48280 Federal Register / Vol. 68, No. 156 / Wednesday, August 13, 2003 / Rules and Regulations 

Inapplicability of Public Notice and 

Comment and Delayed Effect 

Requirements, the Regulatory 

Flexibility Act, and Executive Order 

12866 

Inasmuch as these amendments 

merely conform the Customs 

Regulations to existing law as noted 

above, pursuant to 5 U.S.C. 553(b)(3)(B), 

notice and public procedure thereon are 

unnecessary and pursuant to 5 U.S.C. 

553(d)(3), a delayed effective date is not 

required. Since this document is not 

subject to the notice and public 

procedure requirements of 5 U.S.C. 553, 

it is not subject to the provisions of the 

Regulatory Flexibility Act, as amended 

(5 U.S.C. 601 et seq.). 

For the same reasons, the 

amendments do not meet the criteria for 

a ‘‘significant regulatory action’’ as 

specified in E.O. 12866. Accordingly, a 

regulatory impact analysis it is not 

required thereunder. 

Drafting Information 

The principal author of this document 

was Fernando Pen ́ a, Office of 

Regulations and Rulings, Bureau of 

Customs and Border Protection. 

However, personnel from other Bureau 

offices participated in its development.

List of Subjects in 19 CFR Part 4 

Cargo vessels, Coastal zone, Coastwise 

trade, Customs duties and inspection, 

Entry, Fees, Fishing vessels, Freight, 

Harbors, Imports, Maritime carriers, 

Reporting and recordkeeping 

requirements, Seamen, Vessels, and 

Yachts.

Amendments to the Regulations

■ For the reasons stated above, part 4 of 

the Customs Regulations (19 CFR part 4) 

is amended as set forth below.

PART 4—VESSELS IN FOREIGN AND 

DOMESTIC TRADES

■ 1. The general authority citation for 

part 4 and the specific authority citation 

for § 4.20 continue to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 

1431, 1433, 1434, 1624; 46 U.S.C. App. 3, 91.

* * * * *

Section § 4.20 also issued under 46 U.S.C. 

2107(b), 8103, 14306,14502, 14511, 14512, 

14513, 14701, 14702; 46 U.S.C. App. 121, 

128;

* * * * *

■ 2. Amend § 4.20 as follows:

■ a. In paragraph (a):

■ i. all references to the number ‘‘9’’ are 

removed and, in their place, the number 

‘‘2’’ is added;

■ ii. all references to the number ‘‘27’’

are removed and, in their place, the 

number ‘‘6’’ is added;

■ iii. the reference to the number ‘‘45’’ is 

removed and, in its place, the number 

‘‘10’’ is added; and,

■ iv. the figure ‘‘$1.35’’ is removed and, 

in its place, the number ‘‘30’’ is added.

■ b. In paragraph (b):

■ i. the reference to the number ‘‘9’’ is 

removed and, in its place, the number 

‘‘2’’ is added;

■ ii. the reference to the number ‘‘27’’ is 

removed and, in its place, the number 

‘‘6’’ is added; and,

■ iii. the figure ‘‘$1.80’’ is removed and, 

in its place, the figure ‘‘40 cents’’ is 

added.

■ c. In the table under paragraph (c), in 

the column headed ‘‘Regular tax’’:

■ i. the figure ‘‘0.09’’ and all the figures 

reading ‘‘.09’’ are removed and, in their 

place, the figure ‘‘.02’’ is added; and,

■ ii. the figure ‘‘0.27’’ and all the figures 

reading ‘‘.27’’ are removed and, in their 

place, the figure ‘‘.06’’ is added.

Dated: August 7, 2003. 

Robert C. Bonner, 

Commissioner, Customs and Border 

Protection.

[FR Doc. 03–20568 Filed 8–12–03; 8:45 am] 

BILLING CODE 4820–02–P

DEPARTMENT OF THE TREASURY

31 CFR Part 50

RIN 1505–AA96

Terrorism Risk Insurance Program

AGENCY: Departmental Offices, Treasury.

ACTION: Final rule.

SUMMARY: This final rule modifies the 

current regulatory definition of ‘‘direct 

earned premium’’ in the regulations 

under Title I of the Terrorism Risk 

Insurance Act of 2002 (Act). The Act 

established a temporary Terrorism Risk 

Insurance Program (Program) under 

which the Federal Government will 

share the risk of insured losses from 

certified acts of terrorism with 

commercial property and casualty 

insurers until the Program sunsets on 

December 31, 2005. The Department of 

the Treasury (Treasury) is responsible 

for implementing the Act. This final 

rule clarifies the current regulatory 

definition of ‘‘direct earned premium’’

to parallel the definition of ‘‘direct 

earned premium’’ in section 102(4) of 

the Act.

DATES: This final rule is effective August 

13, 2003.

FOR FURTHER INFORMATION CONTACT:

Mario Ugoletti, Deputy Director, Office 

of Financial Institutions Policy (202) 

622–2730, Martha Ellett or Cynthia 

Reese, Attorney-Advisors, Office of the 

Assistant General Counsel (Banking & 

Finance), (202) 622–0480, or C. 

Christopher Ledoux, Senior Attorney, 

Terrorism Risk Insurance Program (202) 

622–6770 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: On July 

11, 2003, Treasury published a final rule 

containing definitions and other general 

provisions under the Act (68 FR 41250, 

July 11, 2003) (the July final rule). 

Treasury is now making a clarifying 

revision to the definition of ‘‘direct 

earned premium’’ in the July final rule 

to ensure that the rule parallels the 

definition in section 102(4) of the Act. 

Under section 102(6) of the Act, an 

‘‘insurer’’ calculates its ‘‘insurer 

deductible’’ based on the insurer’s 

‘‘direct earned premium.’’ Except in the 

case of new insurers, an ‘‘insurer 

deductible’’ is an insurer’s direct earned 

premiums over the preceding calendar 

year, multiplied by a percentage 

specified in the Act for that year. If a 

certified act of terrorism occurs, an 

insurer would only be entitled to federal 

payment under the Program if the 

insurer’s insured losses exceed its 

insurer deductible and other required 

conditions are met. 

Section 102(4) of the Act defines the 

term ‘‘direct earned premium’’ as ‘‘a 

direct earned premium for property and 

casualty insurance issued by any insurer 

for insurance against losses occurring at 

the locations described’’ in section 

102(5)(A) and (B) of the Act (emphasis 

added). These cross-referenced locations 

appear within the definition of ‘‘insured 

loss.’’ The locations are (1) ‘‘within the 

United States,’’ (2) ‘‘to an air carrier’’ (as 

defined), (3) ‘‘to a United States flag 

vessel (or a vessel based principally in 

the United States, on which United 

States income tax is paid and whose 

insurance coverage is subject to 

regulation in the United States),’’ and 

(4) ‘‘at the premises of any United States 

mission.’’ Therefore, there is a 

relationship between the locations 

contained in the definition of ‘‘insured 

loss’’ and the scope of the definition of 

‘‘direct earned premium,’’ since both 

make reference to the same specified 

locations. 

The July final rule was preceded by 

an interim final rule that requested 

public comments (68 FR 9804, February 

28, 2003). No comments were received 

on the interim final rule concerning the 

relationship of the terms ‘‘insured loss’’

and ‘‘direct earned premium.’’ Upon 

further review, Treasury notes that the 

current regulatory definition of ‘‘direct 

earned premium’’ in the July final rule 

could be interpreted as inconsistent 

with the statutory definition of ‘‘direct 

earned premium.’’ This is because the 

Federal Register / Vol. 68, No. 156 / Wednesday, August 13, 2003 / Rules and Regulations 48281

regulatory definition ‘‘direct earned 

premium’’ includes an abbreviated 

reference to ‘‘insured losses’’ under the 

Program. Treasury’s intent was to reflect 

the statutory definition, including the 

specified locations, as described above. 

An unintended consequence of the 

current text of the regulatory definition 

of direct earned premium is that it 

might be read to narrow the statutory 

definition of ‘‘direct earned premium’’

to refer only to direct earned premiums 

for losses resulting from acts of 

terrorism rather than direct earned 

premiums on all commercial property 

and casualty insurance covering all risks 

within the specified locations. 

After further review of the definition 

in the July final rule, Treasury is by this 

final rule revising the regulatory 

definition of ‘‘direct earned premium’’

in section 50.5(d) to ensure that it 

parallels the definition in the Act. 

Treasury is also revising the related 

provisions in the definition of direct 

earned premium for State licensed or 

admitted insurers that report to the 

NAIC and certain eligible surplus line 

carrier insurers. (Although there are no 

changes to some of these provisions, 

paragraphs (d)(1) and (d)(3) of section 

50.5(d) are being set out in their entirety 

for ease of reading and understanding.) 

The effect of these changes to the 

current regulatory text is to clarify that 

direct earned premium, as provided in 

the Act, consists of direct earned 

premium for all commercial property 

and casualty insurance (as that term is 

used in the Act and Treasury’s 

regulations) issued by an insurer for 

insurance against losses at the specified 

locations. Consistent with the preamble 

discussion in the July final rule, 

premiums for retroactive insurance may 

continue to be excluded by an insurer 

if they are associated with losses that 

occurred prior to the date of enactment 

of the Act (November 26, 2002). An 

insurer receiving premiums for 

retroactive insurance associated with 

losses that occurred prior to November 

26, 2002 may continue to follow the 

guidelines in section 50.5(d)(1) for the 

purposes of calculating the appropriate 

measure of direct earned premium.

Procedural Requirements 

The Act established a Program to 

provide for loss sharing payments by the 

Federal Government for insured losses 

resulting from certified acts of terrorism. 

The Act became effective immediately 

upon the date of enactment (November 

26, 2002). Treasury has issued and will 

be issuing additional regulations to 

implement the Program. This final 

regulation merely clarifies the current 

regulatory definition of ‘‘direct earned 

premium’’ to parallel the definition in 

the Act. Since no one can predict if, or 

when, an act of terrorism may occur, 

there is a clear need for Treasury to 

modify the previously issued final rule 

to clarify the definition and avoid any 

possible reading that it is narrower than 

the definition in the Act. Moreover, the 

definition in the Act is unambiguous 

and the regulatory change merely 

clarifies the current regulatory 

definition to parallel the definition in 

the Act. 

For these reasons, Treasury has 

determined that notice and public 

procedure are unnecessary and contrary 

to the public interest, pursuant to 5 

U.S.C. 553(b)(B). For the same reasons, 

pursuant to 5 U.S.C. 553(d)(3), Treasury 

has determined that there is good cause 

for this final rule to become effective 

immediately upon publication. 

This final rule is not a significant 

regulatory action for purposes of 

Executive Order 12866. Because no 

notice of proposed rulemaking is 

required, the provisions of the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) do not apply. However, the 

Act and the Program are intended to 

provide benefits to the U.S. economy 

and all businesses, including small 

businesses, by providing a federal 

reinsurance backstop to commercial 

property and casualty insurance 

policyholders and spreading the risk of 

insured loss resulting from an act of 

terrorism.

List of Subjects in 31 CFR Part 50

Terrorism risk insurance.

Authority and Issuance

■ For the reasons set forth above, 31 CFR 

part 50 is amended as follows:

PART 50—TERRORISM RISK 

INSURANCE PROGRAM

■ 1. The authority citation for part 50 

continues to read as follows:

Authority: 5 U.S.C. 301; 31 U.S.C. 321; 

Title I, Pub. L. 107–297, 116 Stat. 2322 (15 

U.S.C. 6701 note).

■ 2. Section 50.5(d) introductory text is 

revised, and (d)(1) and (d)(3) are revised 

to read as follows:

§ 50.5 Definitions.

* * * * *

(d) Direct earned premium means a 

direct earned premium for all 

commercial property and casualty 

insurance issued by any insurer for 

insurance against all losses, including 

losses from an act of terrorism, 

occurring at the locations described in 

section 102(5)(A) and (B) of the Act. 

(1) State licensed or admitted 

insurers. For a State licensed or 

admitted insurer that reports to the 

NAIC, direct earned premium is the 

premium information for commercial 

property and casualty insurance 

coverage reported by the insurer on 

column 2 of the NAIC Exhibit of 

Premiums and Losses of the NAIC 

Annual Statement (commonly known as 

Statutory Page 14). (See definition of 

property and casualty insurance.) 

(i) Premium information as reported 

to the NAIC should be included in the 

calculation of direct earned premiums 

for purposes of the Program only to the 

extent of commercial property and 

casualty coverage issued by the insurer 

against losses occurring at the locations 

described in section 102(5)(A) and (B) of 

the Act.

(ii) Premiums for personal property 

and casualty insurance coverage 

(coverage primarily designed to cover 

personal, family or household risk 

exposures, with the exception of 

coverage written to insure 1 to 4 family 

rental dwellings owned for the business 

purpose of generating income for the 

property owner), or premiums for any 

other insurance coverage that does not 

meet the definition of commercial 

property and casualty insurance, should 

be excluded in the calculation of direct 

earned premiums for purposes of the 

Program. 

(iii) Personal property and casualty 

insurance coverage that includes 

incidental coverage for commercial 

purposes is primarily personal coverage, 

and therefore premiums may be fully 

excluded by an insurer from the 

calculation of direct earned premium. 

For purposes of the Program, 

commercial coverage is incidental if less 

than 25 percent of the total direct 

earned premium is attributable to 

commercial coverage. Commercial 

property and casualty insurance 

coverage insuring against losses 

occurring at locations other than the 

locations described in section 102(5)(A) 

and (B) of the Act, or other insurance 

coverage that does not meet the 

definition of commercial property and 

casualty insurance, but that includes 

incidental coverage for commercial 

property and casualty insurance 

insuring against losses occurring at such 

locations, is primarily non-Program 

coverage, and therefore premiums also 

may be fully excluded by an insurer 

from the calculation of direct earned 

premium. For purposes of the Program, 

commercial property and casualty 

insurance coverage insuring against 

losses at the locations described in 

section 102(5)(A) and (B) of the Act is 

incidental if less than 25 percent of the 

48282 Federal Register / Vol. 68, No. 156 / Wednesday, August 13, 2003 / Rules and Regulations 

total direct earned premium is 

attributable to such coverage. For 

purposes of the Program, commercial 

coverage combined with coverages that 

otherwise do not meet the definition of 

commercial property and casualty 

insurance is incidental if less than 25 

percent of the total direct earned 

premium is for such coverage. 

(iv) If a property and casualty 

insurance policy covers both 

commercial and personal risk 

exposures, insurers may allocate the 

premiums in accordance with the 

proportion of risk between commercial 

and personal components in order to 

ascertain direct earned premium. If a 

policy includes insurance coverage that 

meets the definition of commercial 

property and casualty insurance for 

losses occurring at the locations 

described in section 102(5)(A) and (B) of 

the Act, but also includes other 

coverage, insurers may allocate the 

premiums in accordance with the 

proportion of risk attributable to the 

components, in order to ascertain direct 

earned premium.

* * * * *

(3) Certain eligible surplus line carrier 

insurers. An eligible surplus line carrier 

insurer listed on the NAIC Quarterly 

Listing of Alien Insurers must ascertain 

its direct earned premium as follows: 

(i) For policies that were in-force as of 

November 26, 2002, or entered into 

prior to January 1, 2003, direct earned 

premiums are to be determined with 

reference to the definition of property 

and casualty insurance and the 

locations described in section 102(5)(A) 

and (B) of the Act by allocating the 

appropriate portion of premium income 

for losses for property and casualty 

insurance at such locations. The same 

allocation methodologies contained 

within the NAIC’s ‘‘Allocation of 

Surplus Lines and Independently 

Procured Insurance Premium Tax on 

Multi-State Risks Model Regulation’’ for 

allocating premium between coverage 

for property and casualty insurance for 

losses occurring at the locations 

described in section 102(5)(A) and (B) of 

the Act and all other coverage, to 

ascertain the appropriate percentage of 

premium income to be included in 

direct earned premium, may be used. 

(ii) For policies issued after January 1, 

2003, premium for insurance that meets 

the definition of property and casualty 

insurance for losses occurring at the 

locations described in section 102(5)(A) 

and (B) of the Act, must be priced 

separately by such eligible surplus line 

carriers.

* * * * *

Dated: August 5, 2003. 

Wayne A. Abernathy, 

Assistant Secretary of the Treasury.

[FR Doc. 03–20644 Filed 8–12–03; 8:45 am] 

BILLING CODE 4810–25–P

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[CGD13–03–025] 

RIN 1625–AA00 

Safety Zone Regulations, New Tacoma 

Narrows Bridge Construction Project

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

SUMMARY: The Coast Guard is 

establishing temporary safety zones 

during the tow and moor operations of 

the caissons being used for the Tacoma 

Narrows Bridge construction project. 

The Coast Guard is taking this action to 

safeguard the public from hazards 

associated with the transport and 

construction of the caissons being used 

to construct piers for the new bridge. 

These safety hazards include, but are 

not limited to, hazards to navigation, 

allisions with the caissons, allisions 

with the caisson mooring system, and 

collisions with work vessels and barges. 

Entry into these zones is prohibited 

unless authorized by the Captain of the 

Port, Puget Sound or his designated 

representatives.

DATES: This rule is effective from 

August 6, 2003 through February 6, 

2004.

ADDRESSES: Documents as indicated in 

this preamble are available for 

inspection or copying at the U.S. Coast 

Guard Marine Safety Office Puget 

Sound, 1519 Alaskan Way South, 

Building 1, Seattle, Washington 98134. 

Normal office hours are between 8 a.m. 

and 4 p.m., Monday through Friday, 

except Federal holidays.

FOR FURTHER INFORMATION CONTACT: ENS 

Tyana Thayer c/o Captain of the Port 

Puget Sound, 1519 Alaskan Way South, 

Seattle, Washington 98134, at (206) 

217–6222.

SUPPLEMENTARY INFORMATION: 

Regulatory Information 

We did not publish a notice of 

proposed rulemaking (NPRM) for this 

regulation. Under 5 U.S.C. 553(b)(B) and 

5 U.S.C. 553(d)(3), the Coast Guard finds 

that good cause exists for not publishing 

an NPRM and for making this rule 

effective less than 30 days after 

publication in the Federal Register.

Publishing a NPRM would be contrary 

to public interest since immediate 

action is necessary to ensure the safety 

of vessels and persons that transit in the 

vicinity of the Tacoma Narrows Bridge. 

The Coast Guard did not initially intend 

to issue a safety zone for this project. 

However, recent events of boaters 

navigating too close to the construction 

zone and reports of scuba divers diving 

near the caissons make a safety zone 

necessary. If normal notice and 

comment procedures were followed, 

this rule would not become effective in 

sufficient time. For this reason, 

following normal rulemaking 

procedures in this case would be 

impracticable and contrary to the public 

interest. 

Background and Purpose 

The Coast Guard is adopting a 

temporary safety zone regulation on the 

Tacoma Narrows and adjoining waters, 

for the Tacoma Narrows Bridge Project. 

The Coast Guard has determined it is 

necessary to limit access to a 250-yard 

radius around each of the two new 

bridge piers. Caissons are being used to 

build the new bridge piers. The new 

bridge piers are located just north of the 

existing Tacoma Narrows Bridge. The 

dangers to persons and vessels 

transiting this area include, but are not 

limited to, hazards to navigation, 

allisions with the caissons, allisions 

with the caisson mooring system, and 

collisions with work vessels and barges. 

The Coast Guard, through this action, 

intends to promote the safety of persons 

and vessels in the area. Entry into these 

zones will be prohibited unless 

authorized by the Captain of the Port. 

Coast Guard personnel will enforce 

these safety zones. The Captain of the 

Port may be assisted by other Federal, 

State, or local agencies. 

Regulatory Evaluation 

This rule is not a significant 

regulatory action under section 3(f) of 

Executive Order 12866 and does not 

require an assessment of potential costs 

and benefits under section 6(a)(3) of that 

Order. The Office of Management and 

Budget has not reviewed it under that 

Order. It is not significant under the 

regulatory policies and procedures of 

the Department of Homeland Security 

(DHS). We expect the economic impact 

of this rule to be so minimal that a full 

Regulatory Evaluation under paragraph 

10(e) of the regulatory policies and 

procedures of DOT is unnecessary. This 

expectation is based on the fact that the 

regulated area established by the 

regulation would encompass a small