Federal Register / Vol. 69, No. 88 / Thursday, May 6, 2004 / Proposed Rules 25341

ACTION: Notice of Negotiated 

Rulemaking Committee Meeting. 

SUMMARY: This document announces a 

one-day session of the Native American 

Housing Assistance and SelfDetermination Negotiated Rulemaking 

Committee (Committee). The Committee 

has concluded its negotiations regarding 

the development of a proposed rule that 

will change the regulations for the 

Indian Housing Block Grant (IHBG) 

program allocation formula, and other 

regulatory issues that arise out of the 

allocation or reallocation of IHBG funds. 

Subsequent to the conclusion of the 

negotiations, two workgroups were 

established to draft the regulatory text 

and preamble. The Committee will be 

convening for a one-day session to 

review the draft language developed by 

the workgroups and to pose questions to 

the workgroup members regarding the 

draft rule.

DATES: The session will be held on 

Tuesday, May 18, 2004. The session will 

begin at approximately 8:30 a.m., and is 

scheduled to adjourn at approximately 6 

p.m.

ADDRESSES: The one-day session will 

take place at the Westin Tabor Center, 

1672 Lawrence Street, Denver, Colorado 

80202; telephone: (303) 572–9100 (this 

is not a toll-free number).

FOR FURTHER INFORMATION CONTACT:

Rodger J. Boyd, Deputy Assistant 

Secretary for Native American 

Programs, Room 4126, Office of Public 

and Indian Housing, Department of 

Housing and Urban Development, 451 

Seventh Street, SW., Washington, DC 

20410–5000, telephone, (202) 401–7914 

(this is not a toll-free number). Hearing 

or speech-impaired individuals may 

access this number via TTY by calling 

the toll-free Federal Information Relay 

Service at 1–800–877–8339.

SUPPLEMENTARY INFORMATION: 

I. Background 

HUD established the Native American 

Housing Assistance and SelfDetermination Negotiated Rulemaking 

Committee (Committee) for the purposes 

of discussing and negotiating a 

proposed rule that would change the 

regulations for the Indian Housing Block 

Grant (IHBG) program allocation 

formula, and other IHBG program 

regulations that arise out of the 

allocation or reallocation of IHBG funds. 

The IHBG program was established 

under the Native American Housing 

Assistance and Self-Determination Act 

of 1996 (25 U.S.C. 4101 et seq.) 

(NAHASDA). NAHASDA reorganized 

housing assistance to Native Americans 

by eliminating and consolidating a 

number of HUD assistance programs in 

a single block grant program. In 

addition, NAHASDA provides federal 

assistance for Indian tribes in a manner 

that recognizes the right of Indian selfdetermination and tribal selfgovernment. Following the procedures 

of the Negotiated Rulemaking Act of 

1990 (5 U.S.C. 561–570), HUD and its 

tribal partners negotiated the March 12, 

1998 (63 FR 12349) final rule, which 

created a new 24 CFR part 1000 

containing the IHBG program 

regulations. 

The first meeting of the Committee 

took place in April 2003 and the 

Committee continued to meet thereafter 

on approximately a monthly basis. The 

Committee met a total of seven times. 

Subsequent to the conclusion of the 

negotiations, two workgroups were 

established. One workgroup was 

assigned the task of reviewing the 

approved regulatory language for 

content, format, style, and consistent 

use of terminology. The second 

workgroup was charged with 

developing the preamble to this 

proposed rule. The membership of both 

workgroups consisted of HUD and tribal 

representatives. 

The Committee will be convening for 

a one-day session to review the draft 

regulatory text and preamble developed 

by the two workgroups. This one-day 

session will provide the members of the 

Committee with the opportunity to 

review the draft language and to pose 

questions to the workgroup members 

regarding the draft rule. The session will 

take place as described in the DATES and 

ADDRESSES section of this document. 

Public attendance may be limited to 

the space available. Members of the 

public may be allowed to make 

statements during the meeting, to the 

extent time permits, and file written 

statements with the Committee for its 

consideration. Written statements 

should be submitted to the address 

listed in the FOR FURTHER INFORMATION

CONTACT section of this document.

Dated: April 29, 2004. 

Rodger J. Boyd, 

Deputy Assistant Secretary for Native 

American Programs.

[FR Doc. 04–10275 Filed 5–5–04; 8:45 am] 

BILLING CODE 4210–33–P

DEPARTMENT OF THE TREASURY

31 CFR Part 50 

RIN 1505–AB08 

Terrorism Risk Insurance Program; 

Litigation Management

AGENCY: Departmental Offices, Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Department of the 

Treasury (Treasury) is issuing this 

proposed rule as part of its 

implementation of Title I of the 

Terrorism Risk Insurance Act of 2002 

(Act). That Act established a temporary 

Terrorism Insurance Program (Program) 

under which the Federal Government 

will share the risk of insured loss from 

certified acts of terrorism with 

commercial property and casualty 

insurers until the Program ends on 

December 31, 2005. This notice of 

proposed rulemaking proposes 

regulations concerning litigation 

management related to insured losses 

under the Program. This proposed rule 

is the fifth in a series of regulations that 

Treasury is issuing to implement the 

Program.

DATES: Written comments may be 

submitted on or before July 6, 2004.

ADDRESSES: Submit comments (if hard 

copy, preferably an original and two 

copies) to the Terrorism Risk Insurance 

Program, Attention: Terrorism Risk 

Insurance Program Public Comment 

Record, Room 2100, 1425 New York 

Avenue, NW., Washington, DC 20220. 

Because paper mail in the Washington, 

DC, area may be subject to delay, it is 

recommended that comments be 

submitted electronically to: 

triacomments@do.treas.gov. All 

comments should be captioned with 

May 6, 2004, NPRM TRIA Comments.’’

Please include your name, affiliation, 

address, e-mail address, and telephone 

number in your comment. Comments 

may also be submitted through the 

Federal eRulemaking Portal: http://

www.regulations.gov. Comments will be 

available for public inspection by 

appointment only at the Reading Room 

of the Treasury Library. To make 

appointments, call (202) 622–0990 (not 

a toll-free number).

FOR FURTHER INFORMATION CONTACT:

David Brummond, Legal Counsel, or C. 

Christopher Ledoux, Senior Attorney, 

Terrorism Risk Insurance Program, (202) 

622–6770 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

25342 Federal Register / Vol. 69, No. 88 / Thursday, May 6, 2004 / Proposed Rules 

I. Background 

A. Terrorism Risk Insurance Act of 2002 

On November 26, 2002, the President 

signed into law the Terrorism Risk 

Insurance Act of 2002 (Pub. L. 107–297, 

116 Stat. 2322). The Act was effective 

immediately. The Act’s purposes are to 

address market disruptions, ensure the 

continued widespread availability and 

affordability of commercial property 

and casualty insurance for terrorism 

risk, and to allow for a transition period 

for the private markets to stabilize and 

build capacity while preserving State 

insurance regulation and consumer 

protections. 

Title I of the Act establishes a 

temporary federal program of shared 

public and private compensation for 

insured commercial property and 

casualty losses resulting from an act of 

terrorism, which as defined in the Act 

is certified by the Secretary of the 

Treasury, in concurrence with the 

Secretary of State and the Attorney 

General. The Act authorizes Treasury to 

administer and implement the 

Terrorism Risk Insurance Program, 

including the issuance of regulations 

and procedures. The Program will end 

on December 31, 2005. Thereafter, the 

Act provides Treasury with certain 

continuing authority to take actions as 

necessary to ensure payment, 

recoupment, adjustments of 

compensation and reimbursement for 

insured losses arising out of any act of 

terrorism (as defined under the Act) 

occurring during the period between 

November 26, 2002, and December 31, 

2005. 

Each entity that meets the definition 

of ‘‘insurer’’ (well over 2000 firms) must 

participate in the Program. The amount 

of federal payment for an insured loss 

resulting from an act of terrorism is to 

be determined based upon insurance 

company deductibles and excess loss 

sharing with the Federal Government, as 

specified by the Act and the 

implementing regulations. An insurer’s 

deductible increases each year of the 

Program, thereby reducing the Federal 

Government’s share prior to expiration 

of the Program. An insurer’s deductible 

is calculated based on a percentage of 

the value of direct earned premiums 

collected over certain statutory periods. 

Once an insurer has met its individual 

deductible, the federal payments cover 

90 percent of insured losses above the 

deductible, subject to an annual 

industry-aggregate limit of $100 billion. 

The Program provides a federal 

reinsurance backstop for three years. 

The Act provides Treasury with 

authority to recoup federal payments 

made under the Program through 

policyholder surcharges, up to a 

maximum annual limit. The Act also 

prohibits duplicative payments for 

insured losses that have been covered 

under any other federal program. 

The mandatory availability or ‘‘make 

available’’ provisions in section 103(c) 

of the Act require that, for Program Year 

1, Program Year 2, and, if so determined 

by the Secretary of the Treasury, for 

Program Year 3, all entities that meet 

the definition of insurer under the 

Program must make available in all of 

their property and casualty insurance 

policies coverage for insured losses 

resulting from an act of terrorism. This 

coverage cannot differ materially from 

the terms, amounts and other coverage 

limitations applicable to losses arising 

from events other than acts of terrorism. 

The Secretary of the Treasury may 

determine, not later than September 1, 

2004, to extend the make available 

requirements through Program Year 3, 

based on factors referenced in section 

108(d)(1) of the Act. Regardless of 

whether the make available 

requirements of section 103 are 

extended, the Program and the Act’s 

federal backstop for insured losses 

resulting from acts of terrorism continue 

through December 31, 2005.

As conditions for federal payment 

under the Program, insurers must 

provide clear and conspicuous 

disclosure to the policyholders of the 

premium charged for insured losses 

covered by the Program and the Federal 

share of compensation for insured losses 

under the Program. In addition, the Act 

requires that insurers submit claims and 

make certain certifications to Treasury. 

Treasury has recently published in the 

Federal Register a proposed rule 

concerning claims regulations for the 

Program. See 68 FR 67100 (Dec. 1, 

2003). 

The Act also contains specific 

provisions designed to manage litigation 

arising out of or resulting from a 

certified act of terrorism. Among other 

provisions, section 107 creates, upon 

certification of an act of terrorism by the 

Secretary, an exclusive Federal cause of 

action and remedy for property damage, 

personal injury, or death arising out of 

or relating to an act of terrorism; 

preempts certain State causes of action; 

provides for consolidation of all civil 

actions in Federal court for any claim 

(including any claim for loss of 

property, personal injury, or death) 

relating to or arising out of an act of 

terrorism; and provides that amounts 

awarded in actions for property damage, 

personal injury, or death that are 

attributable to punitive damages are not 

to be counted as ‘‘insured losses’’ and 

not paid under the Program. The Act 

also provides the United States with the 

right of subrogation with respect to any 

payment or claim paid by the United 

States under the Program. In this 

rulemaking, Treasury is proposing to 

implement these provisions of the Act 

to the extent that regulations are 

necessary for administration of the 

Program or involve the Federal share of 

compensation under the Program. This 

proposed regulation addresses the 

advance approval of proposed 

settlements of causes of action described 

in section 107 of the Act, as directed by 

the President in a Memorandum to the 

Secretary of the Treasury. See 38 

Weekly Comp. Pres. Doc. 2096 (Nov. 25, 

2002) (also accessible at 

www.treasury.gov/trip). 

In implementing the Program, 

Treasury is guided by several goals. 

First, Treasury strives to implement the 

Act in a transparent and effective 

manner that treats comparably those 

insurers required to participate in the 

Program and provides necessary 

information to policyholders in a useful 

and efficient manner. Second, in accord 

with the Act’s stated purposes, Treasury 

seeks to rely as much as possible on the 

State insurance regulatory structure. In 

that regard, Treasury has coordinated 

the implementation of all aspects of the 

Program with the National Association 

of Insurance Commissioners (NAIC). 

Third, to the extent possible within 

statutory constraints, Treasury seeks to 

allow insurers to participate in the 

Program in a manner consistent with 

procedures used in their normal course 

of business. Finally, given the 

temporary and transitional nature of the 

Program, Treasury is guided by the Act’s 

goal that insurers develop their own 

capacity, resources, and mechanisms for 

terrorism insurance coverage when the 

Program expires. 

B. Previously Issued Interim Guidance 

and Regulations 

To assist insurers, policyholders, and 

other interested parties in complying 

with immediately applicable 

requirements of the Act prior to the 

issuance of regulations, Treasury issued 

interim guidance in four separate 

notices, on December 3 and 18, 2002 

and on January 22 and March 25, 2003. 

The interim guidance addressed issues 

requiring clarification to immediately 

applicable provisions. The guidance 

was to be relied upon by insurers until 

superseded by regulations or a 

subsequent notice. 

Treasury’s first notice of Interim 

Guidance was published in the Federal 

Register at 67 FR 76206 on December 

11, 2002, and addressed, among other 

matters, statutory disclosure obligations 

Federal Register / Vol. 69, No. 88 / Thursday, May 6, 2004 / Proposed Rules 25343

1Treasury’s fourth interim guidance, published at 

68 FR 15039 on March 27, 2003, provided insurers 

a procedure by which they could seek to rebut a 

presumption of control established in Treasury’s 

first set of interim final regulations. The Interim 

Guidance has subsequently been superseded by a 

provision in the final rule for Subpart A of Part 50, 

Title 31 published at 68 FR 41250 (July 11, 2003).

of insurers as conditions for federal 

payment under the Program; the 

requirement that an insurer ‘‘make 

available’’ terrorism insurance; and how 

insurers were to calculate the ‘‘direct 

earned premium’’ received from 

commercial lines of property and 

casualty insurance as well as their 

‘‘insurer deductibles’’ for purposes of 

the Program. 

Treasury’s second notice of interim 

guidance was published at 67 FR 78864 

on December 26, 2002. The Interim 

Guidance addressed the statutory 

categories of ‘‘insurers’’ that are 

required to participate in the Program, 

including their ‘‘affiliates’; provided 

clarification on the scope of insured 

losses covered by the Program; and 

provided additional guidance to enable 

eligible surplus line carriers listed on 

the NAIC Quarterly Listing of Alien 

Insurers or Federally approved insurers 

to calculate their insurer deductibles for 

purposes of the Program. This was 

followed by Treasury’s third notice of 

interim guidance, which was published 

at 68 FR 4544 on January 29, 2003, and 

further clarified certain disclosure and 

certification requirements, and 

addressed issues concerning non-U.S. 

insurers, and the scope of the term 

‘‘insured loss’’ under the Act.1

On February 28, 2003 (68 FR 9804) 

Treasury published an interim final rule 

together with a proposed rule 

addressing the scope of the program, 

key definitions and certain general 

provisions to lay the groundwork for 

program implementation. This interim 

final rule was finalized and published 

in the Federal Register at 68 FR 41250 

(July 11, 2003) (as amended at 68 FR 

48280 (Aug. 13, 2003)) and created 

Subpart A of Part 50 in Title 31 of the 

Code of Federal Regulations. Treasury’s 

second regulation created Subparts B 

and C of Part 50 as an interim final rule 

published in the Federal Register at 68 

FR 19301 (Apr. 18, 2003) and was 

finalized and published at 68 FR 59720 

(Oct. 17, 2003). These regulations 

address disclosures that insurers must 

make to policyholders as a condition for 

federal payment under the Act, and 

requirements that insurers make 

available, in their commercial property 

and casualty insurance policies, 

terrorism risk coverage for insured 

losses under the Program. 

Treasury also created a Subpart D to 

Part 50 of Title 31, which was first 

proposed and published in the Federal 

Register at 68 FR 19309 (Apr. 18, 2003) 

and finalized and published at 68 FR 

59715 (Oct. 17, 2003). This regulation 

applies the provisions of the Act to State 

residual market insurance entities and 

State workers’ compensation funds. 

Most recently, Treasury published a 

proposed rule in the Federal Register at 

68 FR 67100 (December 1, 2003) that 

adds Subparts F and G to Part 50 of Title 

31. Subpart F establishes procedures for 

filing claims for payment of the Federal 

share of compensation for insured 

losses. Subpart G addresses information 

to be retained related to the handling 

and settlement of claims to enable 

Treasury to perform financial and claim 

audits. 

II. The Proposed Rule 

A. Overview 

The rule proposed in this notice 

would create Subpart I of Part 50 in 

Title 31 of the Code of Federal 

Regulations. It would implement the 

litigation management provisions in 

section 107 of the Act, provide for 

advance approval of settlements of 

certain causes of action, and clarify 

related aspects of the Program. Upon 

certification of an act of terrorism by the 

Secretary, section 107 creates a Federal 

cause of action for property damage, 

personal injury, or death arising out of 

or resulting from the act of terrorism, 

which is the exclusive cause of action 

and remedy for such losses. In addition, 

section 107 provides that: 

• All State causes of action of any 

kind for property damage, personal 

injury, or death arising out of or 

resulting from an act of terrorism that 

are otherwise available under State law 

are preempted; 

• Civil actions are to be consolidated 

in a Federal district court or courts, as 

designated by the Judicial Panel on 

Multidistrict Litigation, which shall 

have original and exclusive jurisdiction 

over all actions for any claim (including 

any claim for loss of property, personal 

injury, or death) relating to or arising 

out of an act of terrorism; 

• The substantive law for decision in 

such actions shall be derived from the 

law, including choice of law principles, 

of the State in which the act of terrorism 

occurred, unless such law is otherwise 

inconsistent with or preempted by 

Federal law; 

• Any amounts awarded in any action 

for property damage, personal injury, or 

death under section 107 that are 

attributable to punitive damages shall 

not count as ‘‘insured losses’’ for 

purposes of the Program; 

• Contractual arbitration rights are 

preserved; and 

• The United States has a right of 

subrogation with respect to any 

payment or claim paid pursuant to the 

Act. 

In connection with the 

implementation of the litigation 

management provisions of the Act, the 

President directed the Secretary to use 

his authority under the Act to require 

insurers to obtain Treasury’s advance 

approval before settling certain causes 

of action described in section 107 of the 

Act. The following discussion includes 

a section-by-section analysis of these 

proposed regulatory provisions.

B. Exclusive Federal Cause of Action 

and Remedy (Section 50.80) 

Section 107(a)(1) of the Act states that 

once the Secretary has certified that an 

act of terrorism has occurred pursuant 

to section 102 of the Act, there shall 

exist a Federal cause of action for 

property damage, personal injury, or 

death arising out of or resulting from 

such act of terrorism. The Federal cause 

of action shall be the exclusive cause of 

action and remedy for claims for 

property damage, personal injury, or 

death arising out of or relating to such 

act of terrorism, except as provided in 

section 107(b) of the Act, as discussed 

further below. The exclusive Federal 

cause of action created by the Act 

applies to all actions for property 

damage, personal injury, or death 

arising out of or resulting from a 

certified act of terrorism, regardless of 

whether the cause of action involves an 

insured loss covered by commercial 

property and casualty insurance. 

Section 50.80(a) of the proposed rule 

follows this provision of the Act. 

Section 107(b) of the Act creates an 

exception to the exclusive Federal cause 

of action and remedy established in 

section 107(a) by stating that nothing in 

the litigation management provisions of 

section 107 shall in any way limit the 

liability of any government, 

organization, or person who knowingly 

participates in, conspires to commit, 

aids and abets, or commits any act of 

terrorism certified as such under the 

Act. The proposed rule reflects this 

exception. 

Section 107(e) of the Act provides that 

section 107 applies only to actions for 

property damage, personal injury, or 

death that arise out of or result from acts 

of terrorism that occur or occurred 

during the effective period of the 

Program. Under the Act, the Program 

terminates on December 31, 2005 (see

section 108(a) of the Act); therefore the 

25344 Federal Register / Vol. 69, No. 88 / Thursday, May 6, 2004 / Proposed Rules 

2See Black’s Law Dictionary 214 (7th ed. 1999).

proposed rule provides that the 

exclusive cause of action and remedy 

exists only for those causes of action 

that arise out of or result from certified 

acts of terrorism that occur through 

December 31, 2005. 

Finally, section 107(d) of the Act 

provides that section 107 shall not be 

construed to affect (1) any party’s 

contractual right to arbitrate a dispute; 

or (2) any provision of the Air 

Transportation Safety and System 

Stabilization Act (Pub. L. 107–42; 49 

U.S.C. 40101 note). Section 50.80(c) of 

the proposed rule follows the provisions 

of the Act. 

C. Preemption of State Causes of Action 

(Section 50.81) 

The Act preempts all State causes of 

action for property damage, personal 

injury, or death arising out of or 

resulting from an act of terrorism that 

are otherwise available under State law, 

except as provided in section 107(b). 

See section 107(a)(2) of the Act. Section 

50.81 of the proposed rule reflects this 

statutory preemption and includes the 

circumstances where the Act does not 

limit liability (i.e., for causes of action 

against any government, organization, or 

person who knowingly participates in, 

conspires to commit, aids and abets, or 

commits any act of terrorism.) 

Treasury recognizes that the Act’s 

preemption of State causes of action for 

personal injury or death raises a 

question regarding the treatment of 

workers’ compensation claims under 

section 107. It is Treasury’s view that 

section 107(a)(2) of the Act does not 

preempt workers’ compensation claims 

involving personal injury or death on 

the basis that workers’ compensation 

claims are not ‘‘causes of action’’ for 

personal injury or death within the 

meaning of section 107. A ‘‘cause of 

action’’ is a group of operative facts 

giving rise to one or more bases for one 

person to sue and obtain a remedy in 

court from another person.2 As a general 

matter, the laws of the various States 

have eliminated ‘‘causes of action’’ for 

work-related injuries and replaced them 

with various types of workers’

compensation systems; therefore, there 

are no ‘‘causes of action * * * 

otherwise available under State law’’ for 

work related injuries within the 

meaning of section 107(a)(2). Thus, it is 

Treasury’s view that the preemption 

provision in section 107(a)(2) does not 

extend to workers’ compensation 

systems in the various States.

D. Program Procedures for Notifying 

Federal Court 

Section 107(a)(4) of the Act provides 

that for each act of terrorism certified by 

the Secretary pursuant to section 102 of 

the Act, the Judicial Panel on 

Multidistrict Litigation shall designate 

one district court or, if necessary, 

multiple district courts of the United 

States that shall have original and 

exclusive jurisdiction over all actions 

for any claim (including any claim for 

loss of property, personal injury, or 

death) relating to or arising out of an act 

of terrorism. 

The Act also provides that the Judicial 

Panel on Multidistrict Litigation is to 

designate the district court or courts not 

later than 90 days after the occurrence 

of an act of terrorism. However, it is the 

Secretary’s certification of an act of 

terrorism that triggers the creation of the 

exclusive Federal cause of action and 

the need for the Judicial Panel to 

designate a district court for the 

consolidation of actions. Therefore, to 

facilitate administration of the Program, 

Treasury intends to notify the Panel as 

soon as practicable following any 

certification of an act of terrorism. In 

this regard, Treasury is considering the 

appropriate operational procedures that 

it would follow once an act of terrorism 

is certified by the Secretary. Treasury 

invites comments on such procedures 

from all interested parties. 

E. Failure To Litigate in Federal Court 

Pursuant to the Act 

In applying section 107(a)(4) of the 

Act specifically to the Program, 

Treasury is considering whether it is 

appropriate or necessary to include in 

Part 50 a rule providing that any 

amounts awarded in any civil action 

relating to or arising out of an act of 

terrorism that are not awarded by the 

district court or district courts 

designated by the Judicial Panel on 

Multidistrict Litigation shall be 

ineligible for compensation, regardless 

of whether the amounts awarded are 

insured losses covered by commercial 

property and casualty insurance issued 

by an insurer. Treasury solicits public 

comment on such a provision from all 

interested parties. 

F. Treasury’s Advance Approval of 

Settlements (Section 50.82) 

On November 26, 2002, upon signing 

the Terrorism Risk Insurance Act of 

2002, the President issued a 

Memorandum to the Secretary of the 

Treasury that directed the Secretary to 

propose a rule requiring insurers to 

obtain the advance approval of Treasury 

of any proposed settlements of causes of 

action described in section 107 of the 

Act arising out of or resulting from an 

act of terrorism. 38 Weekly Comp. Pres. 

Doc. 2096 (Nov. 25, 2002) (also 

accessible at www.treasury.gov/trip). 

The Act authorizes Treasury to 

administer the Program, investigate and 

audit claims, and pay the Federal share 

of compensation for insured losses. (see

section 104(a) of the Act). In addition, 

under section 103(b)(3) of the Act, 

Treasury is authorized to prescribe 

reasonable procedures concerning 

insurers’ processing of claims for 

insured losses, which become 

conditions for federal payment. 

Pursuant to its administrative authority 

under the Act and to protect the 

interests of the United States, the 

proposed rule requires advance 

approval by Treasury of proposed 

settlements of certain causes of action 

described in section 107, to the extent 

liability for such causes of action is 

covered by or paid, in whole or in part, 

by an insurer pursuant to coverage for 

insured losses under the Program, 

provided that the insurer intends to 

submit the settlement as part of its claim 

for federal payment under the Program. 

1. Pre-Approval of Certain Proposed 

Settlements 

Under section 104(a)(2), the Secretary 

is authorized to prescribe regulations to 

administer and implement the Program 

effectively. Treasury believes that 

establishing monetary thresholds below 

which an insurer is not required to seek 

pre-approval by Treasury of settlements 

balances the need to protect the 

interests of the United States with the 

administrative costs involved in the 

advance approval of settlements. 

Treasury invites comments on these 

thresholds (which are explained in more 

detail below) from all interested parties.

Treasury’s proposed rule would 

require an insurer to seek Treasury’s 

advance, written approval where an 

insurer (directly or through its insured) 

intends to settle a Federal cause of 

action involving third-party liability 

claims (by a third party against an 

insured and/or the insurer) for property 

damage, personal injury, or death 

arising out of or resulting from an act of 

terrorism when: 

• Any portion of the proposed 

settlement amount that is attributable to 

liability for personal injury or death is 

$1 million or more, or that is 

attributable to liability for property 

damage (including loss of use) is $5 

million or more, regardless of the 

number of third-party liability claims 

being settled; and 

• All or part of the settlement amount 

is expected to be part of the insurer’s 

Federal Register / Vol. 69, No. 88 / Thursday, May 6, 2004 / Proposed Rules 25345

claim for federal payment under the 

Program (included in the insurer’s 

aggregate insured losses). No approval is 

required if the insurer does not intend 

to and does not submit all or part of the 

settlement as part of its claim for federal 

payment of insured losses under the 

Program. 

Treasury notes that its proposed 

settlement approval requirement applies 

to Federal causes of action described 

above regardless of whether a lawsuit 

has actually been filed or an arbitration 

commenced with respect to the matter. 

Treasury also notes that settlements 

that are not required to be submitted for 

prior approval are still subject to 

Treasury review, like any other claim, at 

the point of claim submission by the 

insurer or at the time of any audit (see

Subparts F and G proposed as part of 

claims and audit rulemakings, 68 FR 

67100 (Dec. 1, 2003). 

Treasury views this prior approval 

requirement as extending to settlements 

for insured losses arising from thirdparty claims for property damage, 

personal injury or death against a 

commercial insured. Most commercial 

liability policies provide coverage for 

the insured’s defense of such action. In 

this regard, the insurer is usually 

involved in the settlements of litigated 

third-party property and casualty 

claims. Through the insurer, Treasury 

will have final settlement approval 

authority. 

Coverage disputes and other civil 

actions involving contract rights are not 

included in the scope of the civil 

actions requiring advanced settlement 

approval by Treasury. Such disputes 

involve causes of action that are based 

on contract law, not on property 

damage, personal injury, or death and 

are not subject to prior approval by 

Treasury. 

Treasury seeks comments on how 

frequently claims are received by 

commercial property and casualty 

insurers under commercial liability 

policies where the insured settles 

directly with a claimant and then 

notifies the insurer after the settlement 

has been consummated. In this 

situation, if the insurer was not 

promptly notified in advance of the 

settlement, the insurer may have 

difficulty meeting the requirement to 

obtain prior approval from Treasury of 

the proposed settlement, jeopardizing 

the application of federal reinsurance 

under the Program. Treasury invites 

public comments on the frequency of 

such situations, the size of claims 

usually involved, and possible 

approaches to address these situations. 

2. Factors To Be Reviewed by Treasury 

In determining whether to approve a 

proposed settlement, and in keeping 

with its obligation to safeguard the use 

of taxpayer resources, Treasury will 

consider the nature of the insured loss, 

the facts and circumstances surrounding 

the loss, and other factors such as 

whether: 

• The proposed settlement 

compensates for a bona fide loss that is 

an insured loss under the terms and 

conditions of the underlying 

commercial property and casualty 

insurance policy; 

• Any amount of the proposed 

settlement is attributable to punitive or 

exemplary damages intended to punish 

or deter (whether or not specifically so 

described as such damages); 

• The settlement amount offsets 

amounts received from the United 

States pursuant to any other Federal 

program;

• Attorneys’ fees and expenses in 

connection with the settlement are 

unreasonable or inappropriate, in whole 

or in part and whether they have caused 

the insured losses under the underlying 

commercial property and casualty 

insurance policy to be overstated; and 

• Any other criteria that Treasury 

may consider appropriate, depending on 

the facts and circumstances surrounding 

the settlement, including the 

information contained in section 50.83. 

Additionally, Treasury will review 

any proposed settlement in accordance 

with proposed section 50.50 of Subpart 

F, including whether: 

• The settlement was fraudulent, 

collusive, in bad faith, or otherwise 

dishonest; and 

• The insurer took all businesslike 

steps reasonably necessary to properly 

and carefully investigate and ascertain 

the amount of the loss consistent with 

appropriate business practices. 

3. Settlement Without Treasury’s 

Approval 

If an insurer settles a cause of action 

after Treasury has rejected the proposed 

settlement, or if an insurer settles a 

cause of action without seeking 

Treasury’s approval in advance, as 

required by section 50.82, the insurer 

will not be entitled to the Federal share 

of the amount paid as part of its claim 

for federal payment unless the insurer 

can demonstrate, to the satisfaction of 

the Treasury, extenuating 

circumstances. Also, the insurer shall 

not be entitled to include the paid 

settlement amount as an insured loss in 

its aggregate insured losses (whether or 

not those aggregate insured losses 

exceed the insurer deductible) for 

purposes of calculating the Federal 

share of compensation due to the 

insurer under the Program. Treasury is 

proposing to make advance approval of 

certain settlements a condition for 

federal payment under the Program, 

unless the insurer demonstrates, to the 

satisfaction of the Treasury, that 

extenuating circumstances prevented 

the insurer from seeking Treasury’s 

advance approval. 

4. Ensuring That Punitive Damages Are 

Not Compensated for Under the 

Program 

Section 107(a)(5) of the Act provides 

that any amounts awarded in actions 

under section 107(a)(1) of the Act 

(exclusive Federal cause of action for 

property damage, personal injury, or 

death arising out of or resulting from an 

act of terrorism) that are attributable to 

punitive damages shall not count as 

insured losses under the Act. Punitive 

damages, sometimes also referred to as 

exemplary damages, are damages that 

are not compensatory in nature but are 

an award of money made to a claimant 

solely to punish or deter a wrongdoer. 

Because section 107(a)(5) of the Act 

does not consider punitive damages as 

‘‘insured losses’’ under the Act, the 

Federal Government will not 

compensate an insurer for such 

damages. Accordingly, Treasury has 

proposed amending section 50.5 of 

Subpart A (as part of another proposed 

rulemaking recently published in the 

Federal Register) and amending the 

definition of ‘‘insured loss’’ specifically 

to exclude punitive or exemplary 

damages as compensable under the 

Program. 

Consistent with the proposed claims 

procedures rule, a factor Treasury will 

consider in approving a proposed 

settlement is whether the settlement 

excludes punitive damages, regardless 

of how the parties to the settlement 

agreement characterize the payment. An 

insurer shall be required to identify any 

portion of a proposed settlement 

amount that is attributable to punitive 

damages, or that intends to compromise 

a claim or demand for punitive damages 

in a cause of action for which punitive 

damages could be awarded. Treasury 

will review proposed settlements to 

determine whether all or part of the 

settlement amount is intended to 

compromise an actual or threatened 

claim for punitive or exemplary 

damages, even if the settlement does not 

indicate that the payment includes 

punitive or exemplary damages. 

25346 Federal Register / Vol. 69, No. 88 / Thursday, May 6, 2004 / Proposed Rules 

5. Evaluating Attorneys’ Fees and 

Expenses 

One of the factors Treasury will take 

into account in reviewing proposed 

settlements is the amount of attorneys’

fees and other legal expenses. In 

evaluating the appropriateness of 

attorneys’ fees and expenses that are 

part of any proposed settlement, 

Treasury intends to consider such 

factors as those weighed by Federal 

courts regarding the reasonableness of 

attorneys’ fees under applicable law. 

Among the factors Treasury may 

consider are the time and labor 

required; the novelty and difficulty of 

the questions; the skill requisite to 

perform the legal service properly; the 

customary fee; whether the fee is fixed 

or contingent; the amount involved and 

results obtained; the experience, 

reputation, and the ability of the 

attorneys; and awards in similar cases. 

In addition, Treasury will determine 

whether the attorneys’ fees in question 

have caused the insured losses under 

the underlying commercial property and 

casualty insurance policy to be 

overstated. 

G. Procedures for Requesting Approval 

of Settlements (Section 50.83) 

Section 50.83 of the proposed rule 

establishes a procedure for an insurer to 

submit proposed settlements for 

advance approval by Treasury. 

Generally, within 30 days after 

Treasury’s receipt of a complete notice 

of the proposed settlement and an 

insurer’s request that the proposed 

settlement be approved, Treasury may 

issue a written response and either 

approve or disapprove the proposed 

settlement, in whole or in part. If 

Treasury does not issue a written 

response within 30 days after its receipt 

of a complete notice (or within the time 

as extended in writing by Treasury), the 

request for advance approval of the 

settlement will be deemed approved 

under section 50.83. (The settlement 

will still be subject to review under the 

claims procedures.) The proposed rule 

also outlines the minimum information 

Treasury believes may be relevant and 

useful in considering whether to 

approve a proposed settlement. 

Treasury invites public comment 

concerning this settlement approval 

request process. 

H. Right of Subrogation (Section 50.84) 

Section 107(c) of the Act provides that 

the United States shall have the right of 

subrogation with respect to any 

payment or claim paid by the United 

States under the Act. In most 

commercial insurance policies, 

insurance companies become 

subrogated to the rights of the persons 

they pay, to the extent of payment. In 

section 50.85, Treasury proposes to 

require insurers to take steps to preserve 

rights of subrogation under section 

107(c). 

III. Procedural Requirements 

Executive Order 12866, ‘‘Regulatory 

Planning and Review’’

This proposed rule is a significant 

regulatory action for purposes of 

Executive Order 12866, ‘‘Regulatory 

Planning and Review,’’ and has been 

reviewed by the Office of Management 

and Budget. 

Regulatory Flexibility Act 

Pursuant to the Regulatory Flexibility 

Act, 5 U.S.C. 601 et seq., it is hereby 

certified that this proposed rule will not 

have a significant economic impact on 

a substantial number of small entities. 

Accordingly, a regulatory flexibility 

analysis is not required. The proposed 

rule establishes requirements for 

advance approval of settlements when 

claims are to be submitted for insured 

losses. There is no impact on small 

insurers unless an act of terrorism 

occurs and federal compensation is 

sought by small insurers entitled to 

reimbursement for their insured losses. 

If an act of terrorism occurs and federal 

payment is sought through a claim, the 

proposed rule’s impact on small 

insurers is likely to be minimal because 

most of the information that would have 

to be submitted in connection with 

Treasury approval of settlements largely 

duplicates information already 

contained in an insurer claim file or an 

attorney case file. Moreover, the $1 

million and $5 million thresholds for 

the submission of settlements to 

Treasury for approval is likely further to 

minimize burdens on small insurers.

Paperwork Reduction Act 

The collection of information 

contained in this proposed rule has 

been submitted to the Office of 

Management and Budget (OMB) for 

review under the requirements of the 

Paperwork Reduction Act, 44 U.S.C. 

3507(d). An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number assigned by OMB. 

Organizations and individuals 

desiring to submit comments 

concerning the collection of information 

in the proposed rule should direct them 

to the Desk Officer for the Department 

of the Treasury, Office of Information 

and Regulatory Affairs, Office of 

Management and Budget, Washington, 

DC 20503 (preferably by FAX to 202–

395–6974, or by email to 

jlackeyj@omb.eop.gov). A copy of the 

comments should also be sent to 

Treasury at the following address: 

Terrorism Risk Insurance Program, 

Attention: Terrorism Risk Insurance 

Program Public Comment Record, Room 

2100, 1425 New York Avenue, NW., 

Washington, DC 20220 and 

electronically to: 

triacomments@do.treas.gov. Comments 

on the collection of information should 

be received by June 7, 2004. 

Treasury specifically invites 

comments on: (a) Whether the proposed 

collection of information is necessary 

for the proper performance of the 

mission of Treasury and whether the 

information will have practical utility; 

(b) the accuracy of the estimate of the 

burden of the collections of information 

(see below); (c) ways to enhance the 

quality, utility, and clarity of the 

information collection; (d) ways to 

minimize the burden of the information 

collection, including through the use of 

automated collection techniques or 

other forms of information technology; 

and (e) estimates of capital or start-up 

costs and costs of operation, 

maintenance, and purchase of services 

to maintain the information. 

The collection of information in the 

proposed rule is the information 

required in connection with requests for 

Treasury approval of proposed 

settlements in § 50.83. The submission 

of specified information in connection 

with a proposed settlement is 

mandatory for any insurer that seeks 

payment of a Federal share of 

compensation. 

If an act of terrorism is certified under 

the Act, the number of settlements, if 

any, will be determined by the size and 

nature of the certified act of terrorism. 

Because of the extreme uncertainty 

regarding any such event, a ‘‘best 

estimate’’ has been developed based on 

the considered judgment of Treasury. 

This estimate has 100 insurers 

sustaining insured losses; each of these 

insurers would process an average of 

100 underlying claims for a total of 

10,000 claims. If one in five claims 

involves amounts in dispute that exceed 

the monetary thresholds in § 50.82(a), 

there would be 2,000 claims eligible for 

settlement. If 90 percent of these claims 

settle before any judgment or award, 

this would require 1,800 claims to be 

submitted to Treasury for advance 

approval under Subpart I. 

The information required by Treasury 

in connection with a request for 

advanced approval of a proposed 

settlement in § 50.83 largely duplicates 

Federal Register / Vol. 69, No. 88 / Thursday, May 6, 2004 / Proposed Rules 25347

information already contained in an 

insurer claim file or an attorney case 

file. The burden associated with 

compiling and submitting such 

information to Treasury is therefore 

relatively moderate. 

Accordingly, Treasury estimates that 

the proposed rule will impose 5 hours 

of burden with respect to each claim. 

The estimated annual burden of the 

proposed rule is therefore 9,000 hours.

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 proposed to be 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. Subpart I of part 50 is added to read 

as follows:

Subpart I—Federal Cause of Action; 

Approval of Settlements 

Sec. 

50.80 Federal cause of action and remedy. 

50.81 State causes of action preempted. 

50.82 Advance approval of settlements. 

50.83 Procedure for requesting approval of 

proposed settlements. 

50.84 Subrogation.

Subpart I—Federal Cause of Action; 

Approval of Settlements

§ 50.80 Federal cause of action and 

remedy. 

(a) General. Upon certification of an 

act of terrorism pursuant to section 102 

of the Act, there shall exist a Federal 

cause of action for property damage, 

personal injury, or death arising out of 

or resulting from such act of terrorism, 

pursuant to section 107 of the Act, 

which shall be the exclusive cause of 

action and remedy for claims for 

property damage, personal injury, or 

death arising out of or relating to such 

act of terrorism, except as provided in 

paragraph (c) of this section. 

(b) Effective period. The exclusive 

Federal cause of action and remedy 

described in paragraph (a) of this 

section shall exist only for causes of 

action for property damage, personal 

injury, or death that arise out of or result 

from acts of terrorism that occur or 

occurred during the effective period of 

the Program as set forth in section 108 

of the Act. 

(c) Rights not affected. Nothing in 

section 107 of the Act or this Subpart 

shall in any way: 

(1) Limit the liability of any 

government, organization, or person 

who knowingly participates in, 

conspires to commit, aids and abets, or 

commits any act of terrorism; 

(2) Affect any party’s contractual right 

to arbitrate a dispute; or 

(3) Affect any provision of the Air 

Transportation Safety and System 

Stabilization Act (Pub. L. 107–42; 49 

U.S.C. 40101 note).

§ 50.81 State causes of action preempted. 

Upon certification of an act of 

terrorism pursuant to section 102 of the 

Act, all State causes of action of any 

kind for property damage, personal 

injury, or death arising out of or 

resulting from such act of terrorism that 

are otherwise available under State law 

are preempted, except that, pursuant to 

section 107(b) of the Act, nothing in this 

section shall limit in any way the 

liability of any government, 

organization, or person who knowingly 

participates in, conspires to commit, 

aids and abets, or commits the act of 

terrorism certified by the Secretary.

§ 50.82 Advance approval of settlements. 

(a) General. An insurer shall submit to 

Treasury for advance approval any 

proposed agreement to settle or 

compromise any Federal cause of action 

for property damage, personal injury, or 

death, including any agreement between 

its insured(s) and third parties, 

involving an insured loss, all or part of 

the payment of which the insurer 

intends to submit as part of its claim for 

Federal payment under the Program, 

when: 

(1) Any portion of the proposed 

settlement amount that is attributable to 

an insured loss or losses involving 

personal injury or death in the aggregate 

is $1 million or more, regardless of the 

number of causes of action or insured 

losses being settled; or 

(2) Any portion of the proposed 

settlement amount that is attributable to 

an insured loss or losses involving 

property damage (including loss of use) 

in the aggregate is $5 million or more, 

regardless of the number of causes of 

action or insured losses being settled. 

(b) Factors. In determining whether to 

approve a proposed settlement in 

advance, Treasury will consider the 

nature of the loss, the facts and 

circumstances surrounding the loss, and 

other factors such as whether: 

(1) The proposed settlement 

compensates for a loss that is an insured 

loss under the terms and conditions of 

the underlying commercial property and 

casualty insurance policy; 

(2) Any amount of the proposed 

settlement is attributable to punitive or 

exemplary damages intended to punish 

or deter (whether or not specifically so 

described as such damages); 

(3) The settlement amount offsets 

amounts received from the United 

States pursuant to any other Federal 

program;

(4) The settlement does not involve 

unreasonable or inappropriate attorneys’

fees and legal expenses and whether 

they have caused the insured losses 

under the underlying commercial 

property and casualty insurance policy 

to be overstated; and 

(5) Any other criteria that Treasury 

may consider appropriate, depending on 

the facts and circumstances surrounding 

the settlement, including the 

information contained in § 50.83. 

(c) Settlement Without Seeking 

Advance Approval or Despite 

Disapproval. If an insurer settles a cause 

of action or agrees to the settlement of 

a cause of action without submitting the 

proposed settlement for Treasury’s 

advance approval in accordance with 

this section and in accordance with 

§ 50.83 or despite Treasury’s 

disapproval of the proposed settlement, 

the insurer will not be entitled to 

include the paid settlement amount (or 

portion of the settlement amount, to the 

extent partially disapproved) in its 

aggregate insured losses for purposes of 

calculating the Federal share of 

compensation of its insured losses, 

unless the insurer can demonstrate, to 

the satisfaction of Treasury, extenuating 

circumstances.

§ 50.83 Procedure for requesting approval 

of proposed settlements. 

(a) Submission of Notice. Insurers 

must request advance approval of a 

proposed settlement by submitting a 

notice of the proposed settlement and 

other required information in writing to 

the Terrorism Risk Insurance Program 

Office or its designated representative. 

The address where notices are to be 

submitted will be available at http://

www.treasury.gov/trip following any 

certification of an act of terrorism 

pursuant to section 102(1) of the Act. 

(b) Complete Notice. Treasury will 

review requests for advance approval 

and determine whether additional 

information is needed to complete the 

notice. 

(c) Treasury Response or Deemed 

Approval. Within 30 days after 

Treasury’s receipt of a complete notice, 

or as extended in writing by Treasury, 

Treasury may issue a written response 

and indicate its partial or full approval 

25348 Federal Register / Vol. 69, No. 88 / Thursday, May 6, 2004 / Proposed Rules 

or rejection of the proposed settlement. 

If Treasury does not issue a response 

within 30 days after Treasury’s receipt 

of a complete notice, unless extended in 

writing by Treasury, the request for 

advance approval is deemed approved 

by Treasury. Any settlement is still 

subject to review under the claim 

procedures pursuant to § 50.50. 

(d) Notice Format. A notice of a 

proposed settlement should be entitled, 

‘‘Notice of Proposed Settlement—

Request for Approval,’’ and should 

provide the full name and address of the 

submitting insurer and the name, title, 

address, and telephone number of the 

designated contact person. An insurer 

must provide all relevant information, 

including the following, as applicable: 

(1) A brief description of the insured’s 

underlying claim, the insured’s loss, the 

amount of the claim, the operative 

policy terms, defenses to coverage, and 

all damages sustained; 

(2) An itemized statement of all 

damages by category (i.e., actual, 

economic and non-economic loss, 

punitive damages, etc.); 

(3) A statement from the insurer or its 

attorney recommending the settlement 

and the basis for the recommendation; 

(4) The total dollar amount of the 

proposed settlement; 

(5) Indication as to whether the 

settlement was negotiated by counsel; 

(6) The net amount to be paid to the 

insured and/or third party; 

(7) The amount to be paid that will 

compensate attorneys for their services 

and expenses and an explanation as to 

why the amount is not unreasonable; 

(8) The amount received from the 

United States pursuant to any other 

Federal program for compensation of 

insured losses related to an act of 

terrorism; 

(9) The proposed terms of the written 

settlement agreement, including release 

language and subrogation terms; 

(10) Other relevant agreements, 

including: 

(i) Admissions of liability or 

insurance coverage; 

(ii) Determinations of the number of 

occurrences under a commercial 

property and casualty insurance policy; 

(iii) The allocation of paid amounts or 

amounts to be paid to certain policies, 

or to specific policy, coverage and/or 

aggregate limits; and 

(iv) Any other agreement that may 

affect the payment or amount of the 

Federal share of compensation to be 

paid to the insurer; 

(11) A statement indicating whether 

the proposed settlement has been 

approved by the Federal court or is 

subject to such approval and whether 

such approval is expected or likely; and 

(12) Such other information as may be 

requested by Treasury or its designee.

§ 50.84 Subrogation. 

An insurer shall not waive its rights 

of subrogation under its insurance 

policy and shall take all steps necessary 

to preserve the subrogation right of the 

United States as provided by section 

107(c) of the Act.

Dated: April 29, 2004. 

Wayne A. Abernathy, 

Assistant Secretary of the Treasury.

[FR Doc. 04–10205 Filed 5–5–04; 8:45 am] 

BILLING CODE 4811–15–P

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52

[R04–OAR–2004–GA–0001–200411; FRL–

7656–8] 

Approval and Promulgation of 

Implementation Plans; Georgia: 

Approval of Revisions to the State 

Implementation Plan

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: The EPA is proposing to 

approve a revision to the Georgia State 

Implementation Plan (SIP) submitted by 

the Georgia Environmental Protection 

Division (GAEPD) on December 24, 

2003. The revision pertains to the Post1999 Rate-of-Progress Plan (Post-1999 

ROP Plan). This submittal was made to 

meet the reasonable further progress 

requirements of section 182 of the Clean 

Air Act, as amended in 1990 (CAA). The 

SIP revision also establishes a motor 

vehicle emissions budget (MVEB) for 

transportation conformity purposes of 

160.8 tons per day (tpd) of volatile 

organic compounds (VOC) and 318.24 

tpd of nitrogen oxides (NOX) for 2004. 

Today, EPA is proposing to approve 

Georgia’s Post-1999 ROP plan, including 

the 2004 MVEBs contained therein. In 

addition, in this proposed rulemaking 

EPA is providing information on the 

status of its transportation conformity 

adequacy determination for the 2004 

MVEBs that are contained in the Post1999 ROP SIP submittal.

DATES: Written comments must be 

received on or before June 7, 2004.

ADDRESSES: Comments may be 

submitted by mail to: Scott M. Martin, 

Regulatory Development Section, Air 

Planning Branch, Air, Pesticides and 

Toxics Management Division, U.S. 

Environmental Protection Agency, 

Region 4, 61 Forsyth Street, SW., 

Atlanta, Georgia 30303–8960. 

Comments may also be submitted 

electronically, or through hand 

delivery/courier. Please follow the 

detailed instructions described in 

sections IV.B.1 through 3. of the 

SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Mr. 

Scott M. Martin, Regulatory 

Development Section, Air Planning 

Branch, Air, Pesticides and Toxics 

Management Division, U.S. 

Environmental Protection Agency, 

Region 4, 61 Forsyth Street, SW., 

Atlanta, Georgia 30303–8960. The 

telephone number is (404) 562–9036. 

Mr. Martin can also be reached via 

electronic mail at martin.scott@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 182 of the CAA requires 

ozone nonattainment areas with air 

quality classified as ‘‘moderate’’ or 

worse to submit plans showing 

reasonable further progress towards 

attainment of the national ambient air 

quality standards (NAAQS). Because 

Atlanta was classified as a ‘‘serious’’

nonattainment area for ozone, the CAA 

required Georgia to develop a SIP to 

reduce emissions of VOCs in the 13-

county Atlanta 1-hour ozone 

nonattainment area by 15 percent from 

1990 to 1996. The most recent revision 

to Georgia’s 15% Rate-of-Progress (ROP) 

SIP (i.e., the 15% Plan) was submitted 

by the GAEPD on June 17, 1996, and 

was approved by the EPA effective May 

26, 1999, (64 FR 20186). 

The CAA also requires Post-1996 

emission reductions of VOCs and/or 

NOX totaling 3 percent per year, 

averaged over each consecutive threeyear period beginning in 1996 and 

continuing through the attainment date. 

Georgia chose to rely solely on NOX

emission reductions in its Post-1996 

ROP SIP (i.e., the 9% Plan). This plan 

was required to describe how Georgia 

would achieve reasonable further 

progress towards attaining the ozone 

NAAQS between 1996 and 1999, the 

attainment deadline for serious 

nonattainment areas. The most recent 

revision to Georgia’s 9% Plan was 

submitted June 17, 1996, and was 

approved by EPA effective April 19, 

1999, (64 FR 13348). 

On July 17, 2001, GAEPD submitted 

the Atlanta 1-hour ozone attainment SIP 

to EPA which included a demonstration 

that Atlanta would attain the 1-hour 

ozone NAAQS by November 15, 2004. 

That attainment demonstration, 

including the extension of the 

attainment date, was approved by the 

EPA in a notice published in the