated at 22,245,000 twenty-five-pound container or container equivalents. Thus, the $0.195 rate was expected to provide $4,337,775 in assessment income. Income derived from handler assessments and other sources will be adequate to cover budgeted expenses and permit an adequate reserve.

The NAC met on April 28, 2004, and recommended 2004-05 fiscal period expenditures of $5,162,866 and an assessment rate of $0.195 per 25-pound container or container equivalent of nectarines. In comparison, last year's expenditures were initially budgeted at $4,173,438. The assessment rate of $0.195 is $0.005 lower than the rate previously in effect.

The major expenditures recommended by the NAC for the 2004-05 fiscal period include $219,872 for salaries and benefits, $146,613 for general expenses and industry activities, $1,153,676 for inspection, $208,568 for research, and $3,161,852 for domestic and export market development programs.

Budgeted expenses for these items in the 2003-04 fiscal period were initially estimated to be $226,121 for salaries and benefits, $142,612 for general expenses and industry activities, $1,210,220 for inspection, $138,929 for research, and $2,263,061 for domestic and export market development programs.

After the 2003-04 fiscal period budget was formulated and recommended to USDA in May 2003, the committee received one Federal and two State grants which affected both committee income and expenditures. The NAC also conducted research to test a commercial nectarine drink, using reserve funds. The committee subsequently unanimously recommended an amended budget for the 2003-04 fiscal period. Under this amended budget, the Federal grant of $533,921 and a State grant of $200,557 were applied to the export marketing development program, and a State grant of $3,667 was applied to the research program, along with $45,000 from the committee's reserves for the nectarine drink.

The major expenditures under the 2003-04 fiscal period amended budget include $226,121 for salaries and benefits, $142,612 for general expenses and industry activities, $1,210,220 for inspection, $187,596 for research, and $2,997,539 for domestic and export market development programs.

The lower assessment rate is possible because of the $786,521 in excess funds carried into the 2004-05 fiscal period. This will provide adequate funds at the beginning of the 2005 season before assessment collections begin. A financial reserve carry-in is desirable because major expense outlays for seasonal promotions and other activities occur before assessments are received.

The 2004-05 fiscal period assessment rate for the NAC was derived after considering the total NAC expenses of $5,162,866; the estimated assessable nectarines of 22,245,000 twenty-five-pound containers or container equivalents; the estimated income from other sources, such as interest and grants; and the need for an adequate financial reserve to carry the NAC into the 2005 season.

To meet this goal, the NAC recommended an assessment rate of $0.195 per 25-pound container or container equivalent. According to the committee, that assessment rate will result in an adequate carry-in, while carrying reserves within the maximum permitted by the order (one year's expenses; § 916.42).

The quantity of assessable peaches for the 2004-05 fiscal period is estimated at 22,601,000 twenty-five-pound containers or container equivalents. Thus, the $0.19 rate should provide $4,294,190 in assessment income. Income derived from handler assessments and other sources will be adequate to cover budgeted expenses and permit a small increase in reserves.

The PCC also met on April 28, 2004, and recommended 2004-05 fiscal period expenditures of $5,178,002 and an assessment rate of $0.19 per 25-pound container or container equivalent of peaches. In comparison, last year's expenditures were initially budgeted at $4,086,316. The assessment rate of $0.19 is $0.01 lower than the rate currently in effect.

The major expenditures recommended by the PCC for the 2004-05 fiscal period include $219,872 for salaries and benefits, $148,598 for general expenses and industry activities, $1,240,520 for inspection, $208,570 for research, and $3,188,457 for domestic and export market development programs.

The major expenditures initially recommended by the PCC for the 2003-04 fiscal period include $226,121 for salaries and benefits, $144,743 for general expenses and industry activities, $1,173,480 for inspection, $138,930 for research, and $2,211,346 for domestic and export market development programs.

After the 2003-04 fiscal period budget was formulated and recommended to USDA in May 2003, the committee received one Federal and two State grants which affected both committee income and expenditures. The committee subsequently unanimously recommended an amended budget for the 2003-04 fiscal period. Under this amended budget, the Federal grant of $488,845 and a State grant of $149,667 were applied to the export market development, and a State grant of $3,667 was applied to the cultural research program.

The major expenditures under the amended budget for 2003-04 fiscal period include $226,121 for salaries and benefits, $144,743 for general expenses and industry activities, $1,173,480 for inspection, $142,597 for research, and $2,849,858 for domestic and export market development programs.

The lower assessment rate is possible because of the carry-in of $915,375 in excess funds from the 2003-04 fiscal period into the 2004-05 fiscal period. This is substantially higher than the PCC needs for early season expenses before assessment collections begin. A financial reserve carry-in of approximately $500,000 is desirable because major expense outlays for seasonal promotions and other activities occur before assessments are received.

The 2004-05 fiscal period assessment rate for the PCC was derived after considering the total PCC expenses of $5,178,002; the estimated assessable peaches of 22,601,000 twenty-five-pound containers or container equivalents; the estimated income from other sources, such as interest and grants; and the need for an adequate financial reserve to carry the PCC into the 2005 season.

To meet this goal, the PCC recommended an assessment rate of $0.19 per 25-pound container or container equivalent. According to the committee, the assessment rate will result in an adequate carry-in, while keeping reserves within the maximum permitted by the order (one year's expenses; § 917.38).

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

Each of the committees then reviewed the proposed expenses; the total estimated assessable 25-pound containers or container equivalents; and the estimated income from other sources, such as interest income and grants, prior to recommending a final assessment rate. The NAC decided that an assessment rate of $0.195 per 25-pound container or container equivalent will allow it to meet its 2004-05 fiscal period expenses and carry over an operating reserve of about $499,811 which is in line with the committee's financial needs. The PCC decided that an assessment rate of $0.19 per 25-pound container or container equivalent will allow it to meet its 2004-05 fiscal period expenses and carry over an operating reserve of $567,383, which is in line with the committee's financial needs. The committees then unanimously recommended these rates to USDA.

A review of historical and preliminary information pertaining to the upcoming fiscal period indicates that the grower price for the 2004 crop year for nectarines and peaches could range between $4.00 and $6.00 per 25-pound container or container equivalent. Therefore, the estimated assessment revenue for the 2004-05 fiscal period as a percentage of total grower revenue could range between 4.9 percent and 3.2 percent for nectarines, and 4.7 percent and 3.2 percent for peaches.

This action continues in effect the action that decreased the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rates reduces the burden on handlers, and consequently may reduce the burden on producers.

In addition, the committees' meetings were widely publicized throughout the California nectarine and peach industries and all interested persons were invited to attend the meetings and participate in the committees' deliberations on all issues. Like all committee meetings, the April 28, 2004, meetings were public meetings and entities of all sizes were able to express views on this issue. Finally, interested persons were invited to submit information on the regulatory and informational impacts of this action on small businesses.

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

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

An interim final rule concerning this was published in the Federal Register on August 16, 2004 (69 FR 50278). Copies of that rule were also mailed or sent via facsimile to all nectarine and peach handlers. Finally, the interim final rule was made available through the Internet by USDA and the Office of the Federal Register. A 60-day comment period was provided for interested persons to respond to the interim final rule. The comment period ended on October 15, 2004, and no comments were received.

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

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

This rule is issued under Marketing Agreement and Order No. 955, (7 CFR part 955), regulating the handling of Vidalia onions grown in Georgia, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

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

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

This rule changes the assessment collection requirements currently prescribed under the order. This action allows handlers to mail their assessment payments to the Committee office without incurring late payment penalties as long as the payment is postmarked on or before the due date. Assessment payments are due not later than 4 p.m. on the Tuesday following the week in which the shipments were made. This change was unanimously recommended by the Committee at a meeting held on August 12, 2004.

Section 955.42 of the order provides the authority for the formulation of an annual budget of expenses and the collection of assessments from handlers to administer the order. Section 955.42(f) provides the authority to impose a late payment charge or an interest charge or both, on any handler who fails to pay assessments in a timely manner and the authority to establish the time and rate of such charges. Section 955.142 of the order's rules and regulations outlines the procedures for applying interest charges to delinquent assessments. Both handler reports and assessment payments are to be submitted for each week during the fiscal period in which onions are shipped. Currently, handler reports and assessment payments are due at the Committee office not later than 4 p.m. on the Tuesday immediately following the week in which shipments were made.

This rule modifies the requirements under § 955.142 to provide that as long as assessment payments received by mail are postmarked on or before the due date, the payments will be considered to be timely regardless of when they arrive at the Committee office. This change allows handlers the opportunity to mail their assessment payments without risking late payment penalties. This rule makes no change to the date and time handler reports and assessments are due.

Many handlers have been submitting their weekly reports to the Committee via fax in order to have their reports in on time. Assessment checks are usually prepared at the same time and are hand carried to the Committee office or mailed. Checks mailed to the Committee office are often received several days after the date due. This has subjected handlers to an interest charge of one percent per week, beginning the day immediately after the date the assessments were due.

The production area covered under the order encompasses all or parts of twenty counties in Georgia. It is not always cost effective to drive the distance to the Committee office to hand deliver the assessment check to ensure it makes it there on time. Depending on their location in the production area, handlers can be more than 100 miles from the Committee office. Even if the handler is within 20 miles of the Committee office, considering the costs involved, using the mail still represents the most effective method of delivering assessment payments.

In its discussion of this issue, the Committee agreed that handlers should have the option to pay their assessments on time by the use of mail. If a check is postmarked by the required date, the Committee believes that handler should be viewed as paying their assessments in a timely manner.

Therefore, the Committee unanimously voted to change the assessment collection requirements so that assessments received that are postmarked on or before the date they are due will be considered as meeting the deadline and will not be subject to late payment charges.

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

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

There are approximately 145 producers of Vidalia onions in the production area and approximately 110 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts less than $750,000, and small agricultural service firms, which include handlers, are defined as those whose annual receipts are less than $5,000,000.

Based on information from the Georgia Agricultural Statistical Service and Committee data, around 90 percent of Vidalia onion handlers ship under $5,000,000 worth of onions on an annual basis. In addition, based on acreage, production, grower prices reported by the National Agricultural Statistics Service, and the total number of Vidalia onion growers, the average annual grower revenue is approximately $489,000. In view of the foregoing, it can be concluded that the majority of handlers and producers of Vidalia onions may be classified as small entities.

This rule changes the assessment collection requirements currently prescribed under the order. This action allows handlers to mail their assessment payments to the Committee office without incurring late payment charges as long as the payment is postmarked on or before the due date. Assessment payments are due in the Committee office or are to be postmarked by the Tuesday following the week in which the shipments were made. This rule revises the provisions of § 955.142 of the rules and regulations outlining the procedures for applying interest charges to delinquent assessments. Authority for this action is provided for in § 955.42 of the order. This change was unanimously recommended by the Committee at a meeting held on August 12, 2004.

This rule will not result in any additional costs for the handler or the grower. The purpose of this rule is to make it easier for the handler to submit their assessment payments using the mail without having to risk incurring additional costs and interest charges. For many handlers living a long distance from the Committee office, this will save them the time and costs associated with driving into the Committee office in order to pay their assessments on a timely basis. Having better access to the mail for their payment method will provide many handlers with a more cost-effective option. Thus, it is expected that this option will result in an overall cost savings. The savings will be available to all handlers, regardless of size. Also, as the vast majority of handlers are also growers, this action will have a like benefit for both large and small growers.

The Committee did consider the option of making no change in the current regulation. However, Committee members believe that handlers also should be able to mail their assessments in a timely manner. Therefore, this option was rejected.

This rule will not impose any additional reporting or recordkeeping requirements on either small or large Vidalia onion 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. In addition, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

Further, the Committee meeting was widely publicized throughout the Vidalia onion industry and all interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the August 12, 2004, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

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.

This rule invites comments on a change to the assessment collection requirements currently prescribed under the Vidalia onion marketing order. Any comments received will be considered prior to finalization of this rule.

After consideration of all relevant material presented, including the Committee'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 30 days after publication in the Federal Register because: (1) This action represents a relaxation in the regulations currently in effect; (2) the Committee unanimously recommended these changes at a public meeting and interested parties had an opportunity to provide input; and (3) this rule provides a 60-day comment period and any comments received will be considered prior to finalization of this rule.

This rule is issued under Marketing Agreement No. 156 and Order No. 979 (7 CFR part 979), regulating the handling of melons grown in South Texas, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

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

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

This rule suspends, for the remainder of the 2004-05 fiscal period, the minimum grade, quality, maturity, container, pack, inspection, and other related requirements currently prescribed under the South Texas melon order. For the purpose of this rule, these requirements are referred to as handling requirements. It also suspends the assessment collection and all reporting requirements, with the exception of the acreage planting reports, which will continue to be required during the suspension period. This rule will reduce industry expenses, while the industry evaluates whether the marketing order should be continued.

Section 979.52 of the order provides authority for grade, size, maturity, quality, and pack regulations for any variety of melons grown in the production area during any period. Section 979.52 also authorizes the modification, suspension, or termination of regulations issued under the order. Authority to terminate or suspend provisions of the order is specified in § 979.84.

Section 979.60 provides that whenever melons are regulated pursuant to § 979.52, such melons must be inspected by the Federal-State Inspection Service, and certified as meeting the applicable requirements of such regulations. The cost of such inspection and certification is borne by handlers.

Under the order, fresh market shipments of South Texas melons are required to be inspected and are subject to minimum grade, quality, maturity, and container and pack requirements. Section 979.304 Handling regulation (7 CFR part 979.304) states that no handler shall handle cantaloupes grown in the production area unless such cantaloupes meet the requirements specified for U.S. Commercial grade or better, except that not more than 8 percent serious damage including not more than 5 percent decay will be permitted. Honeydew melons must also meet the requirements U.S. Commercial grade except that not more than 20 percent serious damage may be allowed including not more than 10 percent for melons affected by decay. In addition, the combined juice from the edible portion of a sample of honeydews selected at random shall contain not less than 8 percent soluble solids as determined by an approved hand refractometer. Individual containers of honeydew melons may contain no less than 25 percent U.S. Commercial grade or better quality. Individual containers of cantaloupe and honeydew melons may contain not more than double the specified lot tolerance for scorable defects.

The order's container and pack requirements are also specified in § 979.304. Cantaloupes and honeydew melons must be packed in fiberboard cartons of specified dimensions. Each carton must be marked to indicate the count; the name, address, and zip code of the shipper; the name of the product; and the words “Produce of U.S.A.” or “Product of U.S.A.” Additionally, if the carton is not clean and bright in appearance without marks, stains, or other evidence of previous use, the carton must be marked with the words “USED BOX”. Honeydew melons may also be packed in bulk containers with specified dimensions.

Section 979.304 further includes a minimum quantity exemption of 120 pounds per day, and reporting and safeguard requirements for special purpose and experimental shipments. Related provisions appear in the regulations in § 979.106 Registered handlers; § 979.152 Handling of culls; and § 979.155 Safeguards.

The Committee meets prior to and during each season to consider recommendations for modification, suspension, or termination of the regulatory requirements that have been issued on a continuing basis for South Texas melons. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA reviews Committee recommendations and information submitted by the Committee and other available information, and determines whether modification, suspension, or termination of the regulatory requirements would tend to effectuate the declared policy of the Act.

At its September 16, 2004, meeting, the Committee unanimously recommended suspending, for the 2004-2005 fiscal period, the handling, assessment collection, and all reporting requirements, except for the acreage planting reporting requirement. The 2004-05 fiscal period began October 1, 2004, and ends September 30, 2005.

The objective of the handling and inspection requirements is to ensure that only acceptable quality cantaloupe and honeydew melons enter fresh market channels, thereby ensuring consumer satisfaction, increasing sales, and improving returns to growers. While the industry continues to believe that quality is an important factor in maintaining sales, the Committee believes that the cost of inspection and certification (mandated when minimum requirements are in effect) may exceed the benefits derived, especially in view of reduced melon acreage and yields in recent years.

The South Texas cantaloupe and honeydew melon industry has been shrinking due to the inability to provide dependable supplies because of adverse weather conditions, a lack of success in breeding improved quality melons buyers desire, and intense foreign and domestic competition. South Texas historically had enjoyed a marketing window of approximately six weeks beginning about May 1 each season. That window has steadily eroded in recent years due to strong competition and quality problems with Texas melons. As a result, acreage has decreased dramatically from a high of 27,463 acres in 1987 to 4,780 in 2004. The number of producers and handlers also has declined.

The Committee recommended suspending the regulations and assessment collections for one fiscal period in hopes that new plants might be developed and help revive the industry. Some in the industry believe that the order is no longer needed. The suspensions are designed to decrease handler costs, while the industry evaluates whether the marketing order should be continued.

Underlying economics for the South Texas melon industry do not justify continuing the regulations for 2004-05. Too little revenue can be generated for an effective marketing and promotion program, and buyer demands have superseded the regulations in dictating quality requirements. Buyers have been requesting better quality melons.

This rule will enable handlers to ship melons without regard to the minimum grade, quality, maturity, container, pack, inspection, and related requirements for the 2004-2005 fiscal period. It will decrease industry expenses associated with inspection and assessments. This rule will not restrict handlers from seeking inspection on a voluntary basis.

Consistent with the temporary suspension of § 979.304, this rule also suspends § 979.106, § 979.152, and § 979.155 of the rules and regulations in effect under the order for the 2004-2005. Section 979.106 provides for the registration of handlers, § 979.152 details procedures for the handling of cull melons, and § 979.155 provides safeguard requirements for special purpose shipments and establishes reporting and recordkeeping requirements when such exemptions are in place.

In addition, this rule also suspends § 979.219 requiring that an assessment rate of $0.09 per carton of melons be collected from South Texas melon handlers. Consistent with suspension of § 979.219, § 979.112 specifying late payment charges on delinquent assessments is also suspended. Authorization to assess melon handlers enables the Committee to incur expenses that are necessary to administer the marketing order. With the suspension of handling, inspection, and assessment requirements, a limited Committee budget will be needed for program administration and the collection of the acreage planting reports.

For the period of the suspension, the Committee recommended a reduced budget of $70,959 to cover anticipated expenses. Adequate funds to cover these expenses are currently in the Committee's reserves.

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

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

There are approximately 16 handlers of South Texas melons who are subject to regulation under the marketing order and approximately 29 melon growers in the regulated area. Small agricultural service firms are defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $5,000,000, and small agricultural growers are defined as those having annual receipts of less than $750,000.

Most of the handlers are vertically integrated corporations involved in growing, shipping, and marketing melons. For the 2003-04 marketing year, the industry's 16 handlers shipped melons produced on 4,780 acres with the average and median volume handled being 89,012 and 10,655 containers, respectively. In terms of production value, total revenue for the 16 handlers was estimated to be $12,175,919, with the average and median revenues being $760,996 and $91,094, respectively.

The South Texas melon industry is characterized by growers and handlers whose farming operations generally involve more than one commodity, and whose income from farming operations is not exclusively dependent on the production of melons. Alternative crops provide an opportunity to utilize many of the same facilities and equipment not in use when the melon production season is complete. For this reason, typical melon growers and handlers either double-crop melons during other times of the year or produce alternative crops, like onions.

Based on the SBA's definition of small entities, the Committee estimates that all of the 16 handlers regulated by the order would be considered small entities if only their spring melon revenues are considered. However, revenues from other productive enterprises might push a number of these handlers above the $5,000,000 annual receipt threshold. Of the 29 growers within the production area, few have sufficient acreage to generate sales in excess of $750,000; therefore, the majority of growers may be classified as small entities.

At its September 16, 2004, meeting, the Committee unanimously recommended suspending, for the 2004-2005 fiscal period, the handling, assessment collection, and all reporting requirements, except for the acreage planting reporting requirement. The Committee requested that the rule be effective for the 2004-05 fiscal period, which began October 1, 2004, and ends September 30, 2005.

The objective of the handling and inspection requirements is to ensure that only acceptable quality cantaloupe and honeydew melons enter fresh market channels, thereby ensuring consumer satisfaction, increasing sales, and improving returns to growers. While the industry continues to believe that quality is an important factor in maintaining sales, the Committee believes that the cost of inspection and certification (mandated when minimum requirements are in effect) may exceed the benefits derived, especially in view of reduced melon acreage and yields in recent years. This results in reduced melon shipments and reduced assessment income.

The South Texas cantaloupe and honeydew melon industry has been shrinking due to the inability to provide dependable supplies because of adverse weather conditions, a lack of success in breeding improved quality melons buyers desire, and intense foreign and domestic competition. South Texas historically had enjoyed a marketing window of approximately six weeks beginning about May 1 each season. That window has steadily eroded in recent years due to strong competition and quality problems in Texas melons. As a result, acreage has decreased dramatically from a high of 27,463 acres in 1987 to 4,780 in 2004. The number of producers and handlers also has declined. Some in the industry believe that the marketing order is no longer needed.

Underlying economics for the South Texas melon industry do not justify continuing the regulations for 2004-05. Too little assessment revenue can be generated for an effective marketing and promotion program, and buyer demands have superseded the regulations in dictating quality requirements.

This rule will enable handlers to ship melons without regard to the minimum grade, quality, maturity, container, pack, inspection, and related requirements for one fiscal period. It will decrease industry expenses associated with inspection and assessments. This rule will not restrict handlers from seeking inspection on a voluntary basis.

In addition, this rule also suspends § 979.219 requiring that an assessment rate of $0.09 per carton of melons be collected from South Texas melon handlers. Consistent with suspension of § 979.219, § 979.112 specifying late payment charges on delinquent assessments is also suspended. Authorization to assess melon handlers enables the Committee to incur expenses that are necessary to administer the marketing order.

With the suspension of handling, inspection, and assessment requirements, a limited Committee budget will be needed for program administration and collection of acreage planting reports. For the period of the suspension, the Committee recommended a reduced budget of $70,959 to cover anticipated expenses. Adequate funds to cover these expenses are currently in the Committee's reserves.

The Committee anticipates that this rule will not negatively impact small businesses. This rule will suspend minimum grade, quality, maturity, container, pack, inspection, assessment collection, some reporting, and other related requirements. Further, this rule will allow handlers and growers the choice to obtain inspection for melons, as needed, thereby reducing costs for the industry. The total cost of inspection and certification for fresh shipments of South Texas melons during the 2003-04 marketing season was $46,000. These costs will not be incurred during the 2004-2005 season.

The suspension of the assessment collection requirements for the 2004-05 season will also result in some cost savings. Assessment collections during the 2003-04 season totaled $102,988. Absent the suspension of § 979.219, assessments collected during the 2004-05 season would have been about $292,840.

The Committee considered suspension of the marketing order, but wished to continue receiving data on plantings for a one-year period before deciding whether the order should be continued.

It is possible that the Committee might recommend that the order be terminated after the 2004-2005 season if conditions do not improve. Some Committee members felt that termination was premature, while others felt the order should be immediately eliminated. The Committee recommended the suspension of regulations for one fiscal period as an orderly and reasonable compromise. This will enable the committee to study the impact of suspension, allow the continued collection of data on acreage projections, and minimize disruption if the Committee chooses to recommend termination after the 2004-2005 fiscal period.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection requirements being suspended by this rule were approved previously by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0178. Suspension of some of the reporting requirements is expected to reduce the reporting burden on small or large South Texas melon handlers by 6.12 hours, and should further reduce industry expenses. During the suspension period, handlers will not have to file the following forms with the Committee: Application for Registered Handler (1.74 burden hours); Certification for Handling Melons for Processing (0.70 burden hours); Relief or Charity Certification for Handling Melons Which Fail to Meet the South Texas Rules and Regulations (0.35 burden hours); Certificate of Privilege (0.83 burden hours); and Special Purpose Shipment (2.50 hours). This rule will not impose any additional reporting or recordkeeping requirements on either small or large melon 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.

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

Further, the Committee's meeting was widely publicized throughout the melon industry and all interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the September 16, 2004, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

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.

This rule invites comments on suspension of the handling, assessment collection, and some reporting regulations currently prescribed under the South Texas melon marketing order. Any comments received will be considered prior to finalization of this rule.

After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that the regulations suspended by this interim final rule, as hereinafter set forth, no longer 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 30 days after publication in the Federal Register because: (1) The rule suspends the current handling, assessment collection, some reporting requirements, and related regulations for South Texas melons for the remainder of the 2004-2005 fiscal period; (2) this rule was recommended by the Committee at an open public meeting and all interested persons had an opportunity to express their views and provide input; (3) South Texas melon handlers are aware of this rule and need no additional time to comply with the relaxed requirements; and (4) this rule provides a 60-day comment period and any comments received will be considered prior to finalization of this rule.

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 has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have a 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 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.

During June 2003—the most recent representative period at the time of the hearing—there were a total of 60,096 dairy producers whose milk was pooled under Federal milk orders. Of the total, 56,818 dairy producers—or about 95 percent—were considered small businesses based on the above criteria. During this same period, there were about 1,622 plants associated with Federal milk orders. Specifically, there were approximately 387 fully regulated plants (of which 143 were small businesses), 92 partially regulated plants (of which 41 were small businesses), 44 producer-handlers (of which 23 were considered small businesses), and 108 exempt plants (of which 98 were considered small businesses). Consequently, 950 of the 1,622 plants meet the definition of a small business.

Total pounds of milk pooled under all Federal milk orders was 10.498 billion for June 2003 which represented 73.5 percent of the milk marketed in the United States during June 2003. Of the 10.498 billion pounds of milk pooled under Federal milk orders during June 2003, 1.78 million pounds—or 1.7 percent—was used to produce evaporated milk and sweetened condensed milk products in consumer-type packages. Additionally, during this same period, total pounds of Class I milk pooled under Federal milk orders was 3.475 billion pounds, which represents 82.3 percent of the milk used in Class I products (mainly fluid milk products) that were sold in the United States.

This final rule implements proposals that reclassify milk used to produce evaporated milk in consumer-type packages or sweetened condensed milk in consumer-type packages from Class III to Class IV in all Federal milk orders. This rule is consistent with the Agricultural Agreement Act of 1937 (Act), which authorizes Federal milk marketing orders. The Act specifies that Federal milk orders classify milk “in accordance with the form for which or purpose for which it is used.”

Currently, the Federal milk order system provides for the uniform classification of milk in provisions that define four classes of use for milk (Class I, Class II, Class III, and Class IV). Each Federal milk order sets minimum prices that processors must pay for milk based on how it is used and computes weighted average or uniform prices that dairy producers receive.

Under the milk classification provisions of all Federal milk orders, Class I consists of those products that are used as beverages (whole milk, low fat milk, skim milk, flavored milk products like chocolate milk, etc.) 1 Class II includes soft or spoonable products such as cottage cheese, sour cream, ice cream, yogurt, and milk that is used in the manufacturing of other food products. Class III includes all skim milk and butterfat used to make hard cheeses—types that may be grated, shredded, or crumbled; cream cheese; other spreadable cheeses; plastic cream; anhydrous milkfat; and butteroil. Class III also consists of evaporated milk and sweetened condensed milk in consumer-type packages. Class IV includes, among other things, butter and any milk product in dried form such as nonfat dry milk.

Evaporated milk and sweetened condensed milk in consumer-type packages are now classified as Class IV because their product characteristics and yields are tied directly to the solids content of the raw milk used to make these products as opposed to the protein content as for Class III products. Like other Class IV products, evaporated milk and sweetened condensed milk in consumer-type packages have a relatively long shelf-life ( i.e. , the products can be stored for more than one year without refrigeration). These products also may be substituted for other Class IV products ( e.g. , dry whole milk or nonfat dry milk) and compete over a wide geographic area with products made from non-Federally regulated milk. Additionally, like other Class IV products, evaporated milk and sweetened condensed milk in consumer-type packages are competitive outlets for milk surplus to the Class I needs of the market.

The amendments in this final rule will not have a significant economic impact on dairy producers or handlers associated with Federal milk orders. Since the reclassification of evaporated milk and sweetened condensed milk in consumer-type packages will be uniform in all Federal milk orders, dairy producers and handlers associated with the orders will be subject to the same provisions. The classification change will have only a minimal impact on the price dairy producers receive for their milk due to the small quantity of milk pooled under Federal milk orders that is used to produce evaporated milk or sweetened condensed milk in consumer-type packages. For example, using the Department's production data provided in the hearing record for milk, skim milk, and cream used to produce evaporated milk and sweetened condensed milk in consumer-type packages by handlers regulated under Federal milk orders for the three years of 2000 through 2002, the reclassification of the milk used to produce these products from Class III to Class IV would have affected the statistical uniform price for all Federal milk orders combined by only $0.0117 per hundredweight.

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 proposed 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.

Notice of Hearing: Issued September 2, 2003; published September 8, 2003 (68 FR 52860).

Correction to Notice of Hearing: Issued October 9, 2003; published October 16, 2003 (68 FR 59554).

Tentative Final Decision: Issued February 27, 2004; published March 2, 2004 (69 FR 9763).

Interim Final Rule: Issued April 19, 2004; published April 23, 2004 (69 FR 21950).

Final Decision: Issued September 20, 2004; published September 24, 2004 (69 FR 57233).

The findings and determinations hereinafter set forth supplement those that were made when the Northeast and other orders were first issued and when they were 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 each of the aforesaid orders:

(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 agreements and to the order regulating the handling of milk in the respective marketing areas.

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

(1) The said orders, 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 orders, 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 said orders, as hereby amended, regulate the handling of milk in the same manner as, and are applicable only to persons in the respective classes of industrial and commercial activity specified in, 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 Northeast and other orders effective December 1, 2004. Any delay beyond that date would tend to disrupt the orderly marketing of milk in the aforesaid marketing areas.

The amendments to these orders are known to handlers. The final decision containing the proposed amendments to these orders was issued on September 20, 2004.

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 for milk marketed on or after December 1, 2004.

(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 Northeast and other orders is the only practical means pursuant to the declared policy of the Act of advancing the interests of producers as defined in the orders as hereby amended;

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

Specifically, this final rule permanently adopts classification of milk use provisions that reclassify milk used to produce evaporated or sweetened condensed milk products in consumer type-packages from Class III to Class IV.

The FAA proposed to amend 14 CFR part 39 with a proposed airworthiness directive (AD). The proposed AD applies to Hamilton Sundstrand Power Systems Models T-62T-46C12 and T-62T-40C14 (APS 500R) APUs with fuel filter housing assembly, P/N 4951627, 4951960, or 4952039 installed. We published the proposed AD in the Federal Register on May 7, 2004 (69 FR 25525). That action proposed to require installation of a bracket to prevent a failed bypass button from protruding beyond the internal o-ring seal.

You may examine the AD Docket (including any comments and service information), by appointment, between 8 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays. See ADDRESSES for the location.

We provided the public the opportunity to participate in the development of this AD. We have considered the comments received.

Two commenters request that for APUs Model T-62T-40C14 (APS 500R), we add EMBRAER Alert Service Bulletin (ASB) No. 145-49-A027, dated January 6, 2004, as another means of complying with the AD. We do not agree. That ASB does not contain instructions for installing the bracket, but only instructs the operator to use Hamilton Sundstrand ASB No. ASB-4504112-49-22, for installing the bracket. Because of this, we have not incorporated by reference that ASB.

One commenter requests that we reference the latest revision of Hamilton Sundstrand ASB No. ASB-4504112-49-22, which is Revision 1, dated January 5, 2004. The commenter states that the original ASB specified a gap dimension of 0.32 inch-to-0.65 inch, which is incorrect and unachievable. ASB Revision 1 corrects the gap dimension to the proper value of 0.50 inch, plus or minus 0.015 inch. Also, ASB Revision 1 increases the recommended compliance threshold from within 400 hours time-in-service (TIS) to within 500 hours TIS.

We agree that the latest ASB Revision should be referenced, which is Revision 2, dated October 4, 2004. The 500 hours TIS threshold is consistent with EMBRAER ASB No. 145-49-A027, dated January 6, 2004. ASB Revision 2 requires, as does this AD, that brackets installed using Hamilton Sundstrand ASB No. ASB-4504112-49-22, Original issue, be inspected one time for proper gap and adjusted if necessary. ASB Revision 2 also introduces as an alternative, the installation of a different part number fuel filter assembly for APU Model T-62-T-40C14, that is designed to prevent bypass button failure. We have added that alternative as optional terminating action for APU Model T-62-T-40C14.

We are allowing previous credit for brackets installed using Hamilton Sundstrand ASB No. ASB-4504112-49-22, Original, dated December 2, 2003, or Revision 1, dated January 5, 2004, before the effective date of this AD. We have incorporated the changes described previously in this AD.

We have carefully reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We have determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.

There are about 552 Hamilton Sundstrand APUs of the affected design in the worldwide fleet. We estimate that 448 APUs installed on airplanes of U.S. registry will be affected by this AD. We also estimate that it would take about 1 work hour per APU to perform the actions, and that the average labor rate is $65 per work hour. Required parts will cost about $517 per APU. The manufacturer indicated that they might provide the parts at no cost. Based on these figures, we estimate the total cost of the AD to U.S. operators to be $260,736.

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

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

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

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

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

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES. Include “AD Docket No. 2003-NE-61-AD” in your request.

The FAA proposed to amend 14 CFR part 39 with a proposed AD. The proposed AD applies to RRC models 250-C30R/3, -C30R/3M, -C47B, and -C47M turboshaft engines. We published the proposed AD in the Federal Register on June 9, 2004 (69 FR 32287). That action proposed to require initial and repetitive electrical signal inspections of the HMU PLA potentiometer and replacement of the existing HMU with a new design HMU as a mandatory terminating action to the repetitive inspection requirements.

You may examine the AD Docket (including any comments and service information), by appointment, between 8 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays. See ADDRESSES for the location.

We provided the public the opportunity to participate in the development of this AD. We received no comments on the proposal or on the determination of the cost to the public.

We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed.

We estimate that 700 engines installed on helicopters of U.S. registry will be affected by this AD. We estimate that it will take about 4 work hours per engine to replace a single-element HMU with a dual-element HMU. We also estimate that 12 percent of the single-element HMUs will fail the required inspection and require replacing the HMU. The average labor rate is $65 per work hour. Required parts cost about $615 per engine. Based on these figures, we estimate the total cost of the AD to U.S. operators to be $686,000.

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

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

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

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

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

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES. Include “AD Docket No. 2003-NE-23-AD” in your request.

Discussion

What events have caused this AD? The Luftfahrt-Bundesamt (LBA), which is the airworthiness authority for Germany, recently notified the FAA that an unsafe condition may exist on certain OMF Model OMF-100-160 airplanes. The LBA reports that the manufacturer received a report of cracks in the outside fuselage tube that supports the main landing gear leg. Further investigation revealed that one manufacturer of fuselage tubes used out-of-design dimensions for the tube elements.

What is the potential impact if FAA took no action? Cracks in the outside tube of the main landing gear leg, if not detected, corrected, and prevented, could result in structural failure of the fuselage tubing assembly. This failure could lead to loss of control of the airplane.

Has FAA taken any action to this point? We issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to certain OMF Model OMF-100-160 airplanes. This proposal was published in the Federal Register as a notice of proposed rulemaking (NPRM) on August 18, 2004, (69 FR 51206). The NPRM proposed to detect, correct, and prevent future cracks in the outside tube of the main landing gear leg. These cracks could result in structural failure of the fuselage tubing assembly and lead to loss of control of the airplane.

Was the public invited to comment? We provided the public the opportunity to participate in developing this AD. We received no comments on the proposal or on the determination of the cost to the public.

What is FAA's final determination on this issue? We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed except for minor editorial corrections. We have determined that these minor corrections:

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

How many airplanes does this AD impact? We estimate that this AD affects 11 airplanes in the U.S. registry.

What is the cost impact of this AD on owners/operators of the affected airplanes? We estimate the following costs to accomplish the inspections:

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) by superseding AD 2001-10-15, amendment 39-12241 (66 FR 28646, May 24, 2001), which is applicable to certain EMBRAER Model EMB-135 and -145 series airplanes, was published in the Federal Register on May 12, 2004 (69 FR 26326). The action proposed to continue to require a one-time inspection to detect incorrect wiring of the electrical connectors to the pressure switches and cartridges on the fire extinguisher bottles for the engines and the auxiliary power unit (APU); disconnection and reconnection of the wiring, as necessary; and adjustment of the length of the harnesses on the fire extinguisher bottles to avoid future misconnections. The action also proposed to require additional adjustment of the length of the harnesses; installation of a color-coded identification system to avoid misconnections during maintenance; and a functional test of the engine fire extinguisher system. The action also proposed to expand the applicability of the existing AD to include additional airplanes.

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, the airplane manufacturer, requests that we revise paragraph (c) of the proposed AD to extend the compliance time from 4,000 to 5,000 flight hours for modifying the electrical harnesses and electrical connectors of the engine and APU fire extinguisher system. The commenter states that this would allow operators of affected airplanes to do the modification during a regularly scheduled maintenance visit. The commenter states that this extension would not compromise flight safety because the proposed AD would also require a general visual inspection to detect incorrect wiring of connectors. The compliance time for this general visual inspection is 100 flight hours after June 8, 2001 (the effective date of AD 2001-10-15) for airplanes subject to AD 2001-10-15, and 100 flight hours after the effective date of this AD for airplanes added to the applicability of this AD.

We do not concur. In consultation with the Departmento de Aviacao Civil, which is the airworthiness authority for Brazil, we have determined that extending the compliance time for the modification is not appropriate, and would not adequately ensure continued flight safety. We have not revised this AD.

We have revised paragraph (d) of this AD to correct typographical errors in two serial numbers.

After careful review of the available data, including the comment 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.

There are approximately 435 airplanes of U.S. registry that will be affected by this AD.

The actions that are currently required by AD 2001-10-15 and continue to be required by this AD take approximately 3 work hours per airplane, at an average labor rate of $65 per work hour. Based on these figures, the cost impact of the currently required actions on U.S. operators is estimated to be $84,825, or $195 per airplane.

The new actions that are required by this AD will take approximately 7 work hours per airplane, at an average labor rate of $65 per work hour. Required parts will cost approximately $93 per airplane. Based on these figures, the cost impact of the new requirements of this AD on U.S. operators is estimated to be $238,380, or $548 per airplane.

The cost impact figures discussed above are 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 .

The FAA proposed to amend 14 CFR part 39 with an AD for certain Airbus Model A319, A320, and A321 series airplanes. The proposed AD was published in the Federal Register on August 10, 2004 (69 FR 48426), to require revising the airplane flight manual (AFM) to prohibit operators from performing CAT 2 or CAT 3 automatic landings or roll-outs at certain airports. The proposed AD also provided for an optional terminating action for the AFM revision.

We provided the public the opportunity to participate in the development of this AD. We have considered the comments that have been submitted on the proposed AD. The commenters support the proposed AD.

We have carefully reviewed the available data, including the comments that have been submitted, and determined that air safety and the public interest require adopting the AD as proposed.

This AD will affect about 242 airplanes of U.S. registry. The AFM revision will take about 1 work hour per airplane, at an average labor rate of $65 per work hour. Based on these figures, the estimated cost of the required AFM revision for U.S. operators is $15,730, or $65 per airplane.

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

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

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

(2) Is not a “significant rule” under 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 regulatory evaluation of the estimated costs to comply with this AD. See the ADDRESSES section for a location to examine the regulatory evaluation.

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 McDonnell Douglas Model DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), and DC-9-87 (MD-87) airplanes; and Model MD-88 airplanes; was published in the Federal Register on June 18, 2003 (68 FR 36523). That action proposed to require a general visual inspection for chafing of the power feeder cables of the auxiliary power unit (APU), and repair if necessary. That action also proposed to require replacement of a support bracket located on the left side of the lower cargo compartment with a new “U” shaped bracket.

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 supports the proposed rule.

The other commenter requests that an AMOC previously granted for AD 94-09-02, amendment 39-8890 (59 FR 18720, April 20, 1994), be allowed to satisfy the requirements of the proposed rule. The commenter notes that AD 94-09-02 was previously issued to address a similar unsafe condition in the same area of the airplane, and that McDonnell Douglas MD-80 Service Bulletin 24-105 was approved as an AMOC for that AD. The commenter states that some of its airplanes had doublers previously installed to support the seat track in the modification area per that AMOC. The bracket identified in Revision 02 of McDonnell Douglas Alert Service Bulletin MD80-24A105 (referenced in the proposed rule as the appropriate source of service information for accomplishing the specified actions) could not be used at these locations; therefore, the commenter retained the doubler-bracket in lieu of the new bracket specified in the service bulletin.

The FAA does not agree to allow the specified AMOC granted for AD 94-09-02 to satisfy the requirements of this AD. That AMOC was granted based on information contained in McDonnell Douglas MD-80 Service Bulletin 24-105, dated August 15, 1989. However, since that AD was issued and that AMOC granted, McDonnell Douglas Alert Service Bulletin MD80-24A105, Revision 02, dated January 24, 2000, was released. That revision, which was also upgraded to alert status, specifically requires additional work for airplanes previously modified in accordance with previous issues of that service bulletin. Therefore, airplanes on which the described AMOC was approved are subject to the unsafe condition addressed by this AD, and operators must accomplish the actions required by this AD. No change to the final rule is made in this regard.

The same commenter points out that the proposed rule estimates 1 work hour to accomplish the proposed actions; however, McDonnell Douglas Alert Service Bulletin MD80-24A105, Revision 02, lists 3 work hours for those actions—a figure which the commenter asserts more closely reflects the time required for the specified tasks.

From this comment, we infer that the commenter is requesting that we revise the work-hour estimate in the Cost Impact section of the proposed rule. We do not agree. As stated in the preamble of the proposed rule, the cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. Those 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 work-hour figure listed in the referenced service bulletin includes time for access and close up. No change is made to the final rule in this regard.

We inadvertently omitted reference to the specific service information for accomplishing the required support bracket replacement specified in paragraph (c) of the proposed rule. It was our intent that the required replacement be accomplished in accordance with McDonnell Douglas Alert Service Bulletin MD80-24A105, Revision 02, dated January 24, 2000. We have revised paragraph (c) of this final rule to specify that the required replacement be done in accordance with that service bulletin.

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 change previously described. The FAA has determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.

After the proposed rule was issued, we reviewed the figures we have used over the past several years to calculate AD costs to operators. To account for various inflationary costs in the airline industry, we find it necessary to increase the labor rate used in these calculations from $60 per work hour to $65 per work hour. The cost impact information, below, reflects this increase in the specified hourly labor rate.

There are approximately 634 airplanes of the affected design in the worldwide fleet. The FAA estimates that 438 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 inspection and replacement of the bracket, and that the average labor rate is $65 per work hour. Required parts will cost approximately $147 per airplane. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $92,856, or $212 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.

The FAA proposed to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) with an AD to supersede AD 2001-06-10, amendment 39-12157 (66 FR 17490, April 2, 2001). The existing AD applies to all Airbus Model A300 B4-601, A300 B4-603, A300 B4-620, A300 B4-605R, A300 B4-622R, and A300 F4-605R airplanes. The proposed AD, published in the Federal Register on July 16, 2004 (69 FR 42612), would require modifying certain fuselage frames, which would terminate certain repetitive inspections, and add airplanes to the applicability.

We provided the public the opportunity to participate in the development of this AD. We have considered the comments that have been submitted on the proposed AD.

One commenter requests that we clarify the grace period specified in paragraph (i) of the proposed AD, specifically regarding the following sentence:

The commenter states that this language could be confusing. In Note (01), paragraph 1.E.(2)(b) (“COMPLIANCE”), of Airbus Service Bulletins A300-53-0271 and A300-53-6125, the grace period is described in terms of flight hours and flight cycles only for airplanes that have exceeded their “design service goal” (DSG). For airplanes that have exceeded the “threshold” but not their DSG, the service bulletins (in Note (02)) describe the grace period as the earlier of accomplishment of two service bulletins required by related AD 96-13-11, amendment 39-9679 (61 FR 35122, July 5, 1996).

We partially agree. For airplanes above their DSG, NOTE (01) specifies the imprecise grace period “3,300FC/3700FH for B2, 2900FC/3900FH for B4-100 and 2,200FC/4500FH for B4-200.” We added the sentence quoted by the commenter only to specify that the grace period must be determined by the earlier of the flight-hour and flight-cycle values. While “design service goal” might have been more precise than “threshold” in this context, we referred to these two terms collectively as “the specified threshold” to clarify the compliance-time conditions of the service bulletins. We have revised paragraph (i) of this final rule to clarify the method for determining the appropriate grace period.

One commenter requests that we revise Table 1 of the proposed AD to add Airbus Service Bulletin A300-53-6122. The commenter provides no further explanation.

We find that clarification of Table 1 is necessary. Table 1 identifies the service bulletin references for the requirements of paragraph (i) of this AD. Service Bulletin A300-53-6122 is the reference for the requirements of paragraphs (f) and (g) of this AD. That service bulletin does not provide information relevant to Table 1. We have not changed the final rule regarding this issue.

One commenter requests that we revise the proposed AD to indicate that any approved revisions of the identified service bulletins are acceptable, as stated in the parallel French airworthiness directives F-224-001 and F-224-002, both dated January 7, 2004.

We cannot accept as-yet unpublished service documents for compliance with the requirements of an AD. Referring to an unavailable service bulletin in an AD violates Office of the Federal Register regulations for approving materials that are incorporated by reference. We have not changed the final rule regarding this issue. However, under the provisions of paragraph (k)(1) of this final rule, affected operators may request approval to use a later revision of the referenced service bulletin as an alternative method of compliance (AMOC).

One commenter requests that we revise paragraphs (j) and (k) of the proposed AD to clarify the acceptability of DGAC-or Airbus-approved repairs. The commenter points out that such explicit approval would eliminate the processing time and work duplication for requests for AMOCs if an approval by DGAC or its agent is available. We infer that the commenter is requesting that paragraph (k) of this AD provide explicit approval of repairs done in accordance with a method approved by the DGAC, as specified in paragraph (j) of this AD.

We do not agree. We cannot allow operators to contact the manufacturer for repair instructions; to do so would be delegating our rulemaking authority to the manufacturer. Furthermore, we do not agree that clarification is necessary regarding approvals for repairs specified in paragraph (j) of this AD, which specifically allows repair approval by the DGAC or its delegated agent. Concerning paragraph (k) of this AD, AMOCs must be approved by the FAA.

One commenter reports that the oversize fasteners (specified in Airbus Service Bulletins A300-53-0271 and A300-53-6125) may be difficult to obtain. The commenter therefore requests that we revise the proposed AD to approve use of the alternative substitute fasteners listed in the Airbus Structural Repair Manual (SRM) or the Airbus Process and Materials Specification Manual.

We do not find it necessary to revise the AD regarding this issue. Because the service bulletins refer to the appropriate sections of the applicable Airbus SRM, the specific substitute parts listed in the SRM are considered acceptable for any repair or modification required by this AD.

We have carefully reviewed the available data, including the comments that have been submitted, and determined that air safety and the public interest require adopting the AD with the changes described previously. We have determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.

The following table provides the estimated costs for U.S. operators to comply with this AD:

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

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

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

(2) Is not a “significant rule” under 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 regulatory evaluation of the estimated costs to comply with this AD. See the ADDRESSES section for a location to examine the regulatory evaluation.

The FAA published this direct final rule with a request for comments in the Federal Register on September 29, 2004 (69 FR 58047). The FAA uses the direct final rulemaking procedure for a non-controversial rule where the FAA believes that there will be no adverse public comment. This direct final rule advised the public that no adverse comments were anticipated, and that unless a written adverse comment, or a written notice of intent to submit such an adverse comment, were received within the comment period, the regulation would become effective on January 20, 2005. No adverse comments were received, and thus this notice confirms that this direct final rule will become effective on that date.

History

Federal Register Document 04-21736, published on Tuesday, September 28, 2004, (69 FR 57839) modified the Class E airspace area extending upward from 700 feet above the surface at Kennett, MO. The modification expanded the airspace area to protect for diverse departures, redefined the extension to the Class E airspace area in terms of the 003° bearing from the Kennett nondirectional radio beacon (NDB), decreased the length and width of the extension, corrected the location of the NDB in the legal description and corrected the Kennett Memorial Airport reference point (ARP) used in the legal description. However, publication of a revised Kennett Memorial Airport ARP in the National Flight Data Digest on November 8, 2004, requires a further revision to the Kennett, MO Class E airspace areas.

The FAA published this direct final rule with a request for comments in the Federal Register on October 8, 2004 (69 FR 60285). The FAA uses the direct final rulemaking procedure for a non-controversial rule where the FAA believes that there will be no adverse public comment. This direct final rule advised the public that no adverse comments were anticipated, and that unless a written adverse comment, or a written notice of intent to submit such an adverse comment, were received within the comment period, the regulation would become effective on January 20, 2005. No adverse comments were received, and thus this notice confirms that this direct final rule will become effective on that date.

Elanco Animal Health, A Division of Eli Lilly & Co., Lilly Corporate Center, Indianapolis, IN 46285, filed a supplement to NADA 95 735 that provides for the use of RUMENSIN 80 (monensin sodium) Type A medicated article to formulate Type B and Type C medicated feeds used for increased milk production efficiency (production of marketable solids-corrected milk per unit of feed intake) in dairy cows. The supplemental NADA is approved as of October 28, 2004, and the regulations in 21 CFR 556.420 and 558.355 are amended to reflect the approval. The basis of approval is discussed in the freedom of information summary.

In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

The agency has carefully considered the potential environmental impact of this action and has concluded that the action will not have a significant impact on the human environment and that an environmental impact statement is not required. FDA's finding of no significant impact and the evidence supporting that finding, contained in an environmental assessment, may be seen in the Division of Dockets Management (see previous paragraph).

Under section 512(c)(2)(F)(iii) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360b(c)(2)(F)(iii)), this supplemental approval qualifies for 3 years of marketing exclusivity beginning October 28, 2004.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

On November 21, 2003 (68 FR 65824), HUD published an interim rule codifying the procedures that mortgagees and automated underwriting system vendors must follow if they opt to use the “Technology Open to Approved Lenders” (TOTAL) Mortgage Scorecard offered by the Federal Housing Administration (FHA). The TOTAL Mortgage Scorecard (or Scorecard) developed by HUD assesses the credit worthiness of FHA mortgagors by evaluating certain mortgage application and mortgagor credit information that has been statistically proven to accurately predict the likelihood of mortgagor default. The TOTAL Mortgage Scorecard is not an automated underwriting system (AUS); rather, it is a mathematical equation intended for use within an AUS.

The November 21, 2003, interim rule followed a December 6, 2000 (65 FR 76273) Federal Register notice announcing HUD's intention to deploy the FHA TOTAL Mortgage Scorecard. The objectives for use of the TOTAL Mortgage Scorecard, which were first stated in the Notice are (1) to provide an improved credit evaluation system for FHA loans that has been statistically proven to accurately predict the likelihood of mortgagor default while providing a uniform system protective of borrowers; (2) to expand access to mortgage credit for low- and moderate-income mortgagors and discourage unlawful discrimination against mortgagors protected by the Fair Housing Act and the Equal Credit Opportunity Act; (3) to facilitate access to, and reduce the cost and time associated with, originating HUD/FHA-insured mortgages; and (4) to encourage a standardized, industry-wide capability for communication and exchange of information among members of the mortgage lending community.

The December 6, 2000, Notice also advised that after deployment of the TOTAL Mortgage Scorecard, HUD would require use of the Scorecard in any AUS. The Notice also indicated that users of the TOTAL Mortgage Scorecard would receive documentation relief and credit policy waivers provided by HUD. Further, the Notice advised that HUD also had developed a Use Agreement that established the requirements and responsibilities for implementation and use of the TOTAL Mortgage Scorecard by qualified mortgagees and others that purchase, sell, underwrite, or document HUD mortgage loans for mortgagees under HUD's Direct Endorsement program.

While HUD could have continued, through individual approvals, to authorize organizations to use the TOTAL Mortgage Scorecard, HUD decided that a more efficient course of action would be to promulgate regulations for the use of the Scorecard consistent with the purpose and objectives described above instead of executing individual approvals that establish the requirements and responsibilities for use of the Scorecard. Accordingly, HUD issued the November 21, 2003, interim rule.

The interim rule revised HUD's regulation at 24 CFR 203.251 to define the acronym “TOTAL” and revised § 203.255 to establish specific requirements that mortgagees and vendors must abide by when using the TOTAL Mortgage Scorecard. The interim rule described the Scorecard requirements in order to assist the mortgagee in expediting the endorsement process. While the Scorecard is a valuable tool, its value depends on approved lenders properly using the Scorecard in accordance with HUD requirements and procedures. The preamble to the November 21, 2003, interim rule provides additional details regarding the regulatory amendments to 24 CFR part 203.

A technical correction to the interim rule was published on January 2, 2004 (69 FR 4). The January 2, 2004, document corrected the interim rule by changing certain references to “mortgage” to read “mortgagee.” The January 2, 2004 document also made a technical correction to § 203.255(b)(5)(i)(A) of the interim rule, which contained an outdated reference to “approved” AUSs. As noted in the preamble to the November 23, 2003, interim rule, HUD is no longer approving individual AUSs, and the few approvals that existed at the time of publication of the interim rule have since been terminated. Accordingly, the January 2, 2004, document corrected § 203.255(b)(5)(i)(A) by removing the reference to “approved” AUSs.

This final rule follows publication of the November 21, 2003, interim rule. The interim rule became effective December 22, 2003, and provided for a 60-day public comment period. The comment period for the interim rule closed on January 20, 2004. HUD did not receive any public comments on the interim rule. Accordingly, HUD is adopting the interim rule, as corrected by the technical correction published on January 2, 2004, without change.

Any AUS vendor that “calls” the Total Mortgage Scorecard, and any FHA-approved mortgagee that obtains a risk-assessment from the Scorecard, must abide by the requirements contained in this final rule. Only AUSs developed, operated, owned, or used by FHA-approved Direct Endorsement mortgagees, Fannie Mae, or Freddie Mac are permitted to access the Scorecard, and only FHA-approved mortgagees are able to obtain risk assessments using the TOTAL Mortgage Scorecard.

As did the preceding interim rule, this final rule affirms that Direct Endorsement Mortgagees remain solely responsible for the underwriting decision. This rule does not alter the underwriting requirements to which FHA mortgagees must currently adhere. Rather, this final rule addresses the use of the TOTAL Mortgage Scorecard and the requirements and procedures to which FHA mortgagees must adhere if they opt to use the Scorecard. AUS vendors and mortgagees found to violate these conditions may have their access to the Scorecard terminated with appropriate notice. As an additional measure to ensure compliance with these requirements, access to the TOTAL Mortgage Scorecard by a FHA mortgagee will be conditioned upon the mortgagee's certification to comply with the requirements as provided in this rule.

The TOTAL Mortgage Scorecard is only a tool to assist the mortgagee in managing its workflow and expediting the endorsement process and is not a substitute for the mortgagee's reasonable consideration of risk and credit worthiness. To help assure the TOTAL Mortgage Scorecard is not misused, the final rule requires mortgagees to provide full manual underwriting for mortgage applicants when the scorecard returns a “refer” risk score. The Scorecard results must not be used as the basis for rejecting any mortgage applicant.

The information collection requirements contained in this final rule have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB Control Number 2502-0556. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The final rule governs access to, and use of, an automated, electronic tool to assist mortgagees in managing workflow and expediting the endorsement process. There are no anti-competitive discriminatory aspects of the rule with regard to small entities, and there are not any unusual procedures that would need to be complied with by small entities. Accordingly, the undersigned certifies that this rule will not have a significant economic impact on a substantial number of small entities.

A Finding of No Significant Impact with respect to the environment was made at the interim rule stage in accordance with HUD regulations at 24 CFR part 50, which implements section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332). The Finding of No Significant Impact is available for public inspection between the hours of 7:30 a.m. and 5:30 p.m. weekdays in the Regulations Division, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1531-1538) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This final rule does not impose any Federal mandates on any State, local, or tribal governments or the private sector within the meaning of the UMRA.

Executive Order 13132, (entitled “Federalism”) prohibits, to the extent practicable and permitted by law, an agency from promulgating a regulation that has federalism implications and either imposes substantial direct compliance costs on State and local governments and is not required by statute, or preempts State law, unless the relevant requirements of section 6 of the Executive Order are met. This rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive Order.

The Office of Management and Budget (OMB) reviewed this rule under Executive Order 12866 (entitled “Regulatory Planning and Review”). OMB determined that this rule is a “significant regulatory action,” as defined in section 3(f) of the Order (although not economically significant, as provided in section 3(f)(1) of the Order). Any changes made to the interim rule subsequent to its submission to OMB are identified in the docket file, which is available for public inspection in the Regulations Division, Office of the General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500.

The Catalog of Federal Domestic Assistance Numbers for 24 CFR part 203 are 14.117 and 14.133.

On August 1, 2003 (68 FR 45734), HUD published a notice of proposed rulemaking (NPRM) that proposed to grant PHAs the discretion to evict a family that is over the eligible income limit, with exceptions for families entitled to EID (addressed at 42 U.S.C. 1437a(d)) or with valid contracts of participation under the Family Self Sufficiency (FSS) program (42 U.S.C. 1437u). In submitting this proposed rule for public comment, HUD stated its view that public housing should be available to eligible low-income families and that it is inappropriate to limit the ability of a PHA to move over-income families out of public housing to make room for low-income families on waiting lists.

The current rule on eviction at 24 CFR 960.261 limits the ability of PHAs to evict over-income families unless (1) the PHA has determined that there is other decent, safe, and sanitary housing available to the tenant at a rent not exceeding the then-current tenant rent, or (2) the PHA is required to evict the family by local law.

This final rule does not require PHAs to evict over-income residents, but rather gives PHAs the discretion to do so and thereby make units available for applicants who are income-eligible.

This final rule follows publication of the August 1, 2003, proposed rule. The public comment period for the proposed rule closed on September 30, 2003. Sixteen public comments were received from a variety of individuals and groups during the comment period. Commenters included tenant organizations, housing authority trade associations, public housing tenants, and PHAs. Three of the public comments were in the form of petitions signed by multiple public housing residents from one city, and gathered and submitted by a single organization. After consideration of these comments, HUD has decided to adopt a final rule that, like the proposed rule, provides an exception to eviction for over-income tenants who are receiving the earned income disallowance or have active contracts of participation in a family supportive services program. In addition, this rule makes a conforming technical change to 24 CFR 966.4(l)(2)(ii).

Comment: The rule properly grants discretion to the PHAs regarding over-income residents. One PHA commenter agreed with the rule so long as implementation is voluntary and “with no penalty for non-participation.” Similarly, another PHA did not oppose the concept of the proposed rule that will grant “public housing agencies “ the discretion to evict over income families from public housing, as long as this rule remains a PHA option.” “In an effort to increase accountability and ensure that public housing participants are not being evicted prematurely before reaching self-sufficiency,” this commenter would prefer PHAs be given discretion to regulate this policy, rather than being subject to a mandatory regulation.

Observing that there may be widely divergent local strategies ranging from targeting only households most in need to retaining some over-income households as role models and to maintain the marketability of public housing, one commenter, also a PHA, agreed with the discretion the rule would grant to PHAs, and states that “local communities deserve federal respect for the diverse implementation strategies they devise to accomplish broadly stated national policy goals.” Another commenter stated, “We appreciate and support the Department's recognition of the importance of local-level discretion in setting housing policies” and “LHAs [local housing agencies] must retain true discretion to establish policies that suit their communities.” However, this commenter, a housing association, stated that “a more useful formulation of the notice would be one that gives PHAs the discretion to formulate local policies with regard to families who have increased their incomes while residing in public housing.” Another PHA stated that “ultimate discretion” on if, how and when it is applied should be left to the individual PHA. Local PHAs should be allowed to set the over-income “target” for triggering the eviction based on local market conditions.”

Response: HUD agrees with these commenters in their desire for PHAs to act with discretion. This rule gives PHAs the discretion to make decisions concerning their local housing market needs. HUD will not penalize PHAs for not incorporating this rule into their admission and continued occupancy policies.

Comment: The rule would have a negative effect on deconcentration of poverty and income-mixing goals. Several commenters specifically commented on the rule's effect on income-mixing and deconcentration of poverty. One PHA stated that having a range of incomes is preferable to having a concentration of low-income families, observing that the presence of higher-income families under the flat-rent system serves as role models and as the core homeownership clientele. Another PHA stated that this rule would conflict with the goals of deconcentrating poverty (24 CFR 903.1), income targeting (24 CFR 960.202), and choice of income-based or flat rent (24 CFR 960.253). This commenter stated that the rule would “negatively impact the ability of PHAs to move toward socioeconomic diversity in public housing” and that due to the conflicts, the rule should not be implemented. A PHA-related trade association commented, “The wisdom of evicting over income families or encouraging them to take advantage of other housing options is contingent on local policy preferences * * * retention [of some over-income families] may also contribute to whatever mixed income character public housing apartments may retain.” Another trade association stated that, “Families with increasing incomes can also play a vital role in local strategies to create mixed-income communities and deconcentrate poverty in public housing. The presence of working families in public housing provides role models that contribute to a healthy, stable community. The presence of relatively higher-income families could help PHAs secure private funding for development purposes, helping both residents as well as the broader community.” An individual petition signer made a similar point.

Other commenters cited similar concerns. One individual commenter stated:

This commenter cited the example of the commenter's own development, which lost most of its moderate-income tenants in favor of lower-income tenants. Two commenters opposed to the rule stated that “the proposed rule works against deconcentration objectives.” These commenters further stated, “Under the 1998 Quality Housing and Work Responsibility Act [QHWRA], PHA's are required to plan for deconcentration, in order to promote a comparable mix of incomes in all developments” and “by evicting over-income households, PHAs may be promoting higher concentrations of low income residents in some developments, thereby defeating the purposes of deconcentration.”

These commenters further stated that high turnover in a neighborhood can lessen the capacity of a community to address its needs and interests, and when the turnover occurs among higher-income households who demonstrate self-sufficiency and represent positive role models, the community can lose its strongest leaders and be significantly destabilized.

Some individual petition signers also stated that the rule would contradict income-mixing and HOPE VI goals.

Response: HUD believes that this rule does not contradict deconcentration or income-mixing policies, because those policies can be successfully achieved by a PHA while implementing this rule. Specifically, deconcentration can occur within tenant populations that are within 80 percent of area median income (AMI), since PHAs are required to target only 40 percent of extremely low-income families in the public housing program. Public housing is intended for low-income families (at or below 80 percent of AMI). Therefore, the resources of public housing should not be used by those who are not low-income while many who are low-income remain on the waiting list.

Comment: PHA commenters raised issues regarding how much pre-eviction notice to give.

One commenter suggested “a one-to two-year minimum time limit to allow families to prepare for their move into the private market” as not all PHAs have the resources to help residents become independent of public housing assistance. One commenter suggested a 6-month “stabilization or grace period” at the “ ‘top rent’ level for people ‘exiting poverty,’ ” with a mutually agreed termination of tenancy at the end of the six months. Another commenter suggested a 60-day advance notice to allow families time to enroll in a supportive services program. Another commenter, citing an example of a family that had borrowed heavily during a period of unemployment due to injury, questioned whether a PHA could establish a one-year post-employment grace period to allow families to “get back on their feet and pay off some debt? ” One commenter observed that the length of notice is not covered in the rule.

Response: This rule will provide PHAs the discretion to determine the time frame needed to execute an eviction notice, as long as the PHA's decision complies with HUD's regulations and state and local laws.

Comment: Other issues regarding eviction. In a comment, a PHA stated that eviction might create a blemish on the family's record that could make it difficult for it to find other housing. This commenter stated that an eviction policy would require the support of local courts, cause the PHA to incur legal expenses, and should be a last resort. The commenter suggested that a better option might be to permit PHAs not to renew the lease, allowing the “PHA to notify the over-income family that this would be the last year they would be able to lease from the PHA and provide an interim step before eviction.” One trade association commenter stated that it has generally supported initiatives that encourage public housing residents to increase their earned income and decrease their dependence on housing assistance. The commenter disagreed with “the rule's encouragement of punishing assisted housing families who succeed.” The commenter believed that the rule expresses a preference for eviction, and would prefer that PHAs make discretionary use of their existing tools to encourage over-income families to seek to move, instead of the punitive measure of eviction. In another comment, a PHA stated that “eviction is a rather serious step that cannot be taken lightly and should only occur when there is clear evidence that affordable rental opportunities are available in the open market to the household against which the action is being taken.” An individual petition signer expressed fear of eviction if the rule becomes final. Another petition signer added a comment that the rule would “penalize” and “dissuade people from moving up and out of poverty.”

Response: This rule does not require PHAs to evict, but gives PHAs the flexibility to evict or terminate the tenancies of over-income families, where it deems it appropriate, so long as its policy complies with HUD's regulations and state and local law governing tenant and landlord relations. Therefore, a PHA could take into account mitigating factors such as the family's self-sufficiency efforts.

Comment: Five commenters (three PHAs and two trade associations) disagree with, or suggest changes in, the proposed rule's exemptions for families participating in a Family Self-Sufficiency program under 24 part 984 (FSS) and families entitled to the earned-income disallowance. One commenter stated that the exemptions are invitations to “play the system,” and suggested that the rule should require FSS families also to be eligible for the earned-income disallowance “to ensure reversion of funds to PHA's by those who do not meet their commitment.” After the 24-month period for the disallowance ends, there should be a mutual termination of tenancy with an option for eviction.

One commenter believed that working families and FSS recipients will be negatively affected if forced to leave after the end of the moratorium on the rent increase, and that the rule will be a disincentive to work if the residents' income results in the possibility of an eviction.

A trade association commenter disagreed as a matter of law that either the FSS program or the earned-income disallowance under 42 U.S.C. 1437a(d) protects over-income families from eviction. The earned-income disallowance speaks only to rent increases, not to continued tenancy, and FSS families have no right to remain in the program once their income exceeds the eligibility limits. This commenter stated that some of its members see the Quality Housing and Work Responsibility Act's favorable treatment of these classes of over-income tenants over other working families in public housing as troubling, and complained that the rule would “aggravate this disparate statutory treatment” by placing certain working families at risk of eviction while protecting others. This commenter would prefer HUD to grant PHAs broad discretion in connection with the retention or eviction of all classes of over-income households, or at least remain silent as to the proposed excluded classes, and leave their treatment up to PHAs as well.

Another trade association commenter similarly stated that the proposed rule's exemptions would exclude “working families who have increasing incomes but have not participated in FSS or met the limited EID qualification criteria.” The commenter described this different treatment of working families as a “potential incongruity.” This commenter also agreed that the exemptions are not required by statute. This commenter stated that “PHAs should establish exemption categories as part of their local strategies.”

An individual housing authority commenter stated that “FSS participants should be exempted from this rule as long as they are enrolled in the program and are actively pursuing the goals included in their contract. Over-income families should also be notified of the availability of the program and given the opportunity to enroll in the FSS program with reasonable notice before eviction proceedings are commenced.”

Response: The purpose of the Earned Income Disallowance in 42 U.S.C. 1437a(d), implemented at 24 CFR 960.255, is to encourage families to increase their annual income through participation in self-sufficiency and job training programs and employment by allowing the PHA to exclude the resulting increase in income for one 12-month period and exclude 50 percent of the increase in the second 12-month period. The total lifetime availability of any individual is limited to 48 months. To evict families properly qualified for and receiving the disallowance would clearly be contrary to the statutory purpose and to the regulation providing for the exclusion of such income. Since the earned income disallowance is available only for a limited time, and since it applies upon the commencement of employment of a qualifying family member, HUD does not believe there would be wide latitude to use the exemption improperly to avoid eviction. Therefore, HUD is including the exception to eviction for families receiving EID in this final rule.

FSS is a contractual agreement between the participant and the PHA. Because FSS involves contractual agreements, it is HUD's policy and rule to exempt participants in FSS programs until their contract of participation has ended. Otherwise, PHAs may continue to apply their admissions and continued occupancy policies except as they are modified by this rule.

Comment: One commenter states that this rule would increase program complexity. This commenter, a trade association, stated that this rule would “make program implementation more complex rather than less complex.” PHAs would have to identify FSS families and families entitled to the earned income disregard. Additionally, a PHA's determination of household eligibility for FSS or an earned income disregard “may affect the amount of rent a family pays or the availability of support services to the family. If a PHA elects to implement a local discretionary policy to evict over-income households, these determinations of eligibility may come to affect a household's eligibility for continued occupancy in public housing. * * * .”

Response: PHAs are currently required to monitor FSS families and to apply the earned income disallowance in appropriate cases; therefore, this rule will not add additional complexity to the program.

Comment: HUD should support PHAs in enforcing a time limit for over-income families. This commenter agreed that a family making above 80 percent of the median “should be evicted if that family is not making an effort to obtain housing in the private sector,” and that PHAs should receive support from HUD to enforce a time limit not exceeding one year of housing for over-income families.

Response: HUD supports a PHA's discretion, as provided by this rule, to determine the appropriate time limit, if allowed to remain in public housing at all, for families that have reached the 80 percent AMI threshold.

Comment: Two PHA commenters support exemptions for elderly and disabled residents. One commenter, citing a particular case of an elderly resident whose income suddenly rose, asked whether a PHA could allow for an exemption for elderly or disabled persons. Another commenter stated that the only exceptions to eviction should be for elderly and disabled families who remain in public housing for a variety of reasons. “If PHAs” must evict an elderly or disable family, it should be for failure to comply with state laws and housing laws, not for being over income; otherwise, elderly/disable families will suffer.” Also, “More elderly families may become houseless or choose to rent from the private market. PHAs cannot compete with private market budgets.”

Response: This rule will provide PHAs the flexibility to exempt from eviction specific classes of families, including elderly and persons with disabilities, as long as the exemption is implemented fairly, does not violate civil rights laws, and is included in the PHA's admission and continued occupancy policies.

Comment: The type of increased income should be considered. One commenter, in addition to concerns about elderly and disabled residents, asked whether PHAs would be permitted to “incorporate this proposal based on increased employment income only? ”

Response: PHAs will have the flexibility to set and enforce over-income policy, including distinguishing employment income, so long as the distinction does not violate any other law.

Comment: Two commenters questioned whether perceived “loopholes” could be closed. One commenter, a PHA, stated that it is interested in implementing such a rule, while asking whether the final rule will include language to assure that PHAs have the authority to proceed with termination despite intentional or after-the-fact reductions in income in order to divert the termination process and, if not, what discretion PHAs would have to “close this easily-manipulated loophole.”

Another commenter stated that to be successful, this program would require that “interim recertifications should be performed and rents adjusted accordingly (when the cumulative increase passes some baseline amount such as $100 per month to avoid the inefficient expense of [recertifications] for a few dollars)” and that “any six months (cumulative, not necessarily continuous) require the cessation of housing subsidy benefits.” HUD needs to “continually close the loopholes” or “creative tenant workarounds” that divert resources from assisting the truly needy.

Response: This rule will allow PHAs to have the flexibility, within the parameters of state and local law, to set interim rent policies and other ways to ensure that the policies operate effectively.

Comment: The rule would result in hardship or homelessness. One commenter stated, “I do not feel a family especially with children should be punished and put out just because their parents are working.” The commenter stated that rents in her locality are “out of control,” and that families evicted under this rule would likely become homeless.

Two commenters stated that “in localities with low vacancy rates and high rents, the proposed rule, if applied, will result in displacement and severe hardship for evicted families.” These comments stated that the rule does not distinguish between localities with tight rental markets, such as New York and San Francisco, and those where vacancies are more plentiful. In tight rental markets, eviction under the rule may result in displacement of families with children, disruption of their social and community networks, access to work and other opportunities, and cause stress and hardship.

A number of individual petition signers also stated that the rule would cause displacement or homelessness among families that cannot afford the private rental market.

Response: Public housing is intended for low-income families. This rule is being implemented so that PHAs may, if it deems appropriate, require families with incomes higher than 80 percent AMI to find housing in the unassisted market so that the PHA may tend to its mission of serving truly low-income families on the waiting list.

Comment: Relationship with PHA plan. A commenter asked whether, should this rule become final, PHAs would have to wait until approval of their next agency plan to incorporate it into their policies and practices. Two commenters stated that PHAs intending to use the discretion granted by this rule should so state in their annual plan so that the PHA would be open to public comment under the annual public hearing required by QHWRA. These commenters stated that “use of this discretion should not bypass the accountability requirements under the law.”

Response: PHAs that implement this rule must state their policy in an attachment to their annual plan required under section 5A of the U.S. Housing Act of 1937 (42 U.S.C. 1437c-1), or submit a plan amendment if necessary under local guidelines. A PHA may proceed with eviction actions up to presentation to the court pending the certification of the plan.

Comment: One commenter, a public interest group, submitted petitions signed by public housing residents.

One petition text submitted stated the following:

31 persons signed this petition.

This commenter also submitted a similar petition in English, which reads as follows:

One hundred fifty-four persons signed this petition. Some of these signers appended substantive individual comments. The issues raised in those comments are noted elsewhere in this preamble.

The same commenter also submitted a petition with a different text, which reads as follows:

Sixty-three persons signed this petition. Some of these signers appended substantive individual comments. The issues raised in those comments are noted elsewhere in this preamble.

Response: It is HUD's position that PHAs should have the discretion to implement this rule. Local discretionary policies can address variances in rental markets as well as potential displacement of over-income families. As long as a PHA complies with state and local law, it will have the right to determine all housing requirements.

Comment: Fluctuations in earned income need to be taken into account.

The proposed rule should take into account fluctuations in income. An over-income family may be evicted under the rule, then suffer a reversal that makes it impossible to afford decent housing in the open rental market. The result will be to “lock out” these families until their turn comes up again in the waiting list. These commenters, public interest groups, propose that an “over-income family” be defined as one that is over-income for five consecutive years, and has little risk of suffering a significant income reversal in the next five years. Several of the individual petition signers make a similar point, that employment income is not necessarily stable and that the rule could result in eviction followed by a decrease in income.

Response: This rule provides PHAs with the flexibility to deal with the changes in a family's earned income status in terms of eviction.

Comment: Self-sufficiency planning should begin early. One PHA commented that “With the exception of seniors and truly disabled persons, the day someone begins to receive assistance is the day self-sufficiency planning needs to begin.” HUD assistance should be temporary.

Response: HUD agrees with the commenter's views. In fact, residents are made aware as they enter public housing of the availability of self-sufficiency programs that will allow them to become self-sufficient and make the transition out of public housing and possibly to homeownership. One of HUD's strategic goals is to increase homeownership opportunities and help residents make the transition out of public housing and possibly on to homeownership. HUD's homeownership programs are intended to assist in this process.

Comment: Asset limitations for seniors should be considered. With regard to senior citizens, a reasonable asset limitation in addition to income should be considered.

Response: PHAs have the discretion to consider asset limitations in their policies, as long as the limitations meet state and local legal requirements.

Comment: Government should increase available resources for low-income housing. A public interest group commented that HUD increase the funding of the public housing capital fund and support a national housing trust fund to finance expanded development of affordable low-income housing. This commenter also stated that HUD should increase the minimum income targeting requirement of PHAs from 40 percent of admissions to 60 percent of admissions for extremely low-income families.

Another public interest group similarly stated that HUD should increase federal commitments to adequate funding of public housing, including enabling high-performing housing authorities in tight rental markets to expand the inventory of public housing, and that HUD should recommend that the provision of prohibiting expansion of public housing stock be repealed. This commenter also agreed with the prior commenter that HUD should increase the admissions of extremely low income families from 40 to 60 percent, and added that HUD should propose an amendment to QHWRA to accomplish this.

Response: This rule addresses the public housing program only, not other available low-income housing funding sources, which are outside the scope of this rulemaking.

Comment: Concerns about flat rents and overall high rents. A number of signers of the petition submitted as comments disagree with increases in, or express concerns with, the flat rent. Other petition signers stated generally that rents are too high in relation to their income and other expenses. Others also stated that rents are too high in relation to the condition of public housing units.

Response: HUD regulations at 24 CFR 960.253(2)(b) set the standard for flat rents. Flat rents are statutorily required and must be set by comparable market rents. Any concern about the level of flat rents should be raised to either the PHA or local HUD office.

Comment: Petition signers suggest giving a homeownership option to over-income public housing residents who cannot afford rent in the private market. One commenter stated that “if someone's income is to high place them in their own home build by the state so they would only need to pay a mortgage [sic].” Another asked why the government does not allow PHAs to build or buy and refurbish old housing for over-income residents, and give them an option to buy after a certain length of time with no down-payment. This would free up an overly saturated market and help alleviate homelessness.

Response: HUD programs are intended for eligible families—those with incomes below 80 percent of AMI. Various homeownership options are available to those above this level.

Comment: Length of time for upper-income families to remain. One petition signer asked: If over-income residents are moved out, will a new standard be established as to how long upper income families replacing them can remain in the development?

Response: This rule provides the PHA flexibility to determine if over-income families should remain in public housing.

This rule concerns a statutorily required or discretionary establishment and review of income limits and exclusions with regard to eligibility for or calculation of HUD housing assistance or rental assistance. As such, this rule is categorically excluded from the provisions of the National Environmental Policy Act (42 U.S.C. 4332 et seq. ), under 24 CFR 50.19(c)(6) of HUD's regulations.

The Regulatory Flexibility Act (RFA)(5 U.S.C. 601 et seq. ), generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.

This rule is concerned only with granting PHAs the discretion to evict over-income families. It does not mandate that any PHA take such action. Furthermore, the rule preserves the ability that small PHAs have to admit over-income families in cases where there is no demand for a unit by an eligible family, thus preventing such small PHAs from having to support vacant units.

Therefore, the undersigned certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities, and an initial regulatory flexibility analysis is not required.

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments, and on the private sector. This final rule does not impose any federal mandate on any state, local, or tribal government, or on the private sector, within the meaning of UMRA.

Executive Order 13132 (entitled “Federalism”) prohibits, to the extent practicable and permitted by law, an agency from promulgating a regulation that has federalism implications and either imposes substantial direct compliance costs on state and local governments and is not required by statute, or preempts state law, unless the relevant requirements of section 6 of the Executive Order are met. This rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive Order.

The Office of Management and Budget (OMB) reviewed this rule under Executive Order 12866 (entitled “Regulatory Planning and Review”). OMB determined that this rule is a “significant regulatory action,” as defined in section 3(f) of the Order (although not economically significant, as provided in section 3(f)(1) of the Order). Any changes made to the rule subsequent to its submission to OMB are identified in the docket file, which is available for public inspection in the Regulations Division, Office of the General Counsel, Room 10276, 451 Seventh Street, SW., Washington, DC 20410-0500.

The Catalog of Federal Domestic Assistance number applicable to the program affected by this rule is 14.850.

Since the Parole Commission assumed the revocation functions of the former District of Columbia Board of Parole in August 2000 under the National Capital Revitalization and Self-Government Improvement Act of 1997, Public Law 105-33, the Commission has required that parole revocation and reparole decisions for District of Columbia offenders be made by the concurrence of two Commissioners. The Commission adopted this requirement to replicate the voting procedures of the former DC Board, which made its decisions on the basis of a majority of the quorum of Board members ( i.e. , two out of three). 1 The Board did not provide for an appeal of any of its decisions, and, when the Commission took on DC revocation functions, neither did the Commission. (The Commission is required by statute to afford an appeal procedure to U.S. Code offenders.) In response to recommendations that the Commission allow DC offenders to submit appeals, the Commission has explained that staff resources were not sufficient to justify increasing the agency's workload by allowing appeals for DC offenders, and that the two-vote requirement was an acceptable substitute for an appeal procedure. See 65 FR 45885, 45886 (July 26, 2000).

Last year the Commission began modifying its procedures for post-hearing voting and appeals in DC cases. The Commission promulgated a rule permitting appeals of revocation decisions for DC supervised releasees, and made a corresponding amendment that allowed the initial revocation decision for these releasees to be made by one Commissioner. See 68 FR 41696-41714 (July 15, 2003). Now the Commission is adopting similar changes for DC offenders who have had parole revocation hearings. DC parolees will now have a formal avenue for seeking administrative correction of alleged errors in revocation proceedings. By extending an appeal procedure to DC parole violators, the Commission will provide for cumulative review of the case by two Commissioners for those offenders who file an appeal. Under the Commission's long-standing practice, an appeal is, whenever possible, reviewed by a Commissioner who did not participate in the decision under review. See 28 CFR 2.26(b)(1). For appeals from revoked DC parolees, the Commission will employ the same policies and practices that the Commission identified in the publication of the rule granting an appeal procedure for revoked DC supervised releasees. See 68 FR 41698.

In adding an appeal procedure for revoked DC parolees, the Commission must also ensure that the initial dispositions in these cases continue to be made in a timely manner. The Commission is particularly vigilant in ensuring continued compliance with the 86-day time period for making revocation decisions for DC parolees arrested and held within the DC metropolitan area. The Commission promulgated the rule on this time limit under a consent decree that resolved class action litigation brought against the Commission regarding significant delays in the handling of DC revocation cases in the early months of the Commission's assumption of revocation functions. Over FY 2004, the number for all revocation dispositions for DC offenders increased 32% from the previous fiscal year. The Commission must be careful in apportioning its workload among the Commissioners so as to avoid violations of decision-making time limits. Therefore, in conjunction with the grant of an administrative appeal, the Commission is adopting a one-vote requirement for cases in which the Commissioner agrees with the examiner panel's recommended decisions on whether to revoke parole and to grant reparole to a DC offender. Consistent with the Commission's traditional practice in federal cases, two Commissioners must still concur in order to make a decision in those cases in which the Commissioner who first reviews the case disagrees with the panel recommendation reached by the hearing examiner and the executive hearing examiner. 2

With these changes, the Commission's post-hearing voting procedures and appeal procedures for DC parole revocation and supervised release revocation are now identical. This result is consistent with the Commission's goal of achieving greater uniformity in its procedures for all cases under the Commission's jurisdiction. But the Commission is limiting the amendments described in this publication to the procedures that follow revocation hearings for DC parolees (including mandatory releasees), whether the hearing is a local, institutional, or dispositional revocation hearing. At this time, the Commission is not making any changes for DC offenders who have received parole release hearings, including hearings on possible reparole that are subsequent to an earlier revocation and reparole decision ( e.g. , a rescission or special reconsideration hearing). The Commission is continuing to employ an incremental approach in making appeals available to DC offenders and in modifying the agency's voting procedures. The Commission wants to see the results of the changes made by these amendments before making any further modifications. Budget constraints and the availability of sufficient staff and Commissioners to handle the appeals are factors that affect the Commission's ability to expand or maintain an appeal procedure. See 68 FR 41698-99.

Because these rule changes are only rules of procedure, the Commission is promulgating the changes as final rules without the need for notice and public comment. In July 2003, similar rules for DC supervised release cases were published, along with other rules, for an extended period of notice and comment and no comment was received. The rule amendments are made effective thirty days after the date of publication. The new rules shall be employed for any DC parolee: (1) Who has a revocation hearing on or after the effective date; or (2) who had a revocation hearing before the effective date, but the case has not been voted on by a Commissioner as of the effective date. If a DC parole revocation case has been voted on by a Commissioner before the effective date, and is before another Commissioner for a vote, the case shall be processed under the two-vote requirement under the former rule and no appeal may be submitted. An appeal may be submitted in any case in which the Commissioner who first voted on the case signed the order on or after the effective date.

The single vote procedure shall be used for decisions made under the expedited revocation procedure. A parolee who accepts an expedited offer waives the opportunity to appeal the decisions identified in the offer.

The U.S. Parole Commission has determined that this final rule does not constitute a significant rule within the meaning of Executive Order 12866.

This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Under Executive Order 13132, this rule does not have sufficient federalism implications requiring a Federalism Assessment.

The final rule will not have a significant economic impact upon a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 605(b), and is deemed by the Commission to be a rule of agency practice that does not substantially affect the rights or obligations of non-agency parties pursuant to Section 804(3)(c) of the Congressional Review Act.

This rule will not cause State, local, or tribal governments, or the private sector, to spend $100,000,000 or more in any one year, and it will not significantly or uniquely affect small governments. No action under the Unfunded Mandates Reform Act of 1995 is necessary.

This rule is not a major rule as defined by Sec. 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on the ability of United States-based companies to compete with foreign-based companies.

I. Statutory Background

Section 19 of the Occupational Safety and Health Act (the “OSH Act”) (29 U.S.C. 668) includes provisions to ensure safe and healthful working conditions for Federal sector employees. Under that section, each Federal agency is responsible for establishing and maintaining an effective and comprehensive occupational safety and health program consistent with the standards promulgated by OSHA under Section 6 of the OSH Act. Executive Order 12196, Occupational Safety and Health Programs for Federal Employees, issued February 26, 1980, prescribes additional responsibilities for the heads of Federal agencies, the Secretary of Labor, and the General Services Administrator. Among other things, the Secretary of Labor, through OSHA, is required to issue basic program elements with which the heads of agencies must operate their safety and health programs. These basic program elements are set forth at 29 CFR Part 1960. Section 19 of the OSH Act, the Executive Order, and the basic program elements under 29 CFR Part 1960 apply to all agencies of the Executive Branch except military personnel and uniquely military equipment, systems, and operations. This final rule will amend the basic program elements under 29 CFR Part 1960, Subpart I, to make pertinent private sector recordkeeping requirements under 29 CFR Part 1904 applicable to all Executive Branch Federal agencies. By amendment to the OSH Act on September 28, 1998 (through the Postal Employees' Safety Enhancement Act), the U.S. Postal Service is already complying with the recordkeeping requirements under Part 1904.

Pursuant to Section 19(a) of the OSH Act, each head of a Federal agency is responsible for keeping adequate records of all occupational injuries and illnesses. Section 1-401(d) of the Executive Order provides the Secretary of Labor with the authority to prescribe recordkeeping and reporting requirements for Federal agencies. Under 29 CFR Part 1960, Subpart I, each Federal agency is currently responsible for keeping records of all occupational injuries and illnesses. Section 19 of the OSH Act also provides the Secretary of Labor with access to occupational injury and illness records and reports kept and filed by Federal agencies “unless those records and reports are specifically required by Executive Order to be kept secret in the interest of the national defense or foreign policy, in which case the Secretary of Labor shall have access to such information as will not jeopardize national defense or foreign policy.”

In its role as the lead Agency for implementing and reviewing compliance with Executive Order 12196 and the basic program elements set forth at 29 CFR Part 1960, OSHA requires Federal agencies to comply with all occupational safety and health standards, and generally, to assume responsibility for worker protection in a manner comparable to private employers. The OSH Act authorizes the Secretary of Labor to issue two types of final rules, “standards” and “regulations.” Occupational safety and health standards issued pursuant to Section 6 of the Act specify the measures to be taken to remedy occupational hazards. 29 U.S.C. 652(8), 655. OSHA regulations, issued pursuant to general rulemaking authority found, inter alia, under Section 8 of the Act, are the means to effectuate other statutory purposes, including the collection and dissemination of records on occupational injuries and illnesses. 29 U.S.C. 657(c)(2). Because 29 CFR Part 1904, which sets forth occupational injury and illness recordkeeping requirements for the private sector, was promulgated pursuant to Section 8 of the OSH Act, and thus is technically a “regulation” and not a “standard,” Federal agencies are currently not required to comply with the provisions in Part 1904. Therefore, OSHA is amending the basic program elements at 29 CFR Part 1960, Subpart I, to make pertinent private sector recordkeeping and reporting requirements under Part 1904 applicable to the Federal sector.

In general, recording incidents of occupational deaths, injuries, and illnesses have several distinct functions or uses for employers, employees, and OSHA. One is to provide information to employers about hazards in their workplaces that are injuring or making their employees ill. Employers and employees can then use the information to implement safety and health programs at individual workplaces. Analysis of injury and illness data is a widely recognized method for discovering workplace safety and health problems and for tracking progress in solving those problems.

Federal employees who are better informed about the hazards they face are more likely to follow safe work practices and to report workplace hazards to their Federal agency safety and health personnel. Such employees may then participate in identifying and controlling those hazards, thus improving the overall level of safety and health in the workplace.

The records are an important source of information for Federal agency safety and health staff, as well as for OSHA's oversight function. Federal agency safety and health personnel use the data to identify the most dangerous worksites, as well as during inspections to help direct their efforts to the hazards in the workplace that are hurting workers. Injury and illness information is used to develop statistics that assist OSHA (through its oversight function) in identifying the scope of occupational safety and health problems and decide whether regulatory intervention, compliance assistance, or other measures are warranted. These data also provide the outcome measures used to determine the effectiveness of Federal agency safety and health programs.

Section 8 of the OSH Act authorizes the Secretary of Labor to issue regulations she determines to be necessary to carry out her statutory functions, including regulations requiring employers to record and report work-related deaths and non-minor injuries and illnesses. OSHA's regulations under 29 CFR Part 1904 include requirements for recording, maintaining, posting, retaining, and reporting occupational injury and illness information in the private sector. Employers must record each fatality, injury, and illness that is work related, is a new case, and meets one or more of the general recording criteria in § 1904.7, or specific cases as described under § 1904.8 through § 1904.12. Under Part 1904, recordable work-related injuries and illnesses are those that result in one or more of the following: death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid, loss of consciousness, or diagnosis of a significant injury or illness. Injuries include cases such as, but not limited to, a cut, fracture, sprain, or amputation. Illnesses include both acute and chronic illnesses such as, but not limited to, a skin disease, respiratory disorder, or poisoning.

Also under Part 1904, employers are required to let employees know how and when to report work-related injuries and illnesses. This means that the employer must set up a system for the employees to report work-related injuries and illnesses and instruct them on how to use it. Part 1904 does not specify how the employer must accomplish these objectives, so employers have flexibility to set up systems that are appropriate to their workplace.

Under 29 CFR Part 1960, Subpart I, Federal agencies are required to collect occupational injury and illness data, analyze these data to identify unsafe and unhealthful working conditions, and establish program priorities based on their analyses. Under existing 1960.67c, Federal agencies are required to record only injury and illness information that is reported to the Office of Workers' Compensation Programs (OWCP) on forms CA-1, CA-2, or CA-6. 1 Under this system, injuries and illnesses are recordable only if a medical expense was incurred or expected, or if the employee was away from work or on leave without pay (LWOP) or continuation of pay (COP) as a result of the injury or illness.

OSHA uses injury and illness statistical data provided by OWCP to set program priorities, identify Federal worksites for OSHA oversight activity, and monitor agencies' progress in reducing occupational injury and illness. Also, OSHA uses the injury and illness statistical data from OWCP to develop an annual report for the President on the status of Federal civilian employees' safety and health.

Under the existing system, the records used by Federal agencies include the OSHA Federal Agency Log and Summary of Occupational Injuries and Illnesses, and the OSHA Form 101, Supplementary Record of Occupational Injuries and Illnesses. On the OSHA Federal Agency Log, agencies must include some brief descriptive information, and use a simple check-off procedure to maintain a running total of occupational injuries and illnesses for the year. OSHA Form 101 is used to provide supplementary information regarding each injury and illness entered on the log. Alternate forms, such as workers' compensation forms, may be used if they contain all the information OSHA requires.

Existing Part 1960, Subpart I, directs each Federal agency to complete an annual summary of occupational injuries and illnesses based on the OSHA Federal Agency Log. Agencies are also required to post a copy of the annual summaries for injuries and illnesses at each establishment. Under the existing system, the head of each Federal agency must ensure access to the injury and illness logs and annual summaries to Occupational Safety and Health Committees, employees, former employees, and employee representatives.

OSHA's revision, which essentially adopts applicable private sector recordkeeping requirements under Part 1904, will increase the ability of Federal agency establishments to identify and track occupational injury and illness trends, extend the injury and illness recordkeeping requirements to all civilian workers in the Executive Branch, eliminate the problems associated with non-existent injury and illness reporting for contract employees who are supervised on a daily basis by Federal workers, improve Federal agency and Federal employee awareness of the root causes of accidents in their workplace, create more consistent statistics from Federal agency to Federal agency, and resolve the problem of incompatibility of data between the private sector and Federal sector. Establishing Part 1904 recordkeeping requirements will also reduce reporting errors because Part 1904 is written in plain language, is more detail oriented, uses the question-and-answer format, minimizes ambiguity, eliminates recording of minor injuries and illnesses, and allows agencies flexibility to use computer programs to meet their OSHA recordkeeping obligations.

From an administrative and management perspective, differences in Federal sector and private sector recordkeeping requirements are confusing to Federal agencies and OSHA personnel. Establishing one regulation for recordkeeping will standardize the requirements for both the Federal and private sectors.

Standardizing recordkeeping requirements will allow for more accurate comparisons between Federal and private sector injury and illness experiences. Under the existing Part 1960, Subpart I, recordkeeping system for Federal agencies, comparable data to show how Federal agencies compare statistically with the private sector injury and illness experiences are not available due to the differences in reporting and recording requirements. Therefore, OSHA has not been able to address the concerns raised by several organizations that monitor government activity, and respond to the perception that the Federal Government has a worse injury and illness experience than its private industry counterparts.

For instance, from time to time certain advocacy groups have issued reports comparing some Federal agencies with the highest occupational injury or illness rates per 100 full-time workers with different sectors of private industry. These reports avowed that several Federal agencies had significantly higher occupational injury and illness rates than their private sector counterparts. While the reports intimated that an employee was more likely to be injured or become ill while working for a Federal agency than working for a number of high-risk private sector industries, the reports compared risks in different industries, and OSHA could not verify the injury and illness data reported.

This is best shown in an example of injuries that are compensable but not recordable under 29 CFR Part 1904. Consider the case where a private sector employee falls on the job, notes pain in his or her shoulder, is sent for evaluation at a local emergency room, and following an examination and x-ray, is released back to work without restrictions, days away from work, or medical treatment beyond first aid. Under 29 CFR Part 1904, this case would not be recordable because it does not meet any of the recording requirements (evaluation and x-rays for diagnostic purposes are considered first aid under 29 CFR 1904.7(b)(5)(i)(A) & (B) and the case would not be recordable). However under the current Federal agency recordkeeping system, if the employee files for reimbursement of medical costs under FECA, a CA-1 must be submitted and the case would be recorded.

Another reason for revising the occupational injury and illness recordkeeping system for the Federal sector is that under Part 1960, Subpart I, many groups of employees are not included in the recordkeeping process, including employees hired through the Non-Appropriated Funds Instrumentalities Act (NAFIA), Commissioned Officers of the Public Health Service, and contract employees working under the daily supervision of Federal personnel. Conversely, volunteers are covered under Part 1960 through OWCP reporting requirements, which is not the case for the private sector under Part 1904.

The existing Part 1960 also creates inconsistencies in recordkeeping among Federal establishments. FECA compensability covers injuries to employees that occur on the employer's premises during work hours or in reasonable proximity to the work hours, and the incident is recorded if a CA form is submitted to OWCP because the incident results in a reimbursable medical expense to the employee. Establishments with in-house medical facilities or with contracts for medical services to treat their employees are likely to have fewer claims filed under FECA for medical reimbursement, and therefore are likely to have fewer incidents that are recordable. Establishments without in-house medical facilities or contracts for medical service would record employee injuries and illnesses that result in filing a CA form for any reimbursable medical expense(s). Federal agency establishments with in-house medical staff frequently do not record such events, while those establishments that rely on outside medical staff to treat their injured or ill employees would record such events.

Another example of current inconsistencies in recordkeeping among Federal agencies lies with the U.S. Postal Service (USPS). As mentioned earlier, the U.S. Postal Service, which comprises approximately one-third of the Federal sector workforce in the Executive Branch, is already recording injuries and illnesses under Part 1904 regulations, while the remaining two-thirds of the Federal sector are recording under Part 1960.

The existing Part 1960 system captures little data that are useful in identifying root causes of accidents, fails to adequately capture days away from work, fails completely to capture days of restricted activity or job transfer, and fails to capture important data related to bloodborne pathogens, such as needlesticks and other sharps injuries.

Additional reasons for changing Federal agencies' recordkeeping requirements to the Part 1904 system include: the OSHA 300 log more accurately reflects injuries and illnesses at a glance than does the existing Federal agency log; injuries and illnesses for all employees, including contract employees who are supervised by Federal employees on a daily basis and whose employers do not also record, will be covered; the calendar year reporting will be consistent with the recordkeeping practices in private industry; and, a unified tracking system will result for all workplace injuries and illnesses covered by OSHA.

OSHA's Voluntary Protection Program (VPP) is a program that recognizes worksites with exemplary safety and health programs. In the VPP, management, labor, and OSHA establish cooperative relationships at workplaces that have implemented a comprehensive safety and health management program. OSHA's experience indicates that when an employer commits to the VPP approach to safety and health management and completes the challenging VPP application process, the result includes a dramatic improvement in the organization's safety and health performance.

To qualify for VPP, an establishment must have comprehensive safety and health management programs that include effective injury, illness, and accident recordkeeping, as well as injury and illness lost time and total case rates below the national averages, as measured under Part 1904. As Federal agencies participating in VPP are currently required to maintain records under two systems, the Federal sector has just over ten VPP sites (including a few in the USPS, as of December 31, 2003) compared to over 1,000 in private industry. Adopting the Part 1904 recordkeeping system for the Federal sector will yield consistent injury and illness data, and would make participation in the VPP program much more attractive to Federal agencies.

Standardizing the private and Federal sector recordkeeping and reporting requirements will lessen the administrative burden on OSHA when changes to the recordkeeping requirements need to be made, as well as streamline training efforts. If the recordkeeping systems remain separate, any changes made to the requirements in the private sector will not be applicable to the Federal sector, unless additional modifications to Part 1960, Subpart I, are made reflecting such changes. Requiring Federal agencies to comply with Part 1904 will largely eliminate this problem. Additionally, standardizing the private and Federal sector recordkeeping and reporting requirements will eliminate OSHA's need to develop and present separate training, outreach, interpretations, etc. on both systems.

The advantages of improved recordkeeping fall into two groups. Improved recordkeeping will enhance the ability of Federal agencies and Federal employees to prevent occupational injuries and illnesses. Also, improved recordkeeping and reporting will increase the utility of injury and illness records for Federal agency safety and health staff as well as OSHA's oversight function.

(1) Enhanced Ability of Federal Agencies and Their Employees to Prevent Injuries and Illnesses. Collecting additional or improved information about events and exposures of injuries and illnesses on Form 301, including information on the location, the equipment, materials or chemicals being used, and the specific activity being performed, will increase the ability of Federal agencies and their employees to identify hazardous conditions and take remedial action to prevent future injuries and illnesses. Identifying the irritating substance that caused an employee to experience a recordable case of occupational dermatitis, for example, could prompt a Federal agency to re-examine available Material Safety Data Sheets to identify a non-irritating substitute material. On Form 301, details will be recorded in a logical sequence that will help structure the information and focus attention on problem processes and activities. Thus the establishment's records of injuries and illnesses will provide management with an analytical tool that can be used to control or eliminate hazards.

(2) Increased Utility of Data to Federal Agency Safety and Health Staff and OSHA. Improvements in the quality and usefulness of the records being kept by Federal agencies will enhance their capacity to: focus investigative efforts on the most significant hazards; identify types or patterns of injuries and illnesses whose investigation might lead to prevention efforts; and, set priorities among Federal agency establishments for inspection purposes. Federal agencies and their employees both stand to benefit from the more effective use of Agency resources. The enhanced ability of safety and health personnel to identify patterns of injuries will enable them to focus on the more serious hazards.

Identifying such patterns will also increase the ability of Federal agencies to control these hazards and prevent other similar injuries. To the extent that Federal agencies take advantage of this information, the task of OSHA's oversight function will be facilitated. Federal employees clearly will also benefit from these reductions in injuries.

(1) Forms Simplification and Definitions. Simplifying the forms used by Federal agencies will result in improved information. The same is true of definitional changes, such as counting lost workdays or restricted workdays as calendar days and capping the count at 180 days. Easier recording of data will make records of individual cases more complete and consistent. By using simplified recording procedures, we hope to encourage more complete recording of job-related injuries and illnesses. This process is illustrated by the change from days away from work to calendar days. This change represents an explicit decision to shift the emphasis from lost productivity to the seriousness of the injury or illness. Calendar days are a more accurate and consistent reflection of seriousness than are lost scheduled workdays. They are also directly comparable across establishments and industries while days away from work are not. Thus, calendar days produce more useful information for the purpose of assessing patterns of injuries and illnesses. This variable is also generally much simpler to determine and record, so that the information is more likely to be complete and accurate. This combination of attributes, OSHA believes, will substantially improve the quality of the information available for analysis and enhance the resulting actions taken to reduce job-related injuries and illnesses.

(2) Recordable Injuries and Illnesses. The changes in defining injuries and illnesses that are recordable have several advantages. In general, they follow a pattern of simplification and/or more cost effective targeting of recording requirements, which should produce the types of advantages discussed above. Changes that add to the information recorded have other benefits as well.

Specified Recording Thresholds. One change involves identifying the threshold at which a medical removal condition or restriction is to be recorded, and tying this to the level in a specific OSHA standard (lead, cadmium, etc.). This requirement involves no increase in cost to Federal agencies since the pre-removal or restriction conditions are already required under the specific OSHA standard.

Needlesticks and Sharps Injuries and Hearing Loss Cases. By far the most extensive change in recording is the requirement to report all needlesticks and sharps injuries involving exposure to blood or other potentially infectious materials. In effect, OSHA is changing the emphasis on these injuries from the effects (the injury's medical treatment) to the actual injury caused by the incident ( i.e. , the needlestick or sharps injury). Recording all needlesticks and sharps injuries will provide far more useful information for illness prevention purposes to Federal agencies that administer hospitals and other medical facilities. Unlike many other conditions ( e.g. , blood poisoning and hearing loss) that are progressive, AIDS and hepatitis are either present or they are not. In any given work setting, the risk is probabilistic and bi-modally distributed; whether one is infected by an injury or one is not. Under these circumstances, the important focus is to prevent all injuries that might lead to illness. For that prevention strategy to be successful, however, the agency should have a complete picture of the overall pattern of all needlesticks and sharps injuries. This requires recording all such injuries, whether or not they result in AIDS, hepatitis, or other bloodborne illness.

Because of their high mortality and disability potentials, AIDS and hepatitis are particularly serious illnesses. One implication of this fact, however, is that the benefits per case of prevention are large. Another implication is that there are substantial employee morale benefits to a prevention program that is comprehensive and well informed. Recording all risky wounds and then using the data for prevention are actions that are reasonable. Adopting Part 1904 provisions is also likely to result in indirect benefits in the form of improved patient care.

Hearing loss cases also result in substantial disability and can lead to safety accidents in the workplace. OSHA believes that aligning the recording threshold for such cases with the Standard Threshold Shift criterion in the Agency's Occupational Noise Standard will simplify recording for many Federal agencies that are already familiar with this criterion. The shift in this recording criterion will also increase the number of hearing loss cases captured by the recordkeeping system and provide core opportunities for Federal agencies to intervene to prevent other hearing loss cases.

(3) Procedural Changes and Informational Requirements. The relationship between costs and benefits varies for the final rule's procedural changes and for its requirements for additional information. Some provisions have positive but trivial costs. Others have more significant costs but provide substantial advantages.

De Minimis Costs. A number of changes have costs that are so low that the benefits of the change are clearly greater. Examples include the provisions discussed below. Recording incidents within seven calendar days, rather than six working days, will impose costs for more rapid recording on establishments that work only five days a week. The reduced burden resulting from a simpler deadline—one week later—almost certainly outweighs this minimal cost, however. Moreover, for establishments that operate six or seven days a week, such as the law enforcement agencies, this change does not impose any additional costs. Under Part 1960, Federal agencies must compile the Annual Summary on a fiscal year basis, complete the Summary not later than 45 calendar days after the close of the fiscal year, and post the Summary copy for a minimum of 30 consecutive days. Under Part 1904, the Summary must be compiled at the end of the calendar year, completed no later than February 1, and posted until April 30. The cost, if any, for posting (but not revising) the Annual Summary for three months, rather than one month, is extremely small—particularly considering that quite a number of other certificates and information ( e.g. elevator or boiler inspection certificates) must be posted at all times. The ability of employees to refer back to the Annual Summary information, as well as the availability of the information to new employees when they are hired, clearly produces benefits that exceed the costs.

Certification by an Agency Executive. The requirement that an Agency executive certify the Summary will have the effect of increasing the oversight and accountability of higher management in health and safety activities. The certifying official will be responsible for ensuring that systems and processes are in place, and for holding the recordkeeper accountable. This increased awareness of job-related injuries and illnesses, and of their prevention, will translate into fewer accidents and injuries because the certifying executive will have a heightened sense of responsibility for safety and health, although quantifying this benefit is not possible at this time.

Additional Data Requirements for Form 301 and Form 300-A. The final rule will require Federal Agencies to provide several additional pieces of information, at an estimated cost of two minutes per Form 301 and twenty minutes per Form 300-A. Additional information related to incidents (on Form 301) includes: employee's date of hire, emergency room visits, time the employee began work (starting time of the shift), and time of the accident. Additional establishment information (on the Form 300-A Summary) includes: annual average number of employees employed in that year, and total hours worked by all employees during the year. Information on the injured employee's date of hire can provide insight into a number of factors that have been shown to relate to injury rates. Such factors may include inadequate training, inexperience on the job, etc. If OSHA were to link its injury data with information on the distribution of job tenure, for example, it could then calculate injury rates by job tenure category for different jobs. That information will help to identify areas where better training would have the greatest potential to reduce injuries. Data on starting times of shifts and the time of occurrence of the accident will facilitate research on whether accidents rates vary by shift, and whether certain portions of a shift are particularly dangerous. This information will be helpful to OSHA as well as a Federal agency's own assessment of workplace safety and health. Most importantly, employees will receive the information they need to understand both the absolute and relative incidence of injuries and illnesses in their establishment. The inclusion of information concerning the average number of employees and total hours worked by all employees during the year will make it easier to calculate incidence rates directly from the posted summary. Federal agencies will also benefit from their ability to obtain incidence information quickly and easily. At the establishment level, occupational injury and illness records are examined at the beginning of a safety and health inspection and used by compliance personnel to identify safety and health problems that deserve attention. The data on Form 300 and Form 301 will also be used to determine what areas of the site, if any, warrant particular attention during the inspection.

The Federal Advisory Council on Occupational Safety and Health (FACOSH) was established by Executive Order 11612 to advise the Secretary of Labor on matters relating to the occupational safety and health of Federal employees. At the request of FACOSH, OSHA held a meeting on October 31, 2002 to discuss proposed changes to Federal agency occupational injury and illness recordkeeping and reporting requirements. Representatives from fourteen Federal departments or agencies and two Federal employee unions attended the meeting. Although OSHA received almost unanimous consensus that recordkeeping requirements for Federal agencies should be changed, two issues were raised.

The first issue concerned whether under the proposed change a Federal agency could collect and report their injury and illness data on a fiscal year basis instead of a calendar year basis. Some agencies wanted to report on a fiscal year basis so that the OSHA 300 log and the workers' compensation chargeback costs reflected the same time periods. Currently, fiscal years (October through September) and chargeback years (July through June) do not reflect the same time periods. However, since OWCP chargeback data are available to each agency on a quarterly basis, agencies could use their data to compare chargeback costs to OSHA recordable injuries and illnesses for any period of time they desired. Also, use of the calendar year recording and reporting would allow for more accurate comparisons of Federal and private sector data.

At the meeting, the second issue discussed was the differences between the information required on the CA forms and the OSHA 301 incident report, and having to complete two different forms. While preparation of duplicative paperwork should be avoided, clearly in most instances if the CA form is used, a supplemental statement will frequently still be necessary to comply with OSHA reporting requirements. Agencies must be sensitive to the fact that the CA-1 or CA-2 is frequently the first entry in a FECA case record, and these forms are maintained in a Privacy Act government-wide system of records known as DOL/GOVT-1. Release of information on the CA forms must be consistent with the purpose for which the record was created and must be authorized by the Federal agency as a routine use under the Privacy Act. While elements of the CA-1, CA-2, and CA-6 contain some information useful to OSHA, OWCP's forms are focused on identifying the injury, properly compensating the individual for any wage loss or impairment, and affecting a smooth return to duty. The data collected by OWCP, while valuable for its purpose under FECA, may for OSHA's purposes provide too much unnecessary and extremely personal information about the employee and too little information on the details of how the injury occurred. Accordingly, while use of the information on the CA forms is not prohibited under the new OSHA rule because the Department of Labor seeks to minimize the burdens placed on agencies, OSHA recommends that each agency analyze whether it would be just as easy and cost effective to comply with these new requirements by implementing a system where OSHA 301 forms are completed contemporaneously with CA forms. The information requested on the OSHA 301 form, such as Items 14-17 which asks, “What was the employee doing just before the incident occurred?”, “What happened?”, “What was the injury or illness?”, or “What object or substance directly harmed the employee?”, are not asked on the CA forms. Certain data elements contained on the CA forms contain personal information (such as the names of eligible dependents under FECA) which must be deleted before the CA forms are utilized to comply with OSHA's new rule. For example, the following information must be deleted from the CA-1 forms: Entry 2 for Social Security Number, Entry 3 for Date of Birth, Entry 5 for Home Telephone Number, Entry 6 for Grade Level as of the date of injury, Entry 7 for Employee's Home Mailing Address, Entry 8 for Dependent Information, Entry 19 for Employee's Retirement Coverage, Entries 30 and 31 relating to information on Third Party subrogation, Entries 32 to 34 relating to medical treatment and the Receipt of Notice of Injury.

The Department of Labor wishes to note that the use of electronic filing systems for Federal workers' compensation claims would facilitate the elimination of those data fields not needed by OSHA. Moreover, an electronic prompt could then be developed when preparing the OSHA Form 301 at a time when memories of the injury are fresh and useful details about the injury can be most easily obtained. For example, a description of an injury on a CA form, such as “slipped in hallway,” while sufficient for FECA purposes, might fail to alert safety and health professionals to the fact of which hallway or that the hallway in question is improperly lighted or slippery.

At the January 10, 2003 FACOSH meeting, OSHA gave a presentation describing the differences between recordkeeping requirements under Parts 1904 and 1960. OSHA pointed out that Part 1904 provides very specific instructions on recording criteria, and even contains a flow chart to aid in the decisionmaking process of recordability. OSHA also discussed the new forms and reviewed the timeframes to record injuries and illnesses. A number of questions followed the presentation, and FACOSH recommended that OSHA hold a meeting of Federal agency safety and health representatives to discuss the impact of the proposed recordkeeping change.

On February 25, 2003, OSHA held an informal meeting that was open to the public to discuss the proposed change. This meeting was announced in the Federal Register on February 10, 2003 (Vol. 68, No. 27 FR 6783). The meeting agenda included: reason for the proposed change, description of the change, impact of the change, and implementation of the change. The meeting also provided a forum to air any issues that Federal agencies or the public wanted to bring up regarding the proposed change. The meeting produced four main issues: cost, timing, systems adjustment, and training. Representatives attended the meeting from twenty-one Federal agencies, two labor unions representing Federal employees, and several members of the public.

Some felt that since Federal injury and illness rates continued to fall, Federal agencies would receive no benefit in switching recordkeeping systems. OSHA explained that this statement was not entirely accurate. Federal rates increased slightly between 1999 and 2001, while the private sector rates declined by 9.5%. However, as already mentioned, comparing rates between the two recordkeeping systems is not currently possible because the two systems do not measure the same injury and illness experiences.

Some agencies were concerned about the training costs they expected to incur to educate their employees about the new recordkeeping procedures. OSHA explained that while there could be some costs associated with training, this should not be significant. The new system is similar to existing Part 1960, Subpart I, in recording injury and illness incidents, and the Part 1904 regulation is written in plain, user-friendly language, which should permit easily understandable recording criteria. Additionally, OSHA has developed training materials and will make training available as resources permit. OSHA will maximize the use of distance-learning technology and satellite broadcasting to make training available to the greatest number of personnel at the lowest possible cost. In some instances, OSHA plans to make available DVDs and videos to disseminate training materials, and OSHA has Part 1904 recordkeeping training material already available on its website.

Based on OSHA's experience with other transitions to Part 1904, the overall costs associated with changing the Federal agency injury and illness recordkeeping system should not be significant. Many Federal agencies perform work activities comparable to private sector employers, and OSHA has not been made aware of any significant concerns raised by the private sector related to the economic resources needed to complete the transition to and subsequent compliance with Part 1904. Any discussion regarding the cost to the Federal Government for implementing the provisions under Part 1904 must be considered in light of the fact that OSHA already requires private sector employers, some with as few as eleven employees, to comply with these same recordkeeping requirements. Likewise, since 2001, twenty-six States have been requiring employers of public sector employees (State and local government employees) to comply with the Part 1904 recordkeeping requirements, and there has been no indication of a resource problem.

OSHA has also discussed Part 1904 transition with the U.S. Postal Service, and no significant problems related to cost have been identified. During 1999, the Postal Service established Part 1904 requirements at 38,000 of its facilities nationwide, and although the Agency did not specifically monitor the cost of training or implementation, the Postal Service did derive several benefits in its incident prevention efforts. For example, after implementing Part 1904, the Postal Service created an enhanced database of causal factors based on the reporting and investigation of all occupational injuries and illness beyond those previously reported to OWCP. The new information was used by the Postal Service to develop recommendations to address those causal factors and prevent reoccurrence of similar incidents. Since 1998, the Postal Service has achieved an 11% reduction in their lost time case rate (from 3.03 in FY 1998 to 2.69 in FY 2003). The Postal Service lost time case rate (a measurement of the occurrence of severe injuries and illnesses) represents an 18% improvement over the rest of Executive Branch Federal agencies. OSHA considers the information obtained from the Postal Service to be significant since the USPS employs approximately one-third of the total Federal workforce.

The Occupational Safety and Health Administration does not consider an economic feasibility study to be necessary for the purpose of this regulation. In the private sector employers with as few as eleven employees must comply with the requirements of 29 CFR Part 1904. It cannot be reasonably argued that the costs would be too great for the United States Government to comply. As discussed above the U.S. Postal Service converted their recordkeeping to conform with1904 in 1999 and then in 2002 made the transition to the revised 1904. They did not track the costs incurred in making these transitions but did not feel that the costs exceeded the benefits of the change.

Like their private sector counterparts, Federal agencies will incur the initial costs of training recordkeeping personnel. This is estimated at one hour per person trained. Each Federal establishment will incur the annual costs of setting up the log and posting the annual summary. OSHA estimated that this will require 8 minutes per establishment. However, since Federal agencies already must keep a log, and must post a summary, it is estimated that these tasks will not create additional costs for Federal agencies. The proposed regulation requires the senior establishment management official or someone in the direct chain of command between the senior establishment manager and the agency head to certify that he or she has examined this document and “reasonably believes, based on his or her knowledge of the process by which the information was recorded, that the annual summary is correct and complete.” This is not significantly different than the private sector requirement for certification by the owner of the company, an officer of the corporation, the highest ranking company official working at the establishment, or the immediate supervisor of the highest ranking company official working at the establishment. OSHA estimated the amount of time for this activity as 30 minutes. The amount of time for the record keeper to prepare the annual summary was estimated as 20 minutes.

The costs of maintaining the Log and Incident Reports are related to the number of cases recorded. During the private sector rule making OSHA estimated that it will require an average of 15 minutes for the Log entry plus, for 18% of the cases, 22 minutes for the 301 form following the requirements of 29 CFR Part 1904. In fiscal year 2003 Executive Branch agencies (excluding the U.S. Postal Service) * reported 81,283 non fatal injuries, and 61 fatalities. This equates to 50161 hours for 1,941,511 Federal employees or slightly more than 1.5 minutes for each covered employee. This figure assumes 15 minutes to complete the log entry and 22 minutes to complete the 301 for 100% of the incidents.

The current rule requires employers to provide the Log and Incident Reports to an OSHA inspector during a compliance visit. Federal establishments like their private sector counter parts are required by the final rule to provide a copy of these forms to the inspector on request. OSHA believes that providing copies has in fact been the practice in the past, even though former rule did not spell this out specifically. OSHA thus does not believe that this small change in the regulation will result in burdens or costs for Federal establishments.

This regulation requires employers to set up a way for employees to report work-related injuries and illnesses and inform employees about the approach they have chosen. OSHA assumes that it will take a Personnel Training and Labor Relations Specialist (or equivalent) at each establishment an average of twenty minutes to decide on a system and inform employees of it. The “way” will usually simply involve directing supervisors to inform their subordinates, as part of their usual communication with them, to report work-related injuries and illnesses to their supervisor. Most, if not all, establishments require employees routinely to report problems of any kind to their supervisors, and reporting injuries and illnesses is simply one of the kinds of things employees report. OSHA believes there will be no additional cost associated with the supervisors' forwarding of these reports to the person in charge of recordkeeping, because this is already part of supervisors' duties.

A costs analysis conducted for the private sector rule making on 29 CFR Part 1904 estimated the average annual costs of compliance with this regulation for private sector establishments were less than $58.00 for all businesses in the private sector. For establishments with fewer than 20 employees, the average annual costs per establishment were $31.63 ( Federal Register Vol 66, No. 13/ Friday, January 19, 2001/page 6108).

Because the requirements for the Federal establishments will be essentially the same as covered private sector establishments there is no reason to believe that the costs per Federal establishment will exceed the costs for private sector establishments.

For a full explanation of the costs and how they were estimated, see Federal Register Vol. 66, No. 13/Friday, January 19, 2001/pages 6089-6108.

In addition to providing training and compliance assistance, during the first year in which the Part 1904 recordkeeping provisions are in effect, OSHA compliance officers conducting inspections at Federal establishments will focus on assisting Federal agencies to comply with the new rule. OSHA will not issue notices for violations under Part 1960, Subpart I, until January 1, 2006, provided that the Federal agency is attempting in good faith to meet its recordkeeping obligation and agrees to make corrections necessary to bring the records into compliance.

Some agencies questioned how OSHA would communicate the Part 1904 recordkeeping change to the Federal sector. OSHA suggested that the field Federal Safety and Health Councils (FSHC) would be a good source to help communicate information across the country. The FSHCs, which include approximately fifty chapters throughout the country, are cooperative interagency organizations chartered by the Secretary of Labor to facilitate the exchange of information regarding occupational safety and health. OSHA agreed to participate in communication and training as resources permitted, and believed that train-the-trainer courses would work well to help prepare Federal agencies throughout the nation for the recordkeeping change.

In response to a concern about whether Federal agencies and their employees will be more inclined to underreport or manipulate the recording of injuries, OSHA stated that like the current OWCP-based recording system, the accuracy of records under Part 1904 relies on agency and employee integrity.

Another issue raised was whether as a result of the OSHA recordkeeping system change agencies would lose the independent data provided by OWCP. OSHA explained that OWCP data will not be impacted by this change, and will continue to be available to Federal agencies. The OWCP data track different issues and information, and would still be available to measure workers' compensation injuries and associated costs. OSHA agrees that Federal agencies may use OWCP CA forms in lieu of the OSHA 301 forms, provided that the Federal agencies include the additional OSHA-required information on an attached supplemental sheet (to include the four questions mentioned earlier).

One commenter raised the concern that including applicable portions of the Part 1904 system would require Federal agencies to record different or non-traditional incidents, such as information related to workplace violence. OSHA believes that requiring Federal agencies to keep records under the Part 1904 system would have the opposite effect. Indeed, under existing Part 1960, Subpart I, Federal agencies are required to report on the OSHA log injuries resulting from workplace violence when medical care is provided and information is reported on the OWCP CA-1 Form. Likewise, OSHA's current recordkeeping requirements for the private sector under Part 1904 include the recording of injuries resulting from workplace violence. OSHA believes that the standardization of recordkeeping requirements will eliminate much of the uncertainty as to whether specific incidents should be recorded, and will require Federal agencies to record injuries and illnesses regardless of whether they are recordable under OWCP.

Another apprehension raised by one commenter was whether changing to the Part 1904 requirements would cause injury and illness rates to go up. OSHA explained that the change could affect those rates. Some agencies might experience a reduction in rates, some might have rates that go up, and some might have rates that remain the same. The increased accuracy in recordkeeping resulting from the change to the Part 1904 system could cause injury and illness rates to go down, but if an agency is not recording them accurately under existing Part 1960, Subpart I, the rates could go up. For instance, injuries and illnesses related to diagnosis, prevention, first aid, or in some cases travel on temporary duty (TDY) would no longer be recordable, and would result in a reduction in the number of recordable incidents. As stated earlier, one of the reasons for making the change is because the two systems do not track the same incidents, and therefore do not keep a record of the same data. The data will change, and this may cause injury and illness rates to go up or down. It should be noted that the current system under 29 CFR Part 1960 does not track injuries of contract employees. Under 29 CFR 1904.31, employers “must record the recordable injuries and illnesses that occur to employees who are not on your payroll if you supervise these employees on a day-to-day basis.” Because of this provision, Federal agencies will be responsible for recording recordable injuries sustained by independent contractors who work alongside Federal employees. If a Federal agency chooses to use OWCP Forms CA-1, CA-2 and CA-6 for the purpose of complying with OSHA's recording requirements, agencies should not use the CA forms for recording injuries sustained by contractors. To do so would create administrative problems for OWCP and potential confusion over workers' compensation coverage for such individuals. As a result, OSHA Form 301 must be used to record injuries and illnesses of contract employees.

OSHA acknowledged that agencies could incur additional costs to develop information systems that would capture their injury and illness experience and subsequent data roll-up (collecting and assembling injury and illness statistics from subordinate establishments into reports that reflect the total agency experience), but explained that the Part 1904 recordkeeping change does not include a requirement mandating data roll-up. Federal agencies would not have to invest in a data roll-up system, but OSHA acknowledged that agencies would have the discretion to use the data as a management tool for executing their safety and health programs. The meeting closed with the agreement that absent the mandate to roll-up the data, the agency representatives had no substantive reasons why OSHA should not go forward with the proposed recordkeeping change. Of note, while most participants were opposed to mandating roll-up, there was a consensus that OSHA should look at systems that could be offered Government-wide to assist agencies in the roll-up of their safety and health recordkeeping data.

As noted above, the final rule requires Federal agencies to use the same injury and illness reporting forms as the private sector. Specifically, Federal agencies will be required to use OSHA Form 300, Log of Work-Related Injuries and Illnesses (replacing the OSHA Federal Agency Log), and OSHA Form 300-A, Summary of Work-Related Injuries, and OSHA Form-301, Injury and Illness Incident Report (replacing OSHA Form 101, Supplementary Record of Occupational Injuries and Illnesses). As with the existing requirements under Part 1960, Subpart I, OSHA will continue to allow Federal agencies to use alternate forms, such as workers' compensation claim forms, to report OSHA injury and illness information. The use of alternate workers' compensation claim forms to record OSHA injury and illness information is also currently available to private sector employers under Part 1904. In both the private sector and Federal sector, any use of alternate forms to record occupational injuries and illnesses must include all OSHA-related information (29 CFR 1904.29(a) and 29 CFR 1960.66(e)).

The final rule continues OSHA's long-standing policy of allowing employees and their representatives to access the occupational injury and illness information kept by their employers, with some limitations. Part 1904 requires an employer to provide limited access to the OSHA injury and illness recordkeeping forms to current and former employees, as well as to two types of employee representatives. The first is a personal representative of an employee or former employee, who is a person that the employee or former employee designates, in writing, as his or her personal representative, or is the legal representative of a deceased or legally incapacitated employee or former employee. The second is an authorized employee representative, which is defined as an authorized collective bargaining agent of one or more employees working at the employer's establishment.

29 CFR 1904.35 accords employees and their representatives three separate access rights. First, it gives any employee, former employee, personal representative, or authorized employee representative the right to a copy of the current OSHA 300 Log, and to any stored OSHA 300 Log(s), for any establishment in which the employee or former employee has worked. The employer must provide one free copy of the OSHA 300 Log(s) by the end of the next business day. The employee, former employee, personal representative, or authorized employee representative is not entitled to see, or to obtain a copy of, the confidential list of names and case numbers for privacy cases (as discussed above).

Second, any employee, former employee, or personal representative is entitled to one free copy of the OSHA 301 Incident Report describing an injury or illness to that employee, by the end of the next business day. Finally, an authorized employee representative is entitled to copies of the right-hand portion of all OSHA 301 forms for the establishment(s) where the representative represents one or more employees under a collective bargaining agreement. The right-hand portion of the 301 form contains the heading “Information about the case,” and elicits information about how the injury or illness occurred, including the employee's actions just prior to the incident, the materials and tools involved, and how the incident occurred, but does not contain the employee's name. No information other than that on the right-hand portion of the OSHA 301 form may be disclosed to an authorized employee representative. The employer must provide the authorized employee representative with one free copy of all the 301 forms for the establishment within seven calendar days.

Part 1904 also includes a number of provisions requiring employers to protect the privacy of employees when recording injuries and illnesses. For certain injuries and illnesses listed under § 1904.29, the employer must omit the employee's name from the OSHA 300 Log. Instead, the employer simply enters “privacy case,” and keeps a separate, confidential list containing the identifying information. The separate listing is needed to allow OSHA and other government representatives to obtain the employee's name during a workplace inspection and to assist employers in keeping track of such cases in the event future revisions to the entry become necessary. This approach also allows the employer to provide OSHA 300 Log data to employees, former employees and employee representatives, as required by § 1904.35, while at the same time protecting the privacy of workers who have experienced occupational injuries and illnesses that have privacy concerns.

Under Part 1904, privacy cases include injury and illness to an intimate body part or the reproductive system; injury or illness resulting from sexual assault; mental illnesses; HIV infection, hepatitis, or tuberculosis; needlestick injuries and cuts from sharp objects that are contaminated with another person's blood or other potentially infectious material; and, other illnesses, if the employee voluntarily requests that his or her name not be entered on the log. Mental illnesses are not considered work-related unless the employee voluntarily provides the employer with an opinion from a physician or other licensed health care professional with appropriate training and experience stating that the employee has a mental illness that is work-related. Also, if the employer has a reasonable basis to believe that information describing the privacy concern case may be personally identifiable even though the employee's name has been omitted, the employer may use discretion in describing the injury or illness. In such cases, the employer must enter enough information to identify the incident and the general severity of the injury or illness.

The Privacy Act of 1974, 5 U.S.C. 552a (2000) regulates the collection, maintenance, use, and dissemination of personal information by Federal agencies. Section 552a(e)(4) of the Privacy Act requires that all Federal agencies publish in the Federal Register a notice of the existence and character of their systems of records. The Privacy Act permits the disclosure of information about individuals without their consent pursuant to a published routine use where the information will be used for a purpose that is compatible with the purpose for which the information was originally collected.

OSHA anticipates that Federal agencies will develop agency-specific data systems for recording illness and injury information to meet the requirements of the revised Part 1960, Subpart I. While OSHA does not require that Federal employee illness and injury records be retrieved by individual identifiers, some Federal agencies developing illness and injury data systems may find it useful to do so. Each agency is responsible for assuring its own compliance with the Privacy Act, and for establishing Privacy Act systems of records when the agency determines such compliance is required. As noted above, the revised recordkeeping rules include mandatory access rights to certain illness and injury records, such as an employee's right to copy the OSHA 300 Log and an employee representative's right to view the non-identifying right-hand portion of the OSHA 301 Incident Report (29 CFR 1904.35). Where an agency determines that all or part of the records required under the revised OSHA recordkeeping rule are part of a Privacy Act records system, the agency is responsible for issuing appropriate Notices of Routine Use to ensure that all access rights prescribed in Part 1960, Subpart I, are preserved.

As described elsewhere in today's final rule, Federal agency injury and illness recordkeeping requirements will, with certain modifications, be the same as those in subparts C, D, E and G of Part 1904. However, in order to eliminate confusion, and provide for a single definition, today's final rule will not adopt the definition of “establishment” in Part 1904.46. Instead, the definition of establishment in existing Part 1960.2(h) will remain applicable to Federal agencies. OSHA believes the existing definition of establishment in 1960.2 better describes the application of that term in the Federal sector.

Unlike the private sector, it is common for most Federal agencies to have multiple establishments throughout their national and regional offices. Under Part 1960, the term establishment means a single physical location where business is conducted or where services or operations are performed. Where distinctly separate activities are performed at a single physical location, such as in a typical national or regional office of an executive branch department where headquarters for several agencies or programs are housed, each agency headquarters operation must be treated as a separate establishment. At the Department of Labor, for example, regional and national offices for OSHA, the Employment Standards Administration, Employment and Training Administration, Employee Benefits Security Administration, etc. would all be treated as distinct establishments for illness and injury recordkeeping purposes. Typically, an establishment as used in Part 1960 refers to a field activity, regional office, area office, installation, or facility.

OSHA is also amending certain provisions in existing Part 1960 to eliminate duplication and provide consistency with the requirements in Part 1904. First, today's final rule amends Part 1960.2(l) to incorporate the regulatory text from the definition of “injury and illness” set forth in Part 1904.46. As a result, the existing language defining Categories of injuries/ illnesses/fatalities in 1960.2(l)(1) through (6) is deleted, and replaced with the definition for injury and illness from 1904.46.

Likewise, in order to make Part 1960 consistent with Part 1904, today's final rule modifies the requirements in existing 1960.29(b) addressing accident investigation. Existing 1960.29 provides that, while all accidents should be investigated, such investigation should be reflective of the seriousness of the accident. Existing paragraph (b) includes a statement directing Federal agencies that “each accident which results in a fatality or the hospitalization of five or more employees shall be investigated to determine the causal factors involved.” Today's final rule modifies this provision to direct Federal agencies to conduct an investigation after “a fatality or the in-patient hospitalization of three or more employees.” This change preserves the requirement in the current Part 1960 that federal agencies investigate multiple-hospitalization accidents, but reduces the trigger from five to three to conform with the revised requirements in 29 CFR 1960.70 and 1904.39 that agencies report to OSHA accidents that involve a fatality or the hospitalization of three or more employees.

This rule relates to matters of Federal agency management and personnel and, therefore, is exempt from the usual Administrative Procedure Act requirements for prior notice and comment and a 30-day delay in effective date. See, 5 U.S.C. 553(a)(2) and (d).

The Paperwork Reduction Act (44 U.S.C. 3501 et seq. ) does not apply because this rulemaking, which applies only to Federal agencies, does not create or modify information collection requirements that require the approval of the Office of Management and Budget. Additionally, the Department of Labor has determined that this rulemaking is a nonmajor rule under the Congressional Review Act (5 U.S.C. Chapter 8) and will submit a report thereon to the U.S. Senate, House of Representatives, and General Accounting Office in accordance with that law at the same time this rulemaking document is sent to the Office of the Federal Register for publication.

Because this rulemaking applies only to Federal agencies, the Department of Labor certifies pursuant to the Regulatory Flexibility Act, (5 U.S.C. 605(b)), that this final rule will not have a significant impact on a substantial number of small entities. Similarly, the requirements of the Unfunded Mandates Reform Act of 1995 and Executive Order 13132 addressing “Federalism” do not apply. The Department of Labor has also determined that this is not a “significant regulatory action” under Section 3(f) of Executive Order 12866, “Regulatory Planning and Review,” and that it relates to a matter of agency organization, management, or personnel. See Executive Order 12866; Section 3(d)(3).

As described below, the final rule revises OSHA's requirements for the recording and reporting of work-related deaths, injuries, and illnesses for Federal agencies.

The final rule becomes effective on January 1, 2005. At that time, the following recordkeeping actions will occur:

(1) The revisions to 29 CFR Part 1960, Subpart I, entitled Recordkeeping and Reporting Requirements, which include reference to pertinent provisions in 29 CFR Part 1904, will be in effect.

(2) Federal agencies will utilize the same injury and illness recordkeeping forms that the private sector is required to use:

(A) OSHA Form 300, Log of Work-Related Injuries and Illnesses (replaces the Log of Federal Occupational Injuries and Illnesses);

(B) OSHA Form 300-A, Summary of Work-Related Injuries and Illnesses;

(C) OSHA Form 301, Injury and Illness Incident Report; and

(3) The following OSHA publication will be withdrawn: OSHA 2014 (revised 1986);

(4) All letters of interpretation regarding the former Federal agency recordkeeping requirements will be withdrawn and removed from the OSHA CD-ROM and the OSHA Internet site.

Summary of the Modifications to Existing 29 CFR Part 1960, Subparts A and D.

Today's final rule deletes the existing language in 29 CFR 1960.2(l) addressing the definition of “Categories of injuries/illnesses/fatalities,” and replaces it with the definition of “injury and illness” set forth at 29 CFR 1904.46. The change is necessary to eliminate duplicative definitions in Part 1960 and Part 1904. Accordingly, new Section 1960.2(l) provides: “(l) Injury or Illness. An injury or illness is an abnormal condition or disorder. Injuries include cases such as, but not limited to, a cut, fracture, sprain, or amputation. Illness includes both acute and chronic illnesses, such as, but not limited to, a skin disease, respiratory disorder, or poisoning.”

Existing 29 CFR 1960.29 is revised to provide: “(b) In any case, each accident which results in a fatality or the hospitalization of three or more employees shall be investigated to determine the causal factors involved. Except to the extent necessary to protect employees and the public, evidence at the scene of an accident shall be left untouched until inspectors have an opportunity to examine it.” This change preserves the requirement in the current Part 1960 that federal agencies investigate multiple-hospitalization accidents, but reduces the trigger from five to three to conform with the revised requirements in 29 CFR 1960.70 and 1904.39 that agencies report to OSHA accidents that involve a fatality or the hospitalization of three or more employees.

Summary of the Modifications to Existing 29 CFR Part 1960, Subpart I, to Make the Pertinent Recordkeeping Requirements in Part 1904 Applicable to the Federal Sector.

Today's final rule includes modifications to existing 29 CFR Part 1960, Subpart I, to make the requirements in Part 1904 applicable to the Federal sector. The final rule revises existing 29 CFR 1960.66—Purpose, scope and general provisions—to include new language, as well as removes and redesignates certain paragraphs. Paragraph (a), which includes new language, states: “The purpose of this Subpart is to establish uniform requirements for collecting and compiling by agencies of occupational safety and health data, for proper evaluation and necessary corrective action, and to assist the Secretary in meeting the requirement to develop and maintain an effective program of collection, compilation, and analysis of occupational safety and health statistics.”

Paragraph (b) also includes new language and makes certain provisions in 1904 applicable to Federal agencies. It provides: “Except as modified by this Subpart, Federal agency injury and illness recording and reporting requirements will be the same as 29 CFR Part 1904 Subparts C, D, E, and G.” Paragraph (b) also makes clear that the definition of “establishment” found in 29 CFR 1960.2(h) remains applicable to Federal agencies.

Existing 1960.66(c), which directs Federal agencies to utilize collected information to identify unsafe and unhealthful working conditions and establish program priorities, is retained.

The final rule removes the language in existing paragraph (d) and replaces it with existing paragraph (e). Accordingly, existing paragraph (e), which provides for the use of more detailed recordkeeping forms than those provided by the Department of Labor, is now new paragraph (d). The new paragraph (d) also includes the following additional language: “Because of the unique nature of the national recordkeeping program, Federal agencies must have recording and reporting requirements that are the same as Part 1904 for determining which injuries and illnesses will be entered into the records and how they are entered. All other injury and illness recording and reporting requirements used by any Federal agency may be more stringent than, or supplemental to, the requirements of Part 1904, but must not interfere with the agency's ability to provide the injury and illness information required by Part 1904.”

The final rule also removes existing paragraph (f), but retains the requirements in existing paragraph (g). However, existing paragraph (g), which addresses requirements for secrecy when Federal agencies collect information on occupational injuries and illness related to national defense and foreign policy, is redesignated as new paragraph (e).

The final rule also includes the following note at the end of Part 1960.66: “The recording or reporting of a work-related injury, illness or fatality does not mean that the Federal agency or employee was at fault, that an OSHA rule has been violated, or that the employee is eligible for workers' compensation or other benefits.”

“The requirements of this Part do not diminish or modify in any way a Federal agency's responsibilities to report or record injuries and illnesses as required by the Office of Workers' Compensation Programs under the Federal Employees' Compensation Act (FECA), 5 U.S.C. 8101 et seq. ”

The final rule replaces existing 29 CFR 1960.67—Log of occupational injuries and illnesses—with a new paragraph clarifying who is responsible for certifying the OSHA 300 Log at Federal establishments. The new Section 1960.67 provides: “As required by 29 CFR 1904.32, a company executive must certify that he or she has examined the OSHA 300 Log and that he or she believes, based on his or her knowledge of the process by which the information was recorded, that the annual summary is correct and complete. For Federal establishments, the person who performs the certification must be one of the following: (1) The senior establishment management official, (2) the head of the Agency for which the senior establishment management official works, or (3) any management official who is in the direct chain-of-command between the senior establishment management official and the Agency head.

The final rule also includes a note to Section 1960.67 explaining that the modification to the above requirement for certification of Federal agency injury and illness records is necessary because the private sector position titles contained in the regulation do not fit the Federal agency position titles for agency executives. The Federal officials listed in this paragraph are intended to be the equivalent of the private sector officials who are required to certify records under 1904.32(b)(4).

Today's final rule removes existing Section 1960.68 addressing requirements associated with Federal agency completion of supplementary records of occupational injuries and illnesses. Instead, the new Section 1960.68 addresses “prohibition against discrimination” and provides: “29 CFR 1904.36 refers to Section 11(c) of the Occupational Safety and Health Act. For Federal agencies, the words ‘Section 11(c)’ shall be read as ‘Executive Order 12196, Section 1-201(f).’ ” The revised section includes a note explaining that the modification is necessary because Section 11(c) of the Occupational Safety and Health Act only applies to private sector employers and the U.S. Postal Service. The corresponding prohibitions against discrimination applicable to Federal employers are contained in Section 1-201(f) of Executive Order 12196.

Existing Section 1960.69, which includes requirements for Federal agencies to complete annual injury and illness summaries, is removed. The new Section 1960.69 outlines the retention and updating of old forms. The new paragraph states: “Federal agencies must retain copies of the recordkeeping records utilized under the old system for five years following the year to which they relate and continue to provide access to the data as though these forms were the OSHA Form 300 Log and Form 301 Incident Reports. Agencies are not required to update the old forms.”

The final rule revises existing Section 1960.70, addressing the reporting of serious accidents, to read: “Agencies must provide the Office of Federal Agency Programs with a summary report of each fatal and catastrophic accident investigation. The summaries must address the date/time of accident, agency/establishment name and location, and consequences, description of operation and the accident, causal factors, applicable standards and their effectiveness, and agency corrective/preventive actions.” The final rule also includes a note to Section 1960.70 explaining that the paragraph is retained from the previous regulation 29 CFR 1960.70 paragraph (e). The requirements of this paragraph are in addition to the requirements for reporting fatalities and multiple hospitalization incidents to OSHA under 29 CFR 1904. 39.

The final rule deletes existing Sections 1960.71, Location and utilization of records and reports; 1960.72, Access to records by Secretary; and 1960.73, Retention of records. Existing 1960.74, addressing Federal agencies' annual reports, is retained, but is redesignated as Section 1960.71. Paragraph (a)(2) of the new 1960.71 has been revised to provide: “The Secretary must provide the agencies with the guidelines and format for the reports at the time they are requested.”

Today's final rule also provides that new Sections 1960.72 through 1960.74 are reserved.

This document was prepared under the direction of John L. Henshaw, Assistant Secretary of Labor for Occupational Safety and Health, U.S. Department of Labor, Third and Constitution Avenue, NW., Washington, DC 20210.

Accordingly, pursuant to Sections 19 of the Occupational Safety and Health Act of 1970 (84 Stat. 1609, 1614; 29 U.S.C. 688, 673), 5 U.S.C. 553, Secretary of Labor's Order No. 1-90 (55 FR 9033), and Executive Order 12196.

Introduction: The rule implemented certain provisions of section 7 of the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996. The rule provides two options for relief: (1) notification-based relief for annual reporting, and (2) other requested relief, as proposed by industry and approved by MMS and the State concerned. The rule requires that MMS publish by December 1 of each year, a list of the States concerned and their decision on marginal property relief.

To qualify for the first option of relief (notification-based relief) for Calendar Year 2005, properties must have produced less than 1,000 barrels-of-oil-equivalent (BOE) per year for the base period (July 1, 2003—June 30, 2004). Annual reporting relief will begin on January 1, 2005, with the annual report and payment due February 28, 2006 (unless an estimated payment is on file, which will move the due date to March 31, 2006).

To qualify for the second option of relief (other requested relief), properties must have produced less than 15 BOE per well per day for the base period.

The following table shows states with marginal properties from which a portion of the royalties are shared between MMS and the state and their decision to allow one or both forms of relief.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553 (b)(B), the Coast Guard finds that good cause exists for not publishing a NRPM. Publishing a NPRM, which would incorporate a comment period before a final rule could be issued, and delaying the rule's effective date is contrary to public safety because immediate action is necessary to protect the public and waters of the United States. Moreover, a NPRM is unnecessary due to the limited amount of time this rule will be in effect.

For the same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register. The Coast Guard will issue a broadcast notice to mariners and may place Coast Guard vessels in the vicinity of this zone to advise mariners of the restriction.

This rule is needed to protect spectator craft in the vicinity of the fireworks presentation from the hazards associated with transport, storage, and launching of fireworks. Anchoring, mooring, or transiting within these zones is prohibited, unless authorized by the Captain of the Port, Jacksonville, Florida. The temporary safety zone encompasses all waters 210 feet east and west of the Main Street Bridge and 210 feet east of the Acosta Bridge and 500 yards around both fireworks barges. During the fireworks show, the fireworks will be launched off both sides of the Main Street Bridge in position 30°19.399′ N, 081°39.533′ W and the east side of the Acosta Bridge in position 30°19.326′ N, 081°39.849′ W; as well as from barges located in front of the Landing and the Adam's Mark Hotel.

This regulation 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 cost and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has exempted it from review under the order. It is not significant under the regulatory policies and procedures of the Department of Homeland Security (DHS) because these regulations will only be in effect for a short period of time, and the impacts on routine navigation are expected to be minimal.

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. “Small entities” include small businesses, not-for-profit organizations that are independently owned and operated and are not dominate in their field, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under section 5 U.S.C. 605 (b) that this rule will not have a significant economic impact upon a substantial number of small entities because the regulations will only be in effect for two hours and the impact on routine navigation are expected to be minimal because traffic may transit safely around the zone and traffic may enter upon permission of the Captain of the Port or his representative.

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

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small 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 my 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. Although 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 affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

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

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

We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. Under figure 2-1, paragraph (34)(g), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule.

This 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 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 rule. Under 5 U.S.C. 553(b), the Coast Guard finds that good cause exists for not publishing a NPRM. Publishing a NPRM, which would incorporate a comment period before a final rule could be issued, would be contrary to public safety interests since immediate action is needed to minimize potential danger to the public.

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

The temporary safety zone will encompass all waters of the Savannah River from the Talmadge Bridge (32°05′19″ N 081°05′58″ W) to the east end of the Marriott hotel (32°04′52″ N 81°05′18″ W). The temporary safety zone will be effective from 4:45 p.m. on November 26, 2004, until 9:30 p.m. on November 26, 2004. Marine traffic will not be permitted to enter the safety zone without the permission of the Captain of the Port Savannah or his representative. Any concerned traffic can contact the representative of the Captain of the Port on board the U.S. Coast Guard vessel, which will be on scene throughout the event. Traffic needing permission to pass through this safety zone can contact the representative for the COTP on VHF-FM channel 16 or via phone at (912) 652-4181.

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) because marine traffic should be able to safely transit around the safety zone and may be allowed to enter the zone with the permission of the COTP or his representative.

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 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 because small entities and marine traffic should be able to safely transit around the safety zone and may be allowed to enter the zone with the permission of the COTP.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pubic Law 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. Small entities may contact the person listed under FOR FURTHER INFORMATION CONTACT for assistance in understanding and participating in this rulemaking. We also have a point of contact for commenting on actions by employees of the Coast Guard. 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 this rule does not have implications for federalism.

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

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

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

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

We have analyzed this rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are not required for this rule.

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

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

A. Does this Action Apply to Me? Entities that would be affected by this section are those organizations and facilities subject to 40 CFR part 355—Emergency Planning and Emergency Release Notification Requirements and 40 CFR part 370—Hazardous Chemical Reporting. To determine whether your facility is affected by this action, you should carefully examine the applicability provisions at 40 CFR part 355 and 40 CFR part 370. Entities potentially affected by this action are facilities that produce phosmet formulations, distribute phosmet as a pesticide for commercial use, and farms that store, handle and apply phosmet. If you have any questions regarding the applicability of this action to a particular entity, consult the person(s) listed in the FOR FURTHER INFORMATION CONTACT section.

B. Electronic Access. You may access this Federal Register document electronically through the EPA Internet under the “Federal Register” listings at http://www.epa.gov/fedrgstr. An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to view public comments, access the index listing of the contents of the public docket, and access those documents in the public docket that are available electronically. Once in the system, select “search,” then key in the appropriate docket identification number: SFUND-2003-0007.

The information in this final rule is organized as follows:

This final rule is issued under sections 302 and 328 of the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA).

On October 17, 1986, the President signed into law the Superfund Amendments and Reauthorization Act of 1986 (SARA), Pub. L. 99-499 (1986). Title III of SARA established a program designed to require state and local planning and preparedness for spills or releases of certain hazardous materials and to provide the public and local governments with information concerning potential chemical hazards in their communities. This program is codified as the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA), 42 U.S.C. 11001-11050.

Subtitle A of EPCRA establishes the framework for local emergency planning. The statute requires that EPA publish a list of “extremely hazardous substances” (EHSs). The EHS list was established by EPA to identify chemical substances which could cause serious irreversible health effects from accidental releases (51 FR 13378). EPA had previously published this list as the list of acutely toxic chemicals in November 1985, in Appendix A of the Chemical Emergency Preparedness Program Interim Guidance (CEPP Guidance). The Agency was also directed to establish “threshold planning quantities” (TPQs) for each extremely hazardous substance.

Under EPCRA section 302, a facility which has on-site an EHS in excess of its TPQ must notify the State Emergency Response Commission (SERC) and Local Emergency Planning Committee (LEPC) as well as participate in local emergency planning activities. Under section 304 of EPCRA, the facility must also report accidental releases in excess of the Reportable Quantity (RQ) to the National Response Center, the LEPC and SERC. However, releases from the application of a registered pesticide are exempted from the EPCRA section 304 emergency release notification according to 40 CFR 355.40(a)(2)(iv).

As provided under 40 CFR 370.20, EHSs are subject to EPCRA section 311 and 312 reporting requirements. Facilities with an EHS present on-site in excess of 500 pounds or its TPQ, whichever is lower, are required to submit an emergency and hazardous chemical inventory form and Material Safety Data Sheet (MSDS) to their SERC, LEPC and local fire department. Facilities must also submit chemical inventory forms and MSDS for other hazardous chemicals present on-site in quantities of 10,000 pounds or more. However, under sections 311 and 312 of EPCRA, facilities that apply chemicals to crops as a pesticide, do not have to file the inventory form or MSDS for those chemicals, because chemicals that are used at facilities in routine agricultural operations are not included as hazardous chemicals subject to the reporting requirements.

The purpose of the extremely hazardous substance list is to focus initial efforts in the development of state and local contingency plans. Inclusion of a chemical on the EHS list does not mean state or local communities should ban or otherwise restrict use of a listed chemical. Rather, such identification indicates a need for the community to undertake a program to investigate and evaluate the potential for accidental exposure associated with the production, storage or handling of the chemical at a particular site.

The list of extremely hazardous substances and their threshold planning quantities are codified in 40 CFR part 355, appendices A & B. EPA first published the EHS list and TPQs along with the methodology for determining threshold planning quantities as an interim final rule on November 17, 1986 (51 FR 41573-41579 and 41580). In the final rule, EPA made a number of revisions to the interim final rule (52 FR 13387, April 22, 1987). Among other things, the final rule republished the EHS list, with the addition of four new chemicals and revised the methodology for determining some TPQs. Details of the methodology used to determine whether to list a substance as an extremely hazardous substance and for deriving the threshold planning quantities are found in the November 1986 and April 1987 Federal Register notices and in technical support documents in the rulemaking records. These records are found in Superfund Docket No. 300PQ. See Section III of this notice for the criteria used for determining whether a substance qualifies as an extremely hazardous substance.

EPA has since received a number of petitions to amend the EHS list. To date, 46 chemicals have been delisted from the EHS list in previous rulemakings because they did not meet the toxicity criteria for the list and were originally listed under section 302 in error.

On November 12, 2003 (68 FR 64041), EPA proposed to delete the chemical phosmet from the EHS list under Section 302 of EPCRA, in response to a petition from Gowan Company. Gowan believed that the listing of phosmet was based on an invalid toxicity study and argued that phosmet should be removed from the EHS list because there were no valid data to indicate that the chemical meets the listing criteria.

Phosmet was originally listed on the EHS list because a four-hour rat inhalation LC 50 , reported in the 1985 Registry of Toxic Effect of Chemical Substances (RTECS) database, met the EHS primary toxicity inhalation criteria of LC 50 ≤ 0.5 mg/L. See Section III of this notice for discussion of the EHS listing criteria. The secondary toxicity criteria for EHSs did not apply to phosmet because it does not have a high production volume. Approximately 1,125,000 pounds of phosmet as an active ingredient (a.i.) in pesticide formulations are used annually. The LC 50 result of 0.054 mg/L was from in a 1969 Russian study, unavailable to EPA. However, a translation of a 1969 Russian journal article about the study was available for review. The phosmet used in the experiment was manufactured in a Russian research institute using an unknown method. The journal article severely lacked key details of the experimental methods, such as the purity of phosmet, extent of animal body exposure, possibility of other routes of exposure, specific emulsion components and their toxicity. With the number of unanswered key questions regarding the experimental protocol, EPA agrees that the Russian study results were not a sufficient basis for keeping phosmet on the EHS list.

However, before EPA took any regulatory action, a comprehensive review was undertaken of available acute toxicity studies by inhalation, dermal and oral routes; this review found no other inhalation or dermal study results for phosmet that met the EHS primary listing criteria of inhalation LC 50 ≤ 0.5 mg/L or dermal LD 50 of ≤50 mg/kg. A review of acute oral toxicity studies indicated that mice were more sensitive than rats to phosmet. The lowest reported rat oral LD 50 for technical grade phosmet (96.1%) is 113 mg/kg, which did not meet the primary oral listing criteria of ≤ 25 mg/kg. Technical grade phosmet is generally 94% or higher phosmet content. Reported acute oral toxicity LD 50 s of technical grade phosmet in mice varied from of 23.1 to 51 mg/kg, based on eight studies.

Stauffer Chemical Company in 1971 reported an oral LD 50 of 23.3 mg/kg for mice for technical grade phosmet, purity unspecified. The phosmet used in the study was manufactured by a different synthesis method (using ethylene chloride (EDC) as solvent) than used by the current and previous pesticide registrants (Gowan and Stauffer) and thus the phosmet tested may not be representative of the phosmet used in commerce. The greater toxicity observed for technical phosmet synthesized via the EDC route presumably may have been due to impurities resulting from the starting material, incomplete synthesis, degradation or other syntheses method-specific factors. Because of these uncertainties, EPA does not believe the phosmet-EDC results are representative for the phosmet manufactured and registered with EPA by either Stauffer Chemical (former pesticide registrant) or Gowan Company (current pesticide registrant). Therefore, EPA did not consider these values in its review of phosmet for EHS listing purposes.

Another study conducted by researchers at the National Center for Toxicological Research (NCTR) reported oral LD 50 results of 23.1 and 24.9 mg/kg for male and female mice, respectively, using 99.5% phosmet. The results from this study were presented in a journal article (Haley et al. , 1975), but the actual study data could not be found. Because the actual doses and number of animals killed at each dose are not cited, the LD 50 results could not be replicated or confirmed. Other concerns regarding the Haley study included the variations in mortality response, lack of information on the use of control data, and other questions or potential problems with the study methodology and design. The Agency discussed these issues in detail in the technical background document supporting this rulemaking.

Because of the uncertainties surrounding result verification and the design details of the Haley study, EPA proposed conducting a new acute oral mouse LD 50 study. Gowan then offered to conduct a new study in acute oral toxicity in mice, which they completed in December 2002. In Gowan's study, twenty female mice were administered 40 mg/kg of 98% pure phosmet, by oral gavage. No mortalities occurred. Because the tested dose produced no deaths in the twenty mice, testing at lower doses was considered unnecessary. EPA believes the Gowan study confirms the oral mouse LD 50 results from the majority of the previous reported studies, which show LD 50 s greater than the EHS listing criterion of ≤ 25 mg/kg. Therefore, EPA believes that phosmet does not meet the acute oral toxicity listing criterion and it should be removed from the EHS list. Because phosmet does not have a high production volume (about 1.25 million pounds are applied annually), only the primary listing criteria (discussed below) were used to evaluate whether phosmet should be retained on the EHS list.

As previously described, in November 1985, EPA published a list of substances in appendix A of the “Chemical Emergency Preparedness Program Interim Guidance.” Under section 302(a) of EPCRA, Congress required EPA to adopt that same list as the EHS list. Appendix A defines the list of chemicals as those “for which an acute toxicity measure has a value meeting the criteria stated in Chapter 6” of the November 1985 Interim Guidance. The listing criteria discussed in Chapter 6 are the same criteria referenced and discussed in EPA's interim final and final rules establishing the EHS list. Those criteria contain two sets of numerical acute toxicity measures. For purposes of clarification in today's rulemaking, EPA will refer to the two sets of numerical acute toxicity criteria as the primary listing criteria and the secondary listing criteria. In developing these criteria, the Agency presumed that humans may be as sensitive as the most sensitive mammalian species tested.

The primary acute toxicity criteria are, based on data from mammalian testing:

LC 50 is the median lethal concentration, defined as the concentration level at which 50 percent of the test animals died when exposed by inhalation for a specified time period.

LD 50 is the median lethal dose, defined as the dose at which 50 percent of the test animals died during exposure.

EPA included on the EHS list other chemicals that did not meet the primary acute toxicity criteria. These were added based on the secondary acute toxicity criteria below as well as the following factors: large volume production and known risk, as indicated by the fact that some of the chemicals have caused death and injury in accidents.

The secondary acute toxicity criteria are, based on data from mammalian testing:

The chemical with the lowest production volume that was included as an EHS based on the secondary criteria and high production volume, had an annual production volume of 30 million pounds. In addition to high production chemicals meeting these criteria, several other chemicals slightly less toxic than the secondary criteria, were listed because of their recognized toxicity as a chemical of concern or known hazard; for example several of them have caused death or injury in accidents.

The selection criteria were designed as screening tools to identify chemicals with high acute toxicity. The specific values chosen are recognized by the scientific community as indicating a high potential for acute toxicity, and chemicals meeting the toxicity criteria are considered potentially hazardous. Even with the amount of animal data that are available, some chemicals have no standard acute toxicity test data.

In choosing chemicals for the EHS list, EPA matched the criteria against all mammalian test data for all chemicals. A chemical was identified as acutely toxic according to these criteria if mammalian acute toxicity data for any one of the three routes of administration was equal to or less than the numerical criteria specified for that route. The Agency used LC LO or LD LO data for a chemical in cases where median lethal concentration or dose (LC 50 or LD 50 ) were not available. The lethal concentration low (LC LO ) and the lethal dose low (LD LO ) are the lowest concentration in air or the lowest dose in milligrams of chemical per kilogram of body weight, respectively, at which any test animals died. These values may be more variable than those provided from median lethality tests, but for the purposes of screening large numbers of chemicals, it was deemed necessary to provide a second level screening tool in preference to missing potentially toxic chemicals because they were not adequately tested. For inhalation data, the Agency chose to use LC 50 and LC LO values with exposure periods up to eight hours or even with no reported exposure period. EPA recognized that this was a conservative approach, but wanted to ensure that acutely toxic chemicals of concern were identified.

For purposes of this assessment, the Agency also used lethality data from the most sensitive mammalian species and not only those from rats because it was not possible to predict which species is the appropriate surrogate for humans for a given chemical. In addition, because populations are heterogeneous and individuals are expected to vary considerably in their sensitivity to chemical substances for this assessment, the Agency assumed that humans may be as sensitive as the most sensitive mammalian species tested.

When the initial list was developed, the Agency used acute toxicity data from the Registry of Toxic Effects of Chemical Substances (RTECS), maintained by the National Institute of Occupational Safety and Health (NIOSH). The RTECS data was compared with the EHS listing toxicity criteria (both primary and secondary). The RTECS data base was used as the principal source of toxicity data for identifying acutely toxic chemicals because it represents the most comprehensive repository of acute toxicity information available with basic toxicity information and other data on more than 79,000 chemicals. Although RTECS is not formally peer-reviewed, data from RTECS is widely accepted and used as a toxicity data source by industry and regulatory agencies alike. The data presented are from scientific literature which has been edited by the scientific community before publication.

EPA received eight comments during the comment period. 1 Four were from growers or agricultural trade associations, one was from a horticultural agent, one was from a certified professional agronomist, one was from an pesticide/fertilizer retailer and one was from the petitioner seeking delisting of phosmet. All commenters supported the removal of phosmet from the EHS list. Most commenters stated that phosmet has been an essential pest control tool. Some commented that EPA used good science to eliminate unnecessary regulation and would provide regulatory relief. Additionally, several of these commenters stated that the delisting would allow public and private resources to be focused on more critical issues.

Gowan Company, the petitioner requesting the removal of phosmet from the EHS list and the one of the pesticide registrants, had already submitted many toxicity studies and other information to EPA before the proposal was published. Their comments on the proposed rule noted that in addition to no valid data being available that indicate phosmet meets the listing criteria, a robust set of valid data is available that unequivocally shows that phosmet does not meet any of the toxicity (or other) listing criteria. Gowan also believes that the proposed rulemaking will appropriately rectify the mischaracterization of risk.

EPA agrees that there are many acute toxicity studies available for phosmet with results that do not meet the listing criteria. The Federal Register notice for the proposed rule focused more on those studies that, at first, appeared to meet the listing criteria. As EPA explained in the notice for the proposal, other acute toxicity studies indicate that phosmet does not meet the listing criteria. These studies are summarized and discussed in the technical background document; and available for review in the public docket. EPA did take into consideration the many results of these other acute oral toxicity studies when making its decision to delist phosmet.

EPA also reviewed the 17 technical references and reports submitted by the Working Group on Community Right-to-Know, in July 2002. These references primarily contained information on phosmet's acute and chronic toxicity, human health effects and risks. EPA carefully reviewed the submitted information and saw no new data or studies on acute toxicity that had not already been reviewed and considered in the decision. The EHS listing criteria is based on specific LC 50 or LD 50 acute toxicity testing results in mammals and does not rely on chronic, long-term health effects.

As a result of this final rule, phosmet will no longer be an EHS listed under section 302 of EPCRA. As a result, facilities that have phosmet on-site will no longer be required to (1) notify their SERCs and LEPCs that they are subject to the emergency planning provisions of EPCRA section 302 for the chemical phosmet; (2) provide to their LEPC a facility emergency coordinator (unless other listed EHS chemicals are present at the facility) and information about phosmet for developing and implementing the emergency plan; and (3) notify SERCs and LEPCs of accidental releases of phosmet under the requirements of EPCRA Section 304. Releases from application of a pesticide were already exempted from Section 304 reporting. LEPCs would no longer be required to include phosmet as part of a local emergency plan for responding to a chemical emergency at a facility.

Phosmet is still a “ hazardous chemical” under Section 311 and 312 requirements, except when it is used in routine agricultural operations, such as a pesticide applied on crops. According to 29 CFR 1900.1200(c), phosmet is considered a “toxic” health hazard because it has an oral rat acute toxicity LD 50 of less than 200 mg/kg. Facilities that process or distribute phosmet, such as phosmet product manufacturers and agricultural chemical distributors would still be subject to EPCRA section 311 and 312 reporting requirements for phosmet if they have phosmet present in amounts equal to or greater than 10,000 pounds, as provided in 40 CFR 370.20(b)(4).

Under Executive Order 12866 (58 FR 51735, (October 4, 1993)), the Agency must determine whether this regulatory action is “significant” and therefore subject to formal review by the Office of Management and Budget (OMB) and to the requirements of the Executive Order. The Order defines “significant regulatory action” as one that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

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

The Office of Management and Budget (OMB) has previously approved the information collection requirements contained in the existing regulations 40 CFR part 355 under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB control number 2050-0092, (EPA ICR No. 1395.05). Copies of the ICR document(s) may be obtained from Susan Auby, by mail at U.S. Environmental Protection Agency, Collection Strategies Division (Mail Code 2822), 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001, by e-mail at auby.susan@epa.gov, or by calling 202-566-1672. A copy may also be downloaded off the Internet at http://www.epa.gov/icr. Include the ICR and/or OMB number in any correspondence.

This action does not impose any new information collection burden. This rule will relieve burden for facilities that have phosmet on-site. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.

An Agency may not conduct or sponsor, and a person is not required to respond to a collection of information, unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et. seq., generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: (1) A small business that is defined by the Small Business Administration by category of business using North America Industrial Classification System (NAICS) and codified at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of the final rule on small entities, we have concluded that this action will not have a significant economic impact on a substantial number of small entities. This action would remove requirements for reporting and emergency planning for small entities with phosmet on site, and thus relieves regulatory burden.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted.

Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials to have meaningful and timely input in the development of EPA regulatory proposals, and informing, educating, and advising small governments on compliance with the regulatory requirements.

EPA has determined that this rule does not include a Federal mandate that may result in expenditures of $100 million or more for State, local, or tribal governments, in the aggregate, or the private sector in any one year. This rule will provide regulatory burden relief and does not impose any additional costs to any State, local, or tribal governments.

EPA also has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments. The rule will provide burden relief to regulated entities.

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

Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal Government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the regulation.

This final rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. This rule does not impose any new requirements on States or other levels of government. Instead, it relieves LEPCs of the responsibility of developing and maintaining emergency plans for facilities that handle and store phosmet. SERCs and LEPCs will no longer be notified of releases of phosmet under the requirements of EPCRA Section 304. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

Because this rule deletes phosmet from the list of EHS chemicals, it relieves some burden on local governments for preparing emergency response plans because fewer facilities will be subject to reporting requirements. This action does not prevent any State government from enforcing more stringent standards for this chemical.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.”

This final rule does not have tribal implications, as specified in Executive Order 13175. It does not impose any new requirements on tribal officials. Instead it relieves them of the responsibility of developing emergency plans for facilities that handle and store phosmet. EPA does not believe that tribes have any significant number of facilities that handle, store or use phosmet. Phosmet formulations are handled and stored by farm chemical distributors and used mostly on fruit and nut crops. Today's rule does not significantly or uniquely affect the communities of Indian tribal governments, nor would it impose substantial direct compliance costs on them. Thus, Executive Order 13175 does not apply to this rule.

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

This final rule is not subject to the Executive Order because it is not economically significant as defined in Executive Order 12866, and because the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportionate risk to children.

This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)) because it is not a significant regulatory action defined under Executive Order 12866.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities, unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This final rule does not involve technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A Major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). The rule will be effective December 27, 2004.

In order for a pharmaceutical manufacturer's products to be eligible for Medicaid reimbursement under section 1903(a) of the Social Security Act (the Act), the manufacturer must sign an agreement with us on behalf of the Secretary of Health and Human Services to participate in the Medicaid drug rebate program. Among the terms to which the manufacturer must agree is the requirement to retain pricing data to support the calculation of average manufacturer price and best price as defined in section 1927 of the Act. Absent a regulatory or statutory requirement, it has been our position that manufacturers must retain these records indefinitely.

On September 19, 1995, we published a proposed rule (60 FR 48442) in the Federal Register that proposed numerous provisions related to the Medicaid drug rebate program. As relevant to this rule, we proposed a new 3-year recordkeeping requirement for drug manufacturers under the Medicaid drug rebate program and proposed a 3-year time limitation during which manufacturers must recalculate and report data to us on the average manufacturer price and best price. On August 29, 2003, we published a final rule with comment period (68 FR 51912) in the Federal Register that finalized both provisions. On September 26, 2003, we issued a correction notice (68 FR 55527) in the Federal Register to change the effective date of the August 29, 2003 rule from October 1, 2003 to January 1, 2004.

On January 6, 2004, we published an interim final rule with comment period that removed the 3-year recordkeeping requirement issued in the August 29, 2003 final rule with comment period, and replaced it with 10-year recordkeeping requirements on a temporary basis for manufacturers participating in the Medicaid drug rebate program, and solicited comments on the 10-year requirement.

Under the 10-year recordkeeping requirement, we required that manufacturers retain records for 10 years from the date the manufacturer reports data to us for a rebate period. We also required that manufacturers retain records beyond the 10-year period if the records are the subject of an audit or a government investigation of which the manufacturer is aware and if the audit findings or investigation related to the average manufacturer price and best price have not been resolved. The provisions of the January 6, 2004 interim final rule related to record retention are scheduled to sunset on December 31, 2004.

In addition, the January 6, 2004 interim final rule with comment period responded to public comments on the August 29, 2003 final rule with comment period that pertain to the 3-year recordkeeping requirement at § 447.534(h). The 3-year recordkeeping requirement for drug manufacturers participating in the Medicaid drug rebate program has caused a significant amount of concern from commenters with regard to the False Claims Act (FCA) and other possible fraud and abuse violations.

Also, on January 6, 2004, we published a proposed rule (69 FR 565) that would remove the 3-year recordkeeping requirement and replace it with 10-year recordkeeping requirement on a permanent basis. We also proposed that manufacturers must retain records beyond the 10-year period if the manufacturers are aware that the records are the subject of an audit or a government investigation and if the audit findings or investigation related to the manufacturer's average manufacturer price and best price have not been resolved. This final rule finalizes both the interim final rule and the proposed rule that we published on January 6, 2004.

We received 3 timely comments in response to the January 6, 2004 interim final rule with comment period and proposed rule. We received comments from an attorney who represents the pharmaceutical industry, a coalition comprised of national advocacy groups, and a non-profit organization. These comments and our responses are summarized below.

Comment: One commenter urged us to promulgate the 10-year requirement as a final rule, effective before the expiration of the current 10-year requirement on December 31, 2004.

Response: We agree; therefore, we are issuing this final rule to permanently establish the 10-year recordkeeping requirements for manufacturers.

Comment: One commenter expressed the opinion that the January 6, 2004 interim final rule and proposed rule should be modified to change the record retention requirements back to 3 years. A manufacturer would still have the discretion to retain records for as long as it wanted, but would not be subject to a mandatory requirement in excess of the 3-year period. The government would not be restricted by these rules from pursuing claims under the False Claims Act (FCA) or applicable health care laws against a manufacturer for fraud, abuse, or knowingly submitting false data to the government. Changing the record retention requirement back to 3 years would reconcile the current conflict between the 10-year record retention requirement and the 3-year price recalculation reporting requirement. The commenter further stated that the interim final rule and the proposed rule should be finalized to clearly state that the 3-year time limitation is a statute of limitations and that a manufacturer will not be liable or obligated to pay the government or be entitled to be the beneficiary of any errors in calculations for periods outside of the 3-year time limitation.

Response: We believe that it is necessary to replace the 3-year provision with a 10-year provision to address concerns regarding Federal and State investigations for fraud under the FCA and related anti-fraud provisions concerning the Medicaid drug rebate program. Since the manufacturer is often unaware of the qui tam investigations, we must ensure that manufacturers participating in the Medicaid drug rebate program do not erroneously conclude that they could discard records concerning drug price calculations, as well as data supporting those calculations that are subject to the FCA and other fraud laws. The qui tam whistleblower provisions allow persons with evidence of fraud against Federal programs or contracts to bring suit on behalf of the government. Qui tam actions are filed under seal and preliminary investigations often take place without notice to manufacturers.

As noted in the January 6, 2004 interim final rule, we received comments suggesting that the 3-year recordkeeping requirements were too short, but none to convince us to expand the time limit on pricing recalculations. Therefore, since manufacturers are in full possession of the documents that they need to make pricing recalculations, we continue to believe that 3 years is an adequate timeframe to permit manufacturers to recalculate their pricing data. Furthermore, the 3-year limitation rule was designed to establish time limits for reporting recalculations and to decrease associated administrative burdens on manufacturers and States. After further consideration, we firmly believe that the 10-year provision will be more appropriate and sufficient to ensure a Federal standard with regard to the Medicaid drug rebate program that will not hinder the activities of Federal and State law enforcement activities regarding the issues of potential fraud and abuse violations and litigation.

Comment: One commenter expressed the opinion that the 10-year recordkeeping requirement is a significant improvement over the original rule, and will provide a more effective safeguard against improper or fraudulent drug price inflation and abuse of both the Medicaid rebate program and the program under section 340B of the Public Health Service Act. However, the commenter believes that an even longer period of record retention should be required of drug manufacturers.

Response: We recognize that there is some cross-over between the data required for the Medicaid drug rebate program and the 340B program. However, our regulation is solely designed to address the Medicaid drug rebate program. We believe that a 10-year recordkeeping requirement is consistent with the FCA and offers immediate protection to address potential fraud and abuse violations and litigation.

We are adopting the provisions of the regulation text in the January 6, 2004 proposed rule. We are making editorial changes to § 447.534(h)(1)(i) and we are removing paragraph (h)(2), which was included in the interim final rule with comment. This final rule establishes a permanent 10-year recordkeeping requirement for prescription drug manufacturers that participate in the Medicaid drug rebate program. This provision would be set forth in 42 CFR part 447 subpart I. Under the 10-year recordkeeping requirement, we require that a drug manufacturer retain records for 10 years from the date the manufacturer reports that rebate period's data to us. In addition, we require a manufacturer retain data beyond the 10-year period if the manufacturer is aware that the records are the subject of an audit or a government investigation and if the audit findings or investigation related to the manufacturer's average manufacturer price and best price have not been resolved.

In addition, in § 447.534, we are removing the paragraph (ii) [Reserved] at the end of the section, which is a misprint. The paragraph that precedes it is the lower case letter “i.” It was misconstrued for the roman numeral one (i). Thus, paragraph (ii) is erroneous and should be removed.

Under the Paperwork Reduction Act (PRA) of 1995, we are required to provide 30-day notice in the Federal Register and solicit public comment when a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues:

• The need for the information collection and its usefulness in carrying out the proper functions of our agency.

• The accuracy of our estimate of the information collection burden.

• The quality, utility, and clarity of the information to be collected.

• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

However, the collection requirements referenced below are currently approved by OMB, under OMB control number 0938-0578, entitled “Medicaid Drug Rebate Program, Manufacturers”.

Paragraph (h) of this section states a manufacturer must retain records (written or electronic) for 10 years from the date the manufacturer reports data to CMS for a rebate period. The records must include these data and any other materials from which the calculations of the average manufacturer price and best price are derived, including a record of any assumptions made in the calculations. The 10-year timeframe applies to a manufacturer's quarterly submission of pricing data and any revised pricing data subsequently submitted to CMS.

We have examined the impacts of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.

Executive Order 12866 (as amended by Executive Order 13258, which merely assigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). We do not believe this rule will have an economically significant effect. We believe the rule will not result in costs to the Medicaid program and that additional costs to drug manufacturers will be minimal. We do not consider this rule to be a major rule.

The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year. For purposes of the RFA, pharmaceutical manufacturers with 750 or fewer employees are considered small businesses according to the Small Business Administration's size standards matched to the North American Industry Classification System, effective October 1, 2002, ( http://www.sba.gov/size/sizetable2002.html ). Use of the Small Business Administration's size standards matched to North American Industry Classification System is in compliance with the Small Business Administration's regulation that set forth size standards for health care industries at 65 FR 69432. Individuals and States are not included in the definition of a small entity. Because pharmaceutical manufacturers are not required to report their numbers of employees to the Small Business Administration, we find there is no practical way to determine how many are considered small entities out of a total of 3,295 firms and establishment as reported by the United States Census Bureau (see http://www.census.gov/csd/susb/usaalliol.xls ). Therefore, we believe this rule will not have a significant impact on small businesses because, although some pharmaceutical manufacturers may be small businesses, we estimate that the cost to manufacturers will be minimal, as described in section VII.B below.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. This rule will not have a significant impact on small rural hospitals, because the provisions contained herein do not pertain to hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. We anticipate this rule will not impact State governments or the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. We do not anticipate this rule will impose any direct requirement costs on State governments.

We do not collect information on the costs associated with manufacturer recordkeeping under the Medicaid drug rebate program. Therefore, in the absence of such information, we derived an estimate based on our annual costs of storing electronic pricing data that we receive from approximately 500 drug manufacturers. We store drug product data, including pricing information, for approximately 55,000 drug products. Over the course of the 12 years the Medicaid drug rebate program has been in existence, we have gathered nearly 250 megabytes of information. This information fits on one compact disc. The cost of one blank compact disc is less than $1. We did not have a reasonable proxy available to estimate the staffing costs associated with maintaining the data, so our estimate does not include these costs.

On the whole, we believe this approach is reasonable because it is our understanding that these records are maintained by most manufacturers in an electronic format, while smaller companies may maintain their pricing records in written format. In order to more accurately evaluate the fiscal impact of this provision in the final rule, we requested that manufacturers provide us with information on the costs they would expect to incur pursuant to retaining records for a 10-year period. To the extent possible, we asked that manufacturers make an effort to distinguish between the costs of meeting the 10-year recordkeeping requirement versus other recordkeeping requirements that may apply to the same records. However, we did not receive any information or data in response to our request regarding the expected cost that would be incurred pursuant to retaining records for a 10-year period necessary to determine whether our original assumptions were unsubstantiated. Accordingly, we continue to believe that our estimates are reasonable.

We do not anticipate that this rule will adversely affect a drug manufacturer's participation in the Medicaid drug rebate program or impact the current level of access and availability of prescription drugs for Medicaid beneficiaries. There is no impact on contractors or providers.

We are unable to quantitatively address the burden to States with respect to recordkeeping. This rule will not adversely affect a State's ability to obtain manufacturers' rebates or impact the current level of access and availability of prescription drugs for Medicaid beneficiaries. There is no impact on Medicaid providers or contractors.

Retain the 3-Year Recordkeeping provision in the August 29, 2003 final rule with comment period.

We considered retaining the 3-year recordkeeping provision in the August 29, 2003 final rule with comment period. However, we believe it is necessary to replace the 3-year provision with a 10-year provision to address concerns regarding Federal and State investigations for fraud under the FCA concerning the Medicaid drug rebate program.

Establish a different time limitation.

Another alternative would be to establish a longer or shorter recordkeeping requirement. We did not choose a longer recordkeeping timeframe because we believe a 10-year period will offer immediate protection to address situations where investigations are under seal in qui tam actions. Further, the exception to the 10-year requirement adequately addresses situations where investigations known to manufacturers are not yet resolved. We did not choose a shorter recordkeeping timeframe in this rule because we are concerned that such a timeframe could be misconstrued to lead a manufacturer to believe that it could prematurely destroy vital evidence in a potential fraud and abuse litigation.

Finalize the 10-year recordkeeping requirement with a sunset date provision.

We considered finalizing the 10-year recordkeeping requirement with a sunset date provision. However, we did not choose to finalize the provision with a sunset date because as discussed previously, we have concerns about the potential premature destruction of evidence in false claims act litigation.

For these reasons, we are not preparing analyses for either the RFA or section 1102(b) of the Act because we have determined, and we certify, that this rule will not have a significant economic impact on a substantial number of small entities or a significant impact on the operations of a substantial number of small rural hospitals.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.

This is a synopsis of the Commission's Report and Order, MB Docket No. 04-253, adopted November 4, 2004, and released November 18, 2004. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC. This document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC, 20554, telephone 301-816-2820, facsimile 301-816-0169, or via e-mail joshir@erols.com.

This document does not contain [new or modified] information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

The Commission will send a copy of this Report & Order in a report to be sent to Congress and the General Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).