Brucellosis is a contagious disease affecting animals and humans, caused by bacteria of the genus Brucella .

The brucellosis regulations, contained in 9 CFR part 78 (referred to below as the regulations), provide a system for classifying States or portions of States according to the rate of Brucella infection present and the general effectiveness of a brucellosis control and eradication program. The classifications are Class Free, Class A, Class B, and Class C. States or areas that do not meet the minimum standards for Class C are required to be placed under Federal quarantine.

The brucellosis Class Free classification is based on a finding of no known brucellosis in cattle for the 12 months preceding classification as Class Free. The Class C classification is for States or areas with the highest rate of brucellosis. Class A and Class B fall between these two extremes. Restrictions on moving cattle interstate become less stringent as a State approaches or achieves Class Free status.

The standards for the different classifications of States or areas entail (1) maintaining a cattle herd infection rate not to exceed a stated level during 12 consecutive months; (2) tracing back to the farm of origin and successfully closing a stated percent of all brucellosis reactor cases found in the course of Market Cattle Identification (MCI) testing; (3) maintaining a surveillance system that includes testing of dairy herds, participation of all recognized slaughtering establishments in the MCI program, identification and monitoring of herds at high risk of infection (including herds adjacent to infected herds and herds from which infected animals have been sold or received), and having an individual herd plan in effect within a stated number of days after the herd owner is notified of the finding of brucellosis in a herd he or she owns; and (4) maintaining minimum procedural standards for administering the program.

Before the effective date of this interim rule, Louisiana was classified as a Class A State.

To attain and maintain Class Free status, a State or area must (1) remain free from field strain Brucella abortus infection for 12 consecutive months or longer; (2) trace back at least 90 percent of all brucellosis reactors found in the course of MCI testing to the farm of origin; (3) successfully close at least 95 percent of the MCI reactor cases traced to the farm of origin during the consecutive 12-month period immediately prior to the most recent anniversary of the date the State or area was classified Class Free; and (4) have a specified surveillance system, as described above, including an approved individual herd plan in effect within 15 days of locating the source herd or recipient herd.

After reviewing the brucellosis program records for Louisiana, we have concluded that this State meets the standards for Class Free status. Therefore, we are removing Louisiana from the list of Class A States in § 78.41(b) and adding it to the list of Class Free States in § 78.41(a). This action relieves certain restrictions on moving cattle interstate from Louisiana.

The Administrator of the Animal and Plant Health Inspection Service has determined that there is good cause for publishing this interim rule without prior opportunity for public comment. Immediate action is warranted to remove unnecessary restrictions on the interstate movement of cattle from Louisiana.

Because prior notice and other public procedures with respect to this action are impracticable and contrary to the public interest under these conditions, we find good cause under 5 U.S.C. 553 to make this action effective less than 30 days after publication. We will consider comments that are received within 60 days of publication of this rule in the Federal Register . After the comment period closes, we will publish another document in the Federal Register . The document will include a discussion of any comments we receive and any amendments we are making to the rule as a result of the comments.

This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review process required by Executive Order 12866.

Cattle moved interstate are moved for slaughter, for use as breeding stock, or for feeding. Changing the brucellosis status of Louisiana from Class A to Class Free will promote economic growth by reducing certain testing and other requirements governing the interstate movement of cattle from this State. Testing requirements for cattle moved interstate for immediate slaughter or to quarantined feedlots are not affected by this change. Cattle from certified brucellosis-free herds moving interstate are not affected by this change.

The groups affected by this action will be herd owners in Louisiana, as well as buyers and importers of cattle from this State.

There are an estimated 15,500 cattle herds in Louisiana that will be affected by this rule. About 98 percent of these are owned by small entities. Test-eligible cattle offered for sale interstate from other than certified-free herds must have a negative test under present Class A status regulations, but not under regulations concerning Class Free status. If such testing were distributed equally among all animals affected by this rule, Class Free status would save approximately $4 per head.

Therefore, we believe that changing the brucellosis status of Louisiana will not have a significant economic effect on the small entities affected by this interim rule.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

This interim rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are in conflict with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

This interim rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

In 1979, the NRC published a policy statement, “Regulation of the Medical Uses of Radioisotopes,” (44 FR 8242, February 9, 1979) in which it informed NRC licensees, other Federal and State agencies, and the public of the Commission's general intention in regulating the medical use of byproduct material. Specifically,

1. The NRC will continue to regulate the medical uses of radioisotopes as necessary to provide for the radiation safety of workers and the general public.

2. The NRC will regulate the radiation safety of patients where justified by the risk to patients and where voluntary standards, or compliance with these standards, are inadequate.

3. The NRC will minimize intrusion into medical judgments affecting patients and into other areas traditionally considered to be a part of the practice of medicine.

NRC activities in the medical area, such as promulgation of regulations and development of regulatory guidance, as well as cooperative relationships with other Federal agencies, have been guided by this policy.

On August 6, 1997 (62 FR 42219-42220), NRC published a document in the Federal Register , “Medical Use of Byproduct Material: Issues and Request for Public Input,” describing NRC's detailed, four-year examination of the issues surrounding its medical use program. This process started with a 1993 internal senior management review; continued with a 1996 independent external review by the National Academy of Sciences' (NAS) Institute of Medicine (IOM); and culminated in NRC's Strategic Assessment and Rebaselining Project (SA). Since that Federal Register document was issued, NRC conducted an exhaustive and public review of the medical use program. Specifically, in 1997 and 1998, NRC's current and future role in regulating the medical use of byproduct material was discussed at meetings of the Advisory Committee on Medical Uses of Radioisotopes  1 (ACMUI) and the Organization of Agreement States (OAS), and with various professional societies and government agencies. During this period, the NRC staff also presented four alternative proposed revised versions of the 1979 Medical Policy Statement (MPS) to participants at NRC sponsored workshops and public meetings. These workshops and public meetings also included discussions on the major areas that were being considered for revision in 10 CFR Part 35, “Medical Use of Byproduct Material.”

On August 13, 1998 (63 FR 43580), a proposed revision to the MPS was published in the Federal Register for a 90 day public comment period. This comment period was later extended 30 days, to December 16, 1998, (63 FR 64829; November 23, 1998) to allow additional time for public, stakeholder, and State comments. In addition, to allow for wide participation in the process, NRC discussed the proposed revision of the MPS with interested individuals and organizations at 3 public meetings during the comment period (San Francisco, California, on August 19 and 20, 1998; Kansas City, Missouri, on September 16 and 17, 1998; and Rockville, Maryland, on October 21 and 22, 1998).

NRC received 42 specific comments on the proposed MPS from various organizations and individuals. These comments were extracted from the transcripts of the 3 public meetings and the 10 written comment letters submitted in response to the Federal Register document. Additional details about the comments are provided in Section IV, “Discussion of Public Comments.” These comments were similar to the comments that were discussed in the August 13, 1998 (63 FR 43582-43583), Federal Register . Based on NRC's consideration of all the comments, no changes to the proposed MPS are being made. (See the final statements that appear in Section II, below.)

This NRC policy statement informs NRC licensees, other Federal and State agencies, and the public of the Commission's general intentions regarding the regulation of the medical use of byproduct material. The current revision of 10 CFR part 35 is based on this statement of NRC policy. The Commission expects that future NRC rulemaking activities in the medical area and future NRC involvement with other Federal and State agencies will follow this statement of policy. This NRC policy promotes a more risk-informed approach to regulation of byproduct material.

The following is the final Medical Use Policy Statement to guide NRC's future regulation of the medical use of byproduct material.

1. NRC will continue to regulate the uses of radionuclides in medicine as necessary to provide for the radiation safety of workers and the general public.

2. NRC will not intrude into medical judgments affecting patients, except as necessary to provide for the radiation safety of workers and the general public.

3. NRC will, when justified by the risk to patients, regulate the radiation safety of patients primarily to assure the use of radionuclides is in accordance with the physician's directions.

4. NRC, in developing a specific regulatory approach, will consider industry and professional standards that define acceptable approaches of achieving radiation safety.

NRC's principal statutory authority for regulating medical use of byproduct material is at sections 81, 161, 182, and 183 of the Atomic Energy Act of 1954, as amended (AEA). See 42 U.S.C. 2111, 2201, 2232, and 2233. Section 81 of the Act prohibits, without NRC authorization, the manufacture, production, transfer, receipt in interstate commerce, acquisition, ownership, possession, import, and export of byproduct material (42 U.S.C. 2111). Specifically, section 81 of the AEA provides in pertinent part that:

By virtue of section 161 of the Act, the Commission is authorized to undertake a variety of measures “(in) the performance of its functions” (42 U.S.C. 2201). As stated in subsection b, the Commission may “establish by rule, regulation, or order, such standards and instructions to govern the possession and use of special nuclear material, source material, and byproduct material as the Commission may deem necessary or desirable * * * to protect health or to minimize danger to life or property” (42 U.S.C. 2201(b) (emphasis added)). Similarly, section 161.i. authorizes the Commission to “prescribe such regulations or orders as it may deem necessary” to “(3) govern any activity authorized pursuant to this Act, including standards and restrictions governing the design, location, and operation of facilities used in the conduct of such activities, in order to protect health and minimize danger to life or property” (42 U.S.C. 2201(I) (emphasis added)).

The Commission is bound by statute to regulate byproduct material (as well as source and special nuclear material) to “protect health and minimize danger to life.” This statutory standard applies to the myriad of uses of byproduct material, including not only medical use, but also, for example, radiography and irradiators. However, the Commission is not bound by the limitation in section 104.a. of the AEA, which is often mistakenly cited for the proposition that, in regulating the medical use of byproduct material, the AEA requires that the Commission “impose the minimum amount of regulation consistent with its obligations under this Act to promote the common defense and security and to protect health and safety of the public” (42 U.S.C. 2134(a)). This “minimum regulation” limitation does not apply to the medical use of byproduct material which falls within NRC's broad standard-setting authority in sections 81 and 161. Section 104.a., on its face, applies only to medical therapy licenses for “utilization facilities” (e.g., reactors) and “special nuclear material.” This “minimum regulation” directive does not govern the Commission's regulation of the medical use of byproduct material.

For the most part, the regulations to carry out the broad statutory scheme for byproduct materials are set forth in 10 CFR parts 30 through 39. In addition, the public and occupational dose limits in 10 CFR Part 20, “Standards for Protection Against Radiation,” apply whether the use of byproduct material is for medical or other purposes. However, the scope of Part 20 as stated in § 20.1002 is that, “[t]he limits in this part do not apply to doses due * * * to any medical administration the individual has received or due to voluntary participation in medical research programs.” The Commission has clarified that “the medical administration of radiation or radioactive materials to any individual, even an individual not supposed to receive a medical administration, is regulated by the NRC's provisions governing the medical use of byproduct material rather than by the dose limits in the NRC's regulations concerning standards for protection against radiation” (“Medical Administration of Radiation and Radioactive Materials,” 60 FR 48623; September 20, 1995). Thus, the Commission believes that “an administration to any individual is and should be subject to the regulations in part 35” (60 FR 48623).

The provisions of part 30, “Rules of General Applicability to Domestic Licensing of Byproduct Material” “are in addition to * * * other requirements in this chapter” (§ 30.2). This section requires that “any conflict between the general requirements in part 30 and the specific requirements in another part” are governed by those specific requirements (§ 30.2). The regulations in part 35 are designed “to provide for the protection of the public health and safety” and reflect the broad statutory standard in the AEA, discussed above (§ 35.1). The Commission has determined that, as a matter of policy, “the patient * * * as well as the general public * * * are all members of the public to be protected by NRC” (44 FR 8242, at 8244).

As previously noted, NRC received 42 comments on the proposed revision to the MPS, taken from 10 letters that were submitted and from the transcripts of the 3 public meetings. NRC received verbal comments on the proposed MPS (63 FR 43580; August 13, 1998) from stakeholders (e.g., physicians, medical physicists, nuclear medicine technologists, and radiation safety professionals) during the public meetings that were held in August, September, and October 1998. Stakeholders also submitted written comments to NRC in response to that Federal Register document.

NRC has reviewed all comments, identified the issues raised by the commenters, and combined comments where appropriate. The following discussion includes these issues, the combined comments, and the NRC responses to these combined comments.

Comment. A commenter stated that only physicians can determine what is unnecessary radiation exposure to patients. This commenter cited the “Rationale” portion of the August 13, 1998 (63 FR 43584) document about the responsibility of NRC to regulate actual medical use of byproduct material from the standpoint of reducing unnecessary radiation exposures. According to the commenter, “If the patient exposure is unnecessary and harm is done, then the physician may be guilty of malpractice (monetary awards, civil penalties, possible loss of medical license, etc.). NRC regulations won't prevent malpractice and NRC penalties are the least of the guilty physician's worries. If the patient exposure is unnecessary but no harm is done, then the physician may be still guilty of fraud (billing for unnecessary procedures). But if no harm is done, what is the purpose of NRC regulation?”

Response. The purpose of NRC regulation of the medical use of byproduct material is to reduce unnecessary radiation exposure to patients, workers, and the public. Protection of patient radiation safety is an overall goal in regulating the medical use of byproduct material. The focus of NRC regulation to protect the patient's health and safety is primarily to ensure that the authorized user physician's directions are followed as they pertain to the administration of the radiation or radionuclide, rather than to other, non-radiation related aspects of the administration. Although the Commission recognizes that physicians have primary responsibility for the protection of their patients, NRC also has a necessary role with respect to the radiation safety of patients. NRC regulations are predicated on the assumption that properly trained and adequately informed physicians will make decisions that are in the best interests of their patients. Moreover, there is nothing in the Commission's regulatory approach to medical use regulation that would in any way modify the legal rules governing malpractice suits arising out of the medical use of byproduct material.

Comment. A commenter noted that the proposed revision is an improvement over the 1979 MPS; however, the commenter recommended that the NRC review the MPS more frequently (e.g., every 10 years).

Response. How often the Commission reviews and/or revises the MPS depends on a variety of factors. These factors may be internal, such as the need for a change in the focus of NRC's regulations, or external, such as technological developments. NRC believes that a set interval to review the MPS would not provide the flexibility needed to respond to the many factors which may influence a decision to revise this policy. For example, this revision of the MPS coincides with the NRC's detailed examination of its medical use program which started in 1993 and includes issuance of the Commission's 1997 Strategic Plan (NUREG-1614, Vol. 1).

Comment. Several commenters noted that the current MPS was adequate for effective regulation in safeguarding public health and safety in radiation protection and should not be revised, but simply understood and implemented as originally intended. Several other opinions were stated more strongly. Specifically, one commenter stated that NRC has never paid meaningful attention to the MPS because most existing provisions of Part 35 do not “pass muster” under the MPS, particularly as they apply to physicians conducting nuclear medicine procedures. Another commenter's opinion was that the proposed MPS was a step backward and the MPS is being revised to justify the proposed rule.

Response. The Commission agrees that the 1979 MPS was adequate. However, based on the Commission's recent review of its regulatory framework for medical use of byproduct material, these revisions are being made to emphasize a risk-informed regulatory approach. The Commission strongly disagrees with the commenters' opinions that the medical use regulations in part 35 were promulgated without considering the 1979 MPS. In point of fact, all part 35 rulemaking activities have been issued after ensuring compatibility with the 1979 MPS.

After the Commission initiated the review process in 1993, the policy and the rule were revised in parallel in order to achieve a consistent regulatory framework for medical use of byproduct material. As stated before in response to other comments and explanations of the background for this matter, the Commission's Strategic Assessment in 1997 included a decision to consider developing a more risk-informed, performance-based approach. In the process, the three-part 1979 MPS was revised into a four-part MPS with re-arranged statements to clarify NRC's policy.

The revised MPS was published for public comment in the Federal Register (63 FR 43580-43586; August 13, 1998) and was discussed at meetings with stakeholders and Agreement States. Discussions with stakeholders were meaningful and beneficial, and addressed substantive issues from the medical community (e.g., patient safety, perceived NRC intrusion into the practice of medicine, and regulatory relief for diagnostic nuclear medicine). No new issues were identified during the public comment period and NRC has not revised the MPS any further.

Comment. A commenter disagreed with NRC's interpretation that section 104 of the AEA applies only to special nuclear material. In the commenter's opinion, NRC's medical use regulations should be based on section 104 of the AEA.

Response. NRC's principal authority for regulating medical use of byproduct material is at Sections 81, 161, 182, and 183 of the AEA. As previously discussed under Section III, “Rationale”, NRC regulation of byproduct material is not bound by the limitation in section 104.a. of the AEA, that refers to minimal regulation of reactor facilities or special nuclear material used for medical therapy.

Statement 1: NRC will continue to regulate the uses of radionuclides in medicine as necessary to provide for the radiation safety of workers and the general public.

Comment. Several commenters noted that Statement 1 made reference to uses of radionuclides in medicine. They indicated that NRC only has the statutory authority to regulate byproduct material.

Response. The Commission believes that the general term “radionuclide” is appropriate for a general statement of policy such as the MPS. The latter is intended to inform the public, NRC licensees, and other Federal and State agencies of the Commission's general intentions regarding the regulation of medical use. The 1979 MPS referred to “medical uses of radioisotopes” and the term is now being changed to “uses of radionuclides in medicine” (see 63 FR 43584; August 13, 1998). As rephrased, the term “radionuclide” is a more accurate technical statement of the scope of NRC regulation in this area.

Comment. According to one commenter, the goal of this statement is adequately served by assuring qualification of professionals involved in nuclear medicine. In the commenter's opinion, NRC has no evidence that these individuals do not already adequately provide for the radiation safety of workers and the public, and nuclear medicine is of low risk to workers and members of the public.

Response. The Commission agrees that one way of meeting the goal is to ensure that individuals are adequately trained in radiation safety practices and are placed in key positions within a licensee's organization to maintain radiation exposures as low as are reasonably achievable. Statement 1 sets forth this position. As previously stated, the Commission is bound by statute to regulate byproduct material (and source and special nuclear materials) to “protect health and minimize danger to life.” Statement 1 of the MPS continues to provide a regulatory approach to maintain an adequate level of safety. The Commission expects all medical licensees to provide radiation safety for workers and the general public.

Statement 2: NRC will not intrude into medical judgments affecting patients, except as necessary to provide for the radiation safety of workers and the general public.

Comment. One commenter was concerned that Statement 2 continues to justify NRC interference in the treatment of patients. According to the comment, there is no supporting data that clearly demonstrates that unsealed byproduct material, when used by qualified authorized users to treat patients, has harmed workers or the public.

Response. Statement 2 does not provide justification for NRC to “interfere” in the medical treatment of patients. The modifications to this statement express the Commission's policy not to intrude (rather than “minimizing” intrusion as set forth in the 1979 MPS) into judgments affecting patients except to provide for the radiation safety of workers and the general public. Providing for the radiation safety of the public and workers is essential for the Commission to carry out its statutory mandate. When this protection involves a degree of regulation of medical judgments affecting patients, the NRC may find it necessary to intrude, to a certain extent, into medical judgments affecting patients.

For example, the release from a hospital of a patient to whom radioactive materials have been administered has long been considered a matter of regulatory concern to protect members of the public, not just a matter of medical judgment (“Criteria for the Release of Individuals Administered Radioactive Material,” 62 FR 4120; January 29, 1997). From a medical point of view, it may be appropriate for a physician to release from a hospital a patient to whom radioactive materials have been administered. However, the patient release criteria in NRC regulations may require hospital confinement of that patient if his or her release could result in a dose to other individuals that exceeds the dose-based limit stated in 10 CFR 35.75(a).

In recent years, the Commission has moved away from a more rigid scheme of medical use regulation, which at one time, for example, restricted the uses of therapeutic and certain diagnostic radioactive drugs to the indicated procedures that had been approved by the FDA (44 FR 8242; February 9, 1979). Commission regulations no longer prohibit authorized user physicians from using diagnostic or therapeutic radioactive drugs containing byproduct material for indications or methods of administration that are not listed in the FDA-approved package insert. In addition, Commission regulations now permit medical use licensees and commercial nuclear pharmacies to depart from the manufacturer's instructions for preparing radioactive drugs using radionuclide generators and reagent kits. The recent amendment of 10 CFR 35.75, cited above, substitutes a dose-based limit for patient release (rather than an activity-based limit) that may provide medical use licensees greater flexibility in determining when patients may be released from their control.

Finally, Statement 2 of the MPS is consistent with recent Federal legislation (specifically applicable to FDA), which is to be construed so as not to “limit or interfere with the authority of a health care practitioner to prescribe or administer any legally marketed device to a patient for any condition or disease within a legitimate health care practitioner-patient relationship.” (There are certain exceptions to this mandate, which do not change any existing prohibition on the promotion of unapproved uses of legally marketed devices.) “Food and Drug Administration Modernization Act of 1997,” Public Law 105-115, sec. 906, 111 Stat. 2296 (1997).

Comment. According to one commenter, the NRC is not the right body to intrude into medical judgments affecting patients because NRC's experience in this area is extremely limited.

Response. As discussed above and noted in Statement 2, the Commission's policy is not to intrude into medical judgments affecting patients, except as necessary to provide for the radiation safety of workers and the general public.

This comment does not account for the principle that “[t]he substantive area in which an agency is deemed to be expert is determined by statute.” Massachusetts v. United States , 856 F.2d 378, 382 (1st Cir. 1988). See also, Commonwealth of Massachusetts v. NRC , 924 F.2d 311, 324 (D.C. Cir.), cert. denied, 112 S. Ct. 275 (1991). The AEA commits to the NRC the duty of regulating the use of radioactive byproduct materials, including radiopharmaceuticals, to protect public health and safety.

Comment. Several commenters requested that Statement 2 be revised to read, as follows, “NRC will not intrude into medical judgments.” They believed that the last phrase, “* * * except as necessary to provide for the radiation safety of workers and the general public,” should be deleted.

Response. The Commission does not agree that this statement should be revised as indicated by the commenters because providing for the radiation safety of the public and workers is essential for the Commission to carry out its statutory mandate. The final MPS explicitly states that the Commission's intention is not to intrude into medical judgments affecting patients except to provide for the radiation safety of workers and the general public. When this protection necessitates a degree of regulation of medical judgments affecting patients, the NRC may find it necessary, as previously explained, to intrude, to a certain extent, into medical judgments to protect the public and workers.

Statement 3: NRC will, when justified by the risk to patients, regulate the radiation safety of patients primarily to assure the use of radionuclides is in accordance with the physician's directions.

Comment. One commenter believed that, as written, Statement 3 conflicted with Statement 2, unless the word “primarily” was deleted from Statement 3. Without this change, the commenter believed NRC would intrude into medical judgments affecting patients.

Response. The Commission does not agree that, as written, Statement 3 conflicts with Statement 2. Statement 3 makes clear that the focus of NRC regulation to protect the patient's health and safety is primarily to ensure that the authorized user physician's directions are followed. Statement 2 emphasizes the intent of NRC to avoid intrusion into medical judgments affecting patients, except where necessary to provide for the radiation safety of workers and the public. NRC's goal in this aspect of medical use regulation is focused on the physician's directions as they pertain to the administration of radiation or a radionuclide, rather than to other, non-radiation-related aspects of the administration. Consistent with its statutory authority, if a situation should arise in the future that identifies an additional risk to a patient's health and safety, the Commission will consider adopting an additional limitation or control on a particular radiation or radionuclide modality, as necessary.

Comment. Several commenters indicated that NRC has no useful role in assuring the accurate delivery of byproduct material to patients. They believe that all references to patient radiation safety should be removed, and that NRC should simply state that it will make regulatory efforts to ensure the physician's orders are followed.

Response. The Commission has a role in assuring accurate delivery of radiation doses and dosages to patients and has rejected the notion that NRC should not regulate patient radiation safety (44 FR 8243, February 9, 1979). NRC will continue to regulate the radiation safety of patients when justified by the risk to patients, primarily to ensure that the authorized user physician's directions are followed. The Commission recognizes that physicians have primary responsibility for the protection of their patients. However, NRC's role is also necessary to ensure radiation safety of patients.

Comment. One commenter noted that any attempt by NRC to regulate the radiation safety of patients would duplicate the efforts of the FDA and state boards of pharmacy and medicine and, as such, would be an unwarranted intrusion into the practice of medicine.

Response. The Commission disagrees with this comment. NRC is responsible for regulating the actual medical use of byproduct material from the standpoint of reducing unnecessary radiation exposures to the public, patients, and occupational workers. In general, the FDA is responsible for assuring the safety, effectiveness, and proper labeling of medical products (i.e., drugs, devices, and biologics). NRC routinely relies on prior FDA approval of medical devices as an essential component of NRC's sealed source and device safety evaluations. In a “Memorandum of Understanding” (MOU), effective August 26, 1993, NRC and FDA coordinated existing NRC and FDA regulatory programs for these devices, drugs, and products (58 FR 47300, September 8, 1993).

NRC regulation of the medical use of byproduct material does not duplicate licensing by State boards of pharmacy and medicine of pharmacists and physicians, respectively, to practice pharmacy or medicine within their borders. NRC regulations rely on the licensure of these professionals by a State (or Territory of the U.S., the District of Columbia, or Puerto Rico) to practice their respective professions as a prerequisite to NRC authorizing them to use byproduct material in pharmacy or medicine.

Comment. A commenter insisted that NRC regulation should be “risk-based” (i.e., justified by risk analysis), and if NRC adopts such an approach, the risk analysis should be shared with the medical community.

Response. The Commission believes the regulations for use of byproduct material in medicine should be “risk-informed” rather than “risk-based.” In March 1997, the Commission directed the revision and restructuring of part 35 into a risk-informed and, where appropriate, more performance-based regulation. The Commission is attempting to make its medical use regulatory framework more “risk-informed” and agreeable with its regulatory strategy of regulating “material uses consistent with the level of risk involved, by decreasing oversight of those materials that pose the lowest radiological risk to the public and continuing emphasis on high-risk activities. 2 ” In addition, this portion of the MPS reflects the Commission's strategy of identifying those regulations and processes that are now or can be made risk-informed. 3

The Commission's efforts to make the regulations more risk-informed are evidenced in its recent actions to revise part 35. Before initiating the rulemaking and the associated revision of the MPS, the Commission thoroughly reviewed several extensive assessments, as previously noted. In developing the overall revision of part 35 and the MPS, the Commission considered information on risk provided by members of the public and professional societies, professional medical standards of practice, and event databases maintained by NRC to determine where oversight of lower-risk activities could be decreased. The Commission also examined whether continuation, or even broadening, of the regulations governing higher-risk activities was needed. In addition, throughout the development of the proposed rule and associated MPS, NRC held public workshops with early opportunities for comment from potentially affected parties. These interactions included significant discussions on the risk associated with medical uses of byproduct material.

Although a formal risk assessment was not performed, the Commission believes that the risks associated with use of byproduct material in medicine have been adequately evaluated and considered. Based on these considerations, the revised regulatory approach is more risk-informed and more performance-based and significantly reduces regulatory burden in many areas. The Commission has retained prescriptive regulatory requirements (e.g., in part 35) only where it believes they are necessary to ensure adequate protection of workers, patients, and the public. However, there is nothing in the NRC's regulations that prohibits the medical community or other stakeholders from conducting an independent formal risk assessment of the medical use of byproduct material and forwarding its analysis and recommendations for Commission consideration.

Comment. A commenter pointed out that NRC should not be involved with prescriptions because the requirements for accurate delivery of prescriptions are covered under state medical and pharmacy law. The commenter believes that written directives are not necessary to ensure high confidence that the actual administration of radiation to the patient was intended by the authorized user.

Response. The Commission's statutory authority to regulate the medical use of byproduct material provides for NRC to have a role with respect to patient radiation safety. Statement 3 narrows the primary focus of NRC regulation of the radiation safety of patients to whether the physician's directions for the administration of byproduct material are followed. This regulatory role is in contrast to the broad regulation by a State board of pharmacy or medicine of the general practice of those disciplines within its borders.

The Commission is not using the term “prescription” because it might typically include aspects of the administration that are outside NRC's purview. Instead, the term “written directive” (as defined in part 35) is used to specify the physician's directions (i.e., the procedure to be performed and the dose or dosage). This regulatory objective is currently reflected in provisions of part 35 requiring “high confidence” that byproduct material will be administered as directed by an authorized user physician.

Statement 4: NRC, in developing a specific regulatory approach, will consider industry and professional standards that define acceptable approaches of achieving radiation safety.

Comment. According to several commenters, the NRC ignores professional standards and regulates as it pleases. In the commenters' opinions, NRC should accord industry and professional standards the respect they deserve. They believe that if NRC in fact endorses standards developed by private, consensus organizations, the revised MPS would be improved.

Response. The Commission believes that Statement 4 commits NRC to an approach for regulation of medical use that considers both industry and professional standards that define acceptable levels of achieving radiation safety. NRC reviewed industry and professional standards in developing and implementing part 35 and the guidance document (NUREG 1556, Volume 9). For example, some provisions in 10 CFR part 35 allow medical licensees the flexibility to use standards from nationally recognized organizations to meet the performance standards reflected in the rule.

Consideration of industry and professional standards as part of NRC's policy to achieve radiation safety in medical use of byproduct material conforms to the Commission's Strategic Plan  4 that encourages “industry to develop codes, standards, and guides that can be endorsed by the NRC and carried out by industry.” The NRC's intention is to consider industry and professional standards in developing regulations and guidance for the medical use program, consistent with the concepts in the “National Technology Transfer and Advancement Act of 1995” (the NTTAA), Public Law 104-113, 110 Stat. 775 (1995). Section 12(d) of the NTTAA requires “all Federal agencies and departments to use technical standards that are developed or adopted by voluntary consensus bodies * * * as a means to carry out policy objectives or activities, ‘except when use of such standards,’ is inconsistent with applicable law or otherwise impractical.”

Not all “medical industry and professional standards” would meet the definition of “technical standards” in Section 12(d)(4) of the NTTAA (“performance-based or design-specific technical specifications and related management systems practices”). Nevertheless, as indicated above, in regulating medical use of byproduct material, the Commission endorses the concept in section 12 (a) of the NTTAA, of “emphasizing, where possible, the use of standards developed by private, consensus organizations.”

Comment. A commenter pointed out that, in defining acceptable approaches for achieving radiation safety, NRC should consider the task group reports of the AAPM, which are the latest standards of practice for medical physicists.

Response. The Commission agrees that AAPM standards of practice for professionals involved in the use of certain byproduct material modalities and for radiation safety equipment should be considered as part of NRC's risk-informed and performance-based approaches to regulating the medical use of byproduct material. The Commission acknowledges that these and other standards of practice are often voluntary and, as such, medical professionals are not required to follow them. Therefore, where appropriate, the NRC focused part 35 on performance objectives to be achieved by licensees and is allowing licensees to select among the various performance standards to meet the objective of the regulation. This provides a licensee significant flexibility in designing its radiation protection program.

For example, in developing the final rule for the therapeutic uses of sealed sources, the NRC consulted several AAPM Radiation Therapy Committee Reports, including: Task Group 40 (Comprehensive QA for Radiation Oncology, 1994); Task Group 56 (Code of Practice for Brachytherapy Physics, 1998); Task Group 59 (HDR Treatment Delivery Safety, 1997 Draft); and AAPM Report No. 54 (Stereotactic Radiosurgery, 1995).

In addition to the AAPM, other groups and societies set professional radiation safety and practice standards for medical use. NRC plans to review such standards for possible use in developing regulatory positions (e.g., National Council on Radiation Protection and Measurements, Health Physics Society, and Society of Nuclear Medicine).

Comment. Several commenters expressed the opinion that NRC regulations were unnecessary. They believe that NRC should not make regulations or license conditions out of industry or professional standards, because that reduces flexibility (i.e., regulations cannot evolve as quickly and easily as professional standards). In their opinion, NRC should recognize that these standards are implemented by other appropriate oversight bodies and that the existence of professional standards should signal to the NRC that regulation is unnecessary. Finally, these commenters indicated that a mechanism is needed to require the NRC to justify why an implemented industry standard is not acceptable.

Response. The Commission disagrees with the comment about professional standards necessarily replacing NRC's radiation safety requirements. Many of the professional standards are voluntary in nature, do not have the force of law, and may not meet the definition of a consensus standard under the NTTAA. As such, not all professional standards are adequate to meet the Commission's objectives for the regulation of medical use of byproduct material.

The Commission must consider industry consensus standards before a “government-unique standard” is promulgated. The process is described in NRC Management Directive 6.5, “NRC Participation in the Development and Use of Consensus Standards.” Further information on this topic is available on the NRC's web site, www.nrc.gov/reference_library/standards program/reference documents , e.g., Public Law 104-113, “National Technology Transfer Advancement Act of 1995” (NTTAA), OMB Circular on implementation of the NTTAA, NRC Annual Standards Reports (listings of consensus standards endorsed by NRC).

For example, NRC reviewed the technical literature to identify consensus standards and protocols that could be used or referenced in the rule and guidance document, thereby avoiding promulgation of “government-unique standards” when revising the MPS, 10 CFR part 35, and NUREG 1556 (Volume 9). Part 35, subparts C, F, and H, describe various performance objectives to be achieved (e.g., calibration of survey instruments, calibration of radiation sources used for manual brachytherapy and used in radiation therapy devices, and acceptance testing of treatment planning computers). A licensee may use measurements provided by the source manufacturer or by a calibration laboratory accredited by the AAPM. Alternatively, a licensee may select and implement an appropriate voluntary performance standard from a published protocol that was accepted by a nationally recognized body in order to meet the performance objectives of these regulations. This approach is consistent with the Commission's goal to develop regulations that are more performance-based. The Commission believes this approach provides significant flexibility for medical use licensees to design radiation protection programs that, when fully implemented, maintain radiation exposures to workers, patients, and the public to levels that are as low as are reasonably achievable.

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-8 series airplanes that have been converted from a passenger to a cargo-carrying (“freighter”) configuration, was published in the Federal Register on May 16, 2000 (65 FR 31109). That action proposed to require a revision to the Airplane Flight Manual Supplement (AFMS) to ensure that the main deck cargo door is closed, latched, and locked; inspection of the door wire bundle to detect discrepancies and repair or replacement of discrepant parts. That action also proposed to require, among other actions, modification of the hydraulic and indication systems of the main deck cargo door, and modification of the existing means to prevent pressurization to an unsafe level if the main deck cargo door is not closed, latched, and locked.

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

Since the issuance of the proposed rule, the FAA has reviewed and approved installation of National Aircraft Service Inc. (NASI) Vent Door System Supplemental Type Certificate (STC) ST01245CH as an approved means of compliance with the requirements of paragraph (c) of the final rule. A new note (Note 3) has been added to the final rule to give credit for this installation, and the remaining notes have been renumbered accordingly.

After careful review of the available data, 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 these changes will neither increase the economic burden on any operator nor increase the scope of the AD.

There are approximately 5 Model DC-8 series airplanes of the affected design in the worldwide fleet. The FAA estimates that 4 airplanes of U.S. registry will be affected by this AD.

It will take approximately 1 work hour per airplane to accomplish the general visual inspections, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the general visual inspections required by this AD on U.S. operators is estimated to be $240, or $60 per airplane, per inspection cycle.

It will take approximately 1 work hour per airplane to accomplish the AFMS revision and installation of associated placards, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the AFMS revision and installation of associated placards required by this AD on U.S. operators is estimated to be $240, or $60 per airplane.

The FAA estimates that it will take approximately 210 work hours per airplane to accomplish the modification required by paragraph (c) of this AD, at an average labor rate of $60 per work hour. The FAA also estimates that required parts will cost approximately $45,000 per airplane. Based on these figures, the cost impact of this modification required by this AD on U.S. operators is estimated to be $230,400, or $57,600 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.

This action revises Subpart 10 of 14 CFR part 1204 to update the regulation consistent with current Federal policy and Agency practice.

The National Aeronautics and Space Administration has determined that:

1. This rule is not subject to the requirements of the Regulatory Flexibility Act, 5 U.S.C. 601-612, since it will not exert a significant economic impact on a substantial number of small entities.

2. This rule is not a major rule as defined in Executive Order 12866.

The Federal Energy Regulatory Commission (Commission) is amending the General Instructions of 18 CFR Part 101 to establish, for those public utilities and licensees that are subject to Part 101, standards for determining depreciation for accounting purposes. The Commission also explains how it intends to monitor depreciation practices.

On July 29, 1999, the Commission issued a Notice of Proposed Rulemaking (NOPR) proposing to establish the principles that public utilities and licensees subject to Part 101 must follow in determining depreciation rates for accounting purposes. 1 In the NOPR the Commission noted that it has authority under Section 301 of the Federal Power Act (FPA)  2 over the accounting practices of public utilities and licensees and that, under this Section, it has prescribed a Uniform System of Accounts (USofA)  3 that these jurisdictional entities must follow.

The Commission further noted in the NOPR that it also has authority under Section 302 of the FPA  4 over the depreciation accounting practices of public utilities and licensees and that this authority includes the authority to determine and fix proper and adequate depreciation rates for accounting purposes.

The Commission stated that, in order to fulfill its statutory obligation to ensure that electric utilities charge proper amounts of depreciation to expense in each financial reporting period, it had required public utilities and licensees to obtain Commission approval before changing their depreciation rates for accounting purposes. 5 The Commission noted, however, that a decision of the U.S. Court of Appeals for the District of Columbia Circuit, Alabama Power Company, et al. v. FERC, 160 F.3d 7 (D.C. Cir. 1998) ( Alabama Power ), overturned the Commission's action in MidAmerican on procedural grounds.

The Commission began this rulemaking proceeding to respond to the court's concern that the Commission could not exercise its authority with respect to depreciation accounting matters without first establishing standards. The Commission thus proposed to require utilities  6 to use depreciation rates for accounting purposes that were based on the straight-line method of depreciation and the assets' estimated useful lives, the predominant method traditionally used by utilities. The Commission proposed, also, to monitor utility depreciation rates for accounting purposes on a case-by-case basis, e.g., as a result of or in conjunction with complaints or audits. The Commission's proposal to monitor depreciation practices and rates was in lieu of a requirement that utilities make individual filings and obtain prior Commission approval to change their depreciation rates for accounting purposes.

The Commission received 20 comments in response to the NOPR. 7 The overwhelming majority of those comments agreed with the Commission's proposal not to require individual utilities to file their accounting depreciation rates with us for our approval. 8 However, they strongly opposed the Commission's proposal to adopt the straight-line method of depreciation to the exclusion of other methods of depreciation that also result in systematically and rationally allocating the cost of utility property to the periods during which the utility uses the property in operations.

Only two Commenters, the Florida Public Service Commission and NARUC, supported the exclusive use of the straight-line method of depreciation, 9 and NARUC asked for clarification of the inconsistency between this proposal and the accelerated cost recovery provisions that we have agreed to consider with respect to new transmission investment. 10 All of the other Commenters opposed exclusive reliance upon the straight-line method of depreciation as the only permissible method of accounting for depreciation in the utility industry.

For example, the Edison Electric Institute (EEI) argued that the proposal is “inconsistent with the Commission's adopted policies promoting greater competition in electric markets * * * [which require] a flexible approach to depreciation accounting * * * ”  11 EEI notes that in an era of rapid technological change an asset's productivity may vary greatly over its service life. EEI suggests that, under such circumstances, accelerated depreciation will provide a better match of expenses to revenues than would straight-line depreciation. EEI notes that unregulated companies have the advantage of using accelerated depreciation to meet the changing needs of a free market economy; it asks that the Commission make the same advantages available to utilities as they enter the competitive era.  12

EEI urges the Commission to allow utilities the flexibility to meet the constantly changing conditions of the marketplace by permitting utilities to change the estimated service lives of their capital equipment and to adopt methods of depreciation other than straight-line, if, in their judgment, circumstances warrant. EEI points out that generally accepted accounting principles (GAAP)  13 allows for methods of depreciation other than straight-line that are also systematic and rational ways of accounting for the depreciable life of assets. 14 According to EEI, this flexibility would permit companies to use depreciation schedules that incorporate service lives of varying lengths as well as varying rates of obsolescence. This would allow management to more carefully track costs and cost causation.

EEI submits that the proposed adoption of a straight-line depreciation method of accounting does not meet the reporting needs of a changing industry and runs counter to the Commission's efforts to promote efficient competition by reducing the regulatory and accounting burden on utilities. 15 EEI also observes that the NOPR's proposal for universal straight-line depreciation is inconsistent with the Commission's recent Order No. 2000, in which the Commission indicated that it would consider the application of accelerated depreciation for new transmission investment. 16

Detroit Edison submits that the Commission “is being far too prescriptive for an industry in transition and subject to competitive pressures.”  17 According to Detroit Edison, GAAP mandates only that companies determine depreciation in a systematic and rational manner and recognizes several different methods of accounting for depreciation that would accomplish this. 18 Detroit Edison also argues that straight-line depreciation necessarily defers the recognition of certain costs to future years, when, in a competitive environment, a company charging the higher prices necessary to recover these deferred costs could drive away customers. Detroit Edison submits that other methods of depreciation, such as double or 150-percent declining balance or sum-of-the-years digits depreciation, better match cost accrual with revenues and allow companies the flexibility to survive in a competitive world. 19

Detroit Edison observes that the straight-line method of accounting for depreciation worked well when there was an obligation to serve and a guarantee of future income because technology changed little and customers had few options. Today, technology is changing rapidly, costs are becoming more differentiated, and choice is becoming the norm. As a result, the assumption that assets will produce a steady stream of revenue throughout their physical lives is no longer valid.

Rather, Detroit Edison submits, the assumption in today's world should be that each asset will produce a different, individual income stream, which will depend on its economic usefulness. Detroit Edison argues that “accounting should reflect that reality[]”  20 and help the industry prepare for competition rather than re-enforce existing regulatory practices.  21 Most of the other Commenters expressed similar views.  22

The Commission's Uniform System of Accounts for electric utilities defines depreciation as the loss of an asset's service value not restored by current maintenance. 23 Some of the causes for the loss in service value include wear and tear, decay, action of the elements, inadequacy, obsolescence, changes in the art, changes in demand, and requirements of public authorities. The primary objective of recording depreciation expense is to allocate an asset's service value over its remaining useful life. To accomplish this objective the Commission has traditionally used a straight-line depreciation method to allocate an asset's service value over its remaining life.

We thus initially proposed to adopt for accounting purposes the straight-line method of depreciation as our standard. As we noted in the NOPR, straight-line depreciation was the method typically used by utilities. 24 While, in general, we expect that that is likely to continue to be the case for most utility property, commenters have persuaded us that requiring its universal use would be overly prescriptive. The primary objective of depreciation accounting is to allocate in a systematic and rational manner the cost of property to the periods during which the property is used in utility operations, i.e., over its estimated useful service life. As Commenters correctly observe, there are methods of depreciation other than the straight-line method that also meet this objective.

Therefore, we will modify our proposed rule and simply require utilities to use for accounting purposes methods of depreciation that allocate the cost of utility property over its useful service life in a systematic and rational manner. Such methods include not only a straight-line method of depreciation, but other methods of depreciation. The broader systematic and rational standard will ensure that depreciation for accounting purposes is done properly while at the same time allowing flexibility in a changing business environment.

We are not unmindful that this additional flexibility could create a potential for abuse. However, we believe that our monitoring of utility depreciation practices will mitigate that potential. Consequently, as noted in the NOPR, we will not require utilities to make a separate filing to obtain Commission approval before implementing changes in depreciation rates for accounting purposes. 25 Instead, we will monitor utility depreciation practices on a case-by-case basis. 26

The Commission excludes certain actions not having a significant effect on the human environment from the requirement to prepare an environmental assessment or an environmental impact statement. 27 The promulgation of a rule that is procedural or that does not substantially change the effect of legislation or regulations being amended raises no environmental considerations. 28 This final rule amends Part 101 of the Commission's regulations and does not substantially change the effect of the underlying legislation or the regulations being revised.

Further, approval of actions under Section 301 of the FPA, relating to accounting orders, also raises no environmental considerations. 29 The instant rule fundamentally involves accounting matters, establishing standardized depreciation accounting practices. Accordingly, no environmental consideration is necessary.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires rulemakings to contain either a description and analysis of the effect that the final rule will have on small entities or a certification that the rule will not have a significant economic impact on a substantial number of small entities.

In Mid-Tex Elec. Coop. v. FERC, 773 F.2d 327 (D.C. Cir. 1985), the court found that Congress, in passing the RFA, intended agencies to limit their consideration “to small entities that would be directly regulated” by proposed rules. Id. at 342. The court further concluded that “the relevant ‘economic impact’ was the impact of compliance with the proposed rule on regulated small entities.” Id. at 342.

Most public utilities to which this final rule would apply do not fall within the definition of small entity. 30 Consequently, the Commission certifies that this final rule will not have a significant economic impact on a substantial number of small entities.

The Commission is amending 18 CFR part 101 to establish the principles for determining depreciation rates for accounting purposes. While we are adding an instruction to an information requirement, the instruction is not adding to the information reporting burden because the Commission is not requiring public utilities to do anything more or less than they are already doing to account for depreciation. Accordingly, this final rule does not impose any additional public reporting burden. We are forwarding a copy of this to the Office of Management and Budget for their information.

Interested persons may obtain information on the reporting requirements by contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426 [Attention: Michael Miller, Capital Planning and Policy Group, Phone: (202) 208-1415, Fax: (202) 208-2425, E-mail: mike.miller@ferc.fed.us].

To submit comments concerning collections of information and associated burden estimate(s), please send your comments to the contact listed above and to the Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503, [Attention: Desk Officer for the Federal Energy Regulatory Commission, Phone: (202) 395-3087, Fax: (202) 395-7285].

In addition to publishing the full text of this document in the Federal Register , the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's Home Page ( http://www.ferc.fed.us ) and in the Commission's Public Reference Room during regular business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.

From FERC's Home Page on the Internet, this information is available in both the Commission Issuance Posting System (CIPS) and the Records and Information Management System (RIMS).

User assistance is available for RIMS, CIPS, and the Website during normal business hours from our Help line at (202) 208-2222, or by E-Mail (to WebMaster@ferc.fed.us) or the Public Reference Room at (202) 208-1371 (E-Mail to public.referenceroom@ferc.fed.us).

During normal business hours, documents can also be viewed and/or printed in FERC's Public Reference Room, where RIMS, CIPS, and the FERC Website are available. User assistance is also available.

This final rule will take effect October 2, 2000. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget, that this rule is not a “major rule” within the meaning of Section 251 of the Small Business Regulatory Fairness Act of 1996. 31 The Commission will submit the Final Rule to both houses of Congress and to the General Accounting Office. 32

In the Federal Register of July 26, 1999 (64 FR 40321), FDA published a proposed rule to revise the definition of minor species in § 514.1(d)(1)(ii) (21 CFR 514.1(d)(1)(ii)) by deleting the following language: “Sheep are a minor species with respect to effectiveness and animal safety data collection requirements; sheep are a major species with respect to human safety data collection requirements arising from the possible presence of drug residues in food.” This change makes sheep a minor species for all data collection purposes in support of NADA's.

As stated in the preamble to the proposed rule (64 FR 40321), new data that have become available since publication of the minor species final rule (48 FR 1922, January 14, 1983) allow the agency to conclude that sheep should be a minor species with respect to all data requirements. The new data concern the similarity of drug metabolism between sheep and cattle rather than consumption levels. While consumption levels can be a factor in determining whether a species should be classified as major or minor, the agency believes that the body of evidence concerning drug metabolism is more significant in determining the major/minor status of sheep than consumption data because it demonstrates the reliability of data extrapolated from cattle, a major species, to sheep.

FDA received seven comments on the proposed rule, six comments from organizations, and one from an individual. All the comments supported the proposed rule. The following is a summary of the comments:

(Comment 1) Six comments expressed the opinion that this change would lower research and development costs for sponsors seeking approval of new animal drugs for sheep.

(Comment 2) Six comments noted that the sheep industry suffers from a lack of animal drug availability to the detriment of the industry and animal health.

(Comment 3) Four of the comments praised the agency for its science-based approach to this issue.

Thus, FDA is adopting the rule as proposed.

FDA has examined the impacts of the final rule under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612) (as amended by subtitle D of the Small Business Regulatory Fairness Act of 1996 (Public Law 104-121)), and the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes that this final rule is consistent with the regulatory philosophy and principles identified in the Executive Order. In addition, the final rule is not a significant regulatory action as defined by the Executive Order and so is not subject to review under the Executive Order.

The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. FDA estimates that the final rule will not impose any compliance costs on the animal drug industry, but rather expects it to provide a small cost savings for any company submitting an NADA for an animal drug to be used in sheep. Because this final rule makes no mandates on other government entities and will result in expenditures less than $100 million in any one year, the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities. Therefore, under the Regulatory Flexibility Act, no further analysis is required.

The benefit of this final rule will be to lessen the preapproval study requirements of NADA's for animal drugs to be used in sheep. It is therefore expected to lower research expenses and provide an impetus for sponsors to submit NADA's for minor use species rather than rely on extra-label use of animal drugs on sheep. More specifically, it would eliminate the need for a radio-labeled total residue study that can be costly and prohibitive for sponsors of new animal drugs for small markets such as sheep. FDA believes this study is unnecessary in this instance due to the similarities in the metabolism of most drugs in cattle and sheep. A more flexible approach that allows for this interspecies data extrapolation, along with the continued residue depletion studies, would encourage NADA submissions by decreasing research costs while continuing to protect human food safety. Apart from these cost savings, FDA does not expect this final rule to impose any other compliance burdens on sponsors of new animal drugs.

FDA is amending the animal drug regulations to reclassify sheep as a minor species for all data collection purposes, thereby allowing extrapolation of data from closely related species such as cattle to sheep. Currently, FDA considers sheep as a minor species for the purpose of the data necessary to demonstrate animal safety and effectiveness only. It currently considers sheep as a major species for the purpose of human food safety requirements. Because new data have led FDA to believe there are not significant differences in the metabolism of most drugs between ruminant species, FDA is reclassifying sheep as a minor species for all data collection purposes. Thus, most data packages supporting an NADA for use in sheep will be able to rely on the required human food safety data collected for cattle.

The agency has determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. In the proposed rule, the agency mistakenly made this determination under 21 CFR 25.33(d)(4), which applies to action on minor species NADA's.

The NADA's regulation, § 514.1, contains collections of information requirements previously approved under OMB Control No. 0910-0032. FDA is amending the new animal drug regulation to reclassify sheep as a minor species for all data collection purposes. This reclassification does not change the reporting or recordkeeping burden, thus clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.

FDA has analyzed this final rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the rule does not contain policies 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. Accordingly, the agency has concluded that the rule does not contain policies that have federalism implications as defined in the order and, consequently, a federalism summary impact statement is not required.

In FR Doc. 00-15864, appearing on page 39098 in the Federal Register of June 23, 2000, the following correction is made:

The SSS considers this rule (32 CFR part 1615) to be a procedural rule which is exempt from the notice-and-comment under 5 U.S.C. 533(b)(3)(A). This rule is not a significant rule for the purpose of Executive Order 12866 and has not been reviewed by the Office of Management and Budget. As required by the Regulatory Flexibility Act, SSS certifies that these regulatory amendments will not have a significant impact on small business entities.

The SSS considers this rule (32 CFR part 1698) to be a procedural rule which is exempt from the notice-and-comment under 5 U.S.C. 533(b)(3)(A). This rule is not a significant rule for the purpose of Executive Order 12866 and has not been reviewed by the Office of Management and Budget. As required by the Regulatory Flexibility Act, SSS certifies that these regulatory amendments will not have a significant impact on small business entities.

This Federal Register document is also available from the Federal Register online database through GPO Access, a service of the U.S. Government Printing Office. The Website address is: http://www.access.gpo.gov/nara/index.html.

On April 7, 2000, we published in the Federal Register (65 FR 18434) a final rule with comment for implementation of a new prospective payment system (PPS) for hospital outpatient services. The new system establishes payment rates for each PPS covered service using ambulatory payment classification (APC) groups. On June 30, 2000, we published a notice in the Federal Register (65 FR 40535) announcing our decision to delay the effective date of the outpatient PPS from July 1, 2000 as set forth in the April 7, 2000 final rule until August 1, 2000. We stated in the June 30, 2000 notice that we are delaying the effective date because we have to make a major change to the current claims processing system to implement the new PPS. We further stated that the 1 month postponement would give us additional time to test and refine the complex software programs needed to operate the PPS and would give hospitals the additional time they require to prepare and train for the new system. Therefore, the PPS provisions incorporated in the April 7, 2000 final rule are effective August 1, 2000 and the provider-based provisions included in that rule are effective October 10, 2000.

Among the provisions of the April 7, 2000 final rule are those implementing section 1833(t)(6) of the Social Security Act (the Act), which was added by section 201(b) of the Balanced Budget Refinement Act of 1999 (BBRA 1999). This section provides for temporary additional payments, termed “transitional pass-through payments,” for certain drugs, biologicals, and devices. The provision requires the Secretary to make additional payments to hospitals for at least 2 but no more than 3 years for specific items. The items designated by the law are the following: Current orphan drugs, as designated under section 526 of the Federal Food, Drug, and Cosmetic Act; current drugs, biologic agents, and brachytherapy devices used for the treatment of cancer; current radiopharmaceutical drugs and biological products; and new medical devices, drugs, and biologic agents, in instances in which the item was not being paid for as a hospital outpatient service as of December 31, 1996, and when the cost of the item is “not insignificant” in relation to the hospital outpatient PPS payment amount. For those drugs, biologicals, and devices referred to as “current,” the transitional payment begins on the first date the new PPS is implemented, as required by section 1833(t)(6)(B)(i) of the Act.

In the April final rule, we established three criteria that a new device, drug, or biological must meet to determine whether its cost are not insignificant relative to the APC payment with which the item is associated. We stated that all of the following cost criteria must be satisfied in order for a new device, drug, or biological to be eligible for transitional pass-through payments:

(1) Its expected reasonable cost exceeds 25 percent of the applicable fee schedule amount for the associated service.

(2) The expected reasonable cost of the new drug, biological, or device must exceed the portion of the fee schedule amount determined to be associated with the drug, biological, or device by 25 percent.

(3) The difference between the expected, reasonable cost of the item and the portion of the hospital outpatient department fee schedule amount determined to be associated with the item exceed 10 percent of the applicable hospital outpatient department fee schedule amount.

In this interim final rule, we are revising the first criterion and delaying the effective date of the other two criteria.

Our plans for implementation of section 1833(t)(6) of the Act are discussed in the April 2000 final rule (65 FR 18478). This section, along with other sections implementing BBRA 1999 provisions that were included in the April 2000 final rule have not previously been subject to public comment were subject to comment until June 6, 2000. We explained in the April 2000 final rule that we found good cause to waive the customary procedure for prior notice and comment with respect to these BBRA 1999 provisions and the final rule provides a 60-day period for the public to comment on these provisions. (For a full discussion of the waiver of proposed rulemaking, refer to Section XI of the April 2000 final rule (65 FR 18535).)

The transitional pass-through payments provide a way for ensuring appropriate payment for new items for which the use and costs are not adequately represented in the 1996 base year claims data on which the hospital outpatient prospective payment system is based. Although individual items will receive transitional pass-through payments for 2 to 3 years from either the first date the PPS is implemented or on the first date payment is initiated for the specific item, the underlying provision is permanent and provides an on-going mechanism for new items to qualify for 2 to 3 years pass-through payments in the future.

Another provision of the April 2000 final rule (65 FR 18477) describes the payment approach for new technology services by defining a special category of APCs referred to as “new technology APCs.” Services, such as new surgical techniques (for example, transurethral microwave thermotherapy) or items not eligible for transitional pass-through payments can be paid as a part of these new technology APCs. At a later stage, once data about the actual hospital costs incurred to furnish a new technology service are available, we expect to move payment for these services or items to other, APCs with services that are comparable clinically and with respect to resources. As explained in the April 2000 final rule, if we cannot move the new technology service to an existing APC because it is dissimilar clinically and, with respect to resource costs, from all other APCs, we will create a separate APC for the service. As stated in our April 2000 final rule, the timeframe for treating a service or item as new technology will be consistent with that for pass-through payments; that is at least 2 but no more than 3 years.

In the April 2000 final rule (65 FR 18480), we established eight specific criteria that new or innovative medical devices must meet to be considered eligible for pass-through payments under section 1833(t)(6) of the Act. We stated in the final rule that new or innovative medical devices must meet all of the following criteria to be considered eligible for transitional pass-through payments:

a. They were not recognized for payment as a hospital outpatient service prior to 1997.

b. They have been approved/cleared for use by the Food and Drug Administration.

c. They are determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part, as required by section 1862(a)(1)(A) of the Act. We recognize that some investigational devices are refinements of existing technologies or replications of existing technologies and may be considered reasonable and necessary. We will consider devices for coverage under the outpatient PPS if they have received an FDA investigational device exemption (IDE) and are classified by the FDA as Category B devices. (See §§ 405.203 (FDA categorization of investigational devices) to 405.215 (Confidential commercial and trade secret information).) However, in accordance with § 405.209 (Payment for a non-experimental/investigational (Category B) device), payment for a nonexperimental investigational device is based on, and may not exceed, the amount that would have been paid for a currently used device serving the same medical purpose that has been approved or cleared for marketing by the FDA.

d. They are an integral and subordinate part of the procedure performed, are used for one patient only, are surgically implanted or inserted, and remain with that patient after the patient is released from the hospital outpatient department.

e. The associated cost is not insignificant in relation to the APC payment for the service in which the innovative medical equipment is packaged. (For the definition of “not insignificant,” see the April 2000 final rule (65 FR 18480).)

f. They are not equipment, instruments, apparatuses, implements, or such items for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (HCFA Pub. 15-1). (As discussed in the April 2000 final rule, these costs are considered overhead expenses that are and will continue to be factored into the APC payment.)

g. They are not materials and supplies such as sutures, clips, or customized surgical kits furnished incident to a service or procedure.

h. They are not materials such as biologicals or synthetics that may be used to replace human skin.

Note that devices that meet criteria “b” and “c” but not one of the others, though they are not eligible for transitional pass-through payments under section 1833(t)(6) of the Act, are paid through the usual payments for the associated APC. These payment levels will be updated over time to reflect the use of new items and services.

Three of the criteria, “c”, “d”, and “g,” are the focus of the transitional pass-through payment changes contained in this interim final rule. In criterion “c”, we stated that devices cleared by the FDA with IDE Category B status would be considered for transitional pass-through payment. We further stated that we would limit such payment to the amount that would be paid for a currently used device serving the same medical purpose that has been approved or cleared for marketing by the FDA. In criterion “d,” we stated our intent to interpret the new device transitional pass-through payment provision in a way that would limit these payments to those devices that are implantable in the sense that they are surgically inserted in a patient and remain with that patient after the patient is released from the hospital outpatient department. In criterion “g” we expressed our intent to treat all “clips” equally as though they function solely as tools and supplies that are necessary for the surgeon to perform a surgical procedure without considering other functions that may qualify some as candidates for pass-through consideration.

In Addendum K of the April 2000 final rule, we published a preliminary list of those particular items and services for which we expect to make payment based on either the pass-through or new technology provision effective August 1, 2000. A slightly different version of this list was posted on our web site, www.hcfa.gov, on March 9, 2000. (A separate notice published elsewhere in the April 7, 2000 Federal Register (65 FR 18341) specifically identified this web site posting.) The April 2000 final rule and the web site posting contain instructions about how interested parties may apply for transitional pass-through or new technology payment status for items or services. On May 12, 2000, we updated our web site posting to reflect additional items approved for pass-through and new technology payments on implementation of the new system; that is, August 1, 2000. In addition, on June 22, 2000 we posted updated instructions and announced the application deadline of July 14, 2000 for transitional pass-through and new technology payments effective October 1, 2000.

The April 2000 final rule also specified a number of criteria that facilities or organizations must meet to be considered, for purposes of Medicare payment, to be “provider-based.” We adopted these criteria in an attempt to ensure that only appropriately qualified facilities and organizations receive the higher payment levels typically associated with this status. The criteria for provider-based status are set forth in § 413.65 (Requirements for a determination that a facility or an organization has provider-based status) of the April 2000 final rule (65 FR 18538).

In the April 2000 final rule, we included a special grandfathering provision applicable to FQHCs and “look-alikes” (facilities that are structured like FQHCs and meet all the requirements for grant funding but have not actually received these grants). The provision stated that a facility or entity would be treated as provider-based, without regard to compliance with the provider-based criteria if it has, since April 7, 1995, furnished only services that were billed as if they had been furnished by a department of a provider and received a grant before 1995 under section 330 of the Public Health Service Act, or is receiving funding from such a grant under a contract with the recipient of such a grant and meets the requirements to receive a grant under section 330 of the Public Health Service Act, or based on the recommendation of the Public Health Service (PHS), was determined by HCFA before 1995 to meet the requirements for receiving such a grant. We included this provision in response to comments suggesting that application of provider-based criteria to FQHCs and “look-alikes” could interfere with the continuity of care to patients served by these health centers. We also were concerned that application of the criteria could adversely affect access to care for the patients served by these facilities. Therefore, we indicated that we were accepting the comments and had crafted the criteria to give effect to these concerns.

The April 2000 final rule (65 FR 18540) also contained a requirement, in new § 413.65(g)(7) (Obligations of hospital outpatient departments and hospital-based entities), that when a Medicare beneficiary is treated in a hospital outpatient department or hospital-based entity (other than a rural health clinic) that is not located on the main provider's campus, the hospital has a duty to furnish written notice to the beneficiary, before the delivery of services, of the amount of the beneficiary's potential financial liability (that is, of the fact that the beneficiary will incur a coinsurance liability for an outpatient visit to the hospital as well as for the physician service and of the amount of that liability). The notice must be one that the beneficiary can read and understand. If the beneficiary is unconscious, under great duress, or for any other reason unable to read a written notice and understand and act on his or her own rights, the notice must be furnished, before the delivery of services, to the beneficiary's authorized representative.

In addition, the April 2000 final rule amended § 489.24 (Special responsibilities of Medicare hospitals in emergency cases), sometimes referred to the Emergency Medical Treatment and Active Labor Act (EMTALA) regulation. In new § 489.24(i)(2), we required that hospitals establish protocols for handling individuals with potential emergency conditions at off-campus departments. In new § 489.24(i)(2)(ii), we further required that if the off-campus department is a physical therapy, radiology, or other facility not routinely staffed with physicians, RNs, or LPNs, the department personnel must be given protocols that direct them to contact emergency personnel at the main hospital campus.

We are revising § 419.43 (e)(1)(iv) to change one criterion and to postpone the effective date for two other criteria that a new device, drug, or biological must meet in order for its cost to be considered “not insignificant”. In the April 2000 final rule, (65 FR 18434), the expected reasonable cost of a device had to exceed 25 percent of the applicable fee schedule amount for the associated service in order for the cost of the device to meet the “not insignificant” test. Based on the experience that we gained by reviewing the applications submitted for approval of new devices, drugs and biologicals as pass-through items, we concluded that the 25 percent-limitation was too restrictive and could result in limiting Medicare beneficiaries' access to new products. In order to ensure that Medicare beneficiaries will continue to have access to the latest technologies, we are changing that criterion. We will now require that the expected reasonable cost of a new device must exceed 10 percent of the applicable fee schedule amount for the associated service.

The additional two criteria, proposed in the April 2000 rule, for determining whether a new device, drug, or biological cost is “not insignificant” will be postponed and will apply to devices, drugs, and biologicals for which a transitional pass-through payment is first made on or after January 1, 2003. The delay in effective date for these criteria is necessary so that we will have sufficient time to gather and analyze data needed to determine the current portion of the fee schedule amounts associated with a device, drug, or biological, which is an essential factor in applying these criteria.

In criterion “c”, we stated that devices cleared by the FDA with IDE Category B status would be considered for transitional pass-through payment. We further stated that we would limit pass-through payment for the eligible IDE Category B device to the amount that would be paid for a currently used device serving the same medical purpose that has been approved or cleared for marketing by the FDA. This approach was taken based on the regulations requirement set forth in § 405.209 that limits payment for the IDE Category B device in the manner described. Since publishing our April 2000 final rule, we have reviewed this policy and now believe that it would be more appropriate to provide that the payment amount for IDE Category B items that qualify for transitional pass-through payments be determined in the same manner as other pass-through items (that is, no cap). Since IDE Category B devices are subjected to the same eligibility requirements as any other device applying for pass-through status and since pass-through payments for a specific device are temporary, we believe that, for purposes of making outpatient PPS pass-through payments, it is more appropriate to not impose a payment cap on eligible IDE Category B devices. Therefore, we are revising criterion “c” by removing the cost limitation provision for IDE Category B devices that qualify for transitional pass-through payments.

In addition, since publication of the April 2000 final rule, we have been processing a large number of applications for transitional pass-through payment status for new medical devices. It has become apparent that our attempt to distinguish implantable devices using the procedure we had outlined in the April 2000 final rule had practical limitations. For example, a significant number of applications received were for devices that consist of more than one component in which one component would be implantable according to the new medical device definition stated in the April 2000 final rule (65 FR 18480) while other components, such as catheters, guidewires, or certain clips would not meet this definition.

Distinguishing these components of a single product and pricing them separately appears unnecessarily cumbersome. In some instances, a particularly expensive catheter that is surgically inserted, removed, and disposed of in the course of a procedure may be used in one of a number of procedures. In this instance the new medical device is implanted temporarily rather than permanently as indicated in our original policy published in the April 2000 final rule. However, we did not intend for our policy to exclude new medical devices that are implanted or inserted during a procedure but also may be removed during that procedure so that the patient leaves the hospital without the device. Rather, we believe that these devices should be considered for pass-through payments because they also are implantables.

In other instances, it became apparent that some clips are expensive and function other than as tools or supplies necessary for a surgeon to perform a surgical procedure. Some clips are radiological site or tissue markers that are implanted and may be used months after implantation to locate an area for imaging and later removed. We did not intend to exclude such clips from consideration for pass-through payments.

Separating components of a single product and pricing them separately could require the establishment of a number of new payment groups consisting of just one product as a result of introduction of a single, high-priced item. Industry representatives also indicated significant concerns about our way of proceeding.

Therefore, we are modifying our interpretation of which devices are eligible for transitional pass-through payments to include new medical devices that are used for one patient only, are single use, come in contact with human tissue, and are surgically implanted or inserted in a patient during a procedure but may also be removed during that procedure so that the patient leaves the hospital without the device. Our revised interpretation also includes clips that are used as radiological site or tissue markers.

In addition, we are clarifying our interpretation of criterion “g” to include as supplies pharmacological imaging and stressing agents other than radiopharmaceuticals (for which payment under the transitional pass-through provision is established by section 1833(t)(6)(A) of the Act). Also, in criterion “g” we have become aware of the need, based on our review of pass-through applications, to clarify that supplies include contrast media and stressing agents, excluding radiopharmaceuticals, that are used in imaging procedures. We are revising criteria “c”, “d” and “g” of the eight criteria for defining new medical devices for pass-through payments that were discussed in the preamble of the April 2000 final rule to reflect this change. These three revised criteria are as follows:

• Criterion—c. They are determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part, as required by section 1862(a)(1)(A) of the Act. Some investigational devices are refinements of existing technologies or replications of existing technologies and may be considered reasonable and necessary. If such devices have received an FDA investigational device exemption (IDE) and are classified by the FDA as Category B devices in accordance with §§ 405.203 to 405.215 of this chapter, excluding § 405.209, they will be considered for coverage under the hospital outpatient prospective payment system.

• Criterion—d. They are an integral and subordinate part of the procedure performed, are used for one patient only, are single use, come in contact with human tissue, and are surgically implanted or inserted, whether or not they remain with the patient when the patient is released from the hospital outpatient department.

• Criterion—g. They are not materials and supplies such as sutures, customized surgical kits, clips (other than radiological site or tissue markers), or furnished incident to a service or procedure. Supplies include pharmacological imaging and stressing agents other than radiopharmaceuticals (for which transitional pass-through payment is authorized under section 1833(t)(6)(A) of the Act).

Also, we are revising § 419.43(e)(4) (Transitional pass-through for additional costs of innovative medical devices, drugs, and biologicals) to include all eight criteria to define new or innovative medical devices eligible for pass-through payments.

The policies discussed above represent a change from the policies stated in the April 2000, final rule. This interim final rule with comment, thus, supersedes the relevant aspects of the previous rule. Comments on our revised policy will be considered if received by September 5, 2000.

Since publication of the April 2000 final rule, we have become aware that, as currently worded, the rule would not fulfill its intended purpose in that the continuity of care and access to care for patients of some health centers could be jeopardized. This is because those centers meet other criteria for grandfathering but were not designated as FQHCs or “look-alikes” before 1995. To meet our original policy intent of helping to ensure that the new criteria do not disrupt the delivery of services to patients of these facilities, we are correcting § 413.65(m) to state that a facility or entity would be treated as provider-based, without regard to compliance with the provider-based criteria, if it has since April 7, 1995 furnished only services that were billed as if they had been furnished by a department of a provider and received a grant on or before April 7, 2000 under section 330 of the Public Health Service Act and continues to receive funding under such a grant, or is receiving funding from a grant made on or before April 7, 2000 under section 330 of the Public Health Service Act; or based on the recommendation of the PHS, was determined by HCFA on or before April 7, 2000 to meet the requirements for receiving a grant under section 330 of the Public Health Service Act, and continues to meet such requirements. We are making this change to clarify that grandfathering under § 413.65 is based on continued status as a section 330 of the Public Health Service Act grantee or a “look-alike” facility.

We wish to clarify that the “C” codes assigned to many items shown in the May 12, 2000 web site posting are temporary HCFA Common Procedure Coding System (HCPCS) codes that are to be used exclusively to bill pass-through and new technology items paid under the hospital outpatient PPS. These codes cannot be used to bill other Medicare payment systems, for example, the durable medical equipment fee schedule. Assignment of the “C” category of HCPCS codes for use in the hospital outpatient PPS is intended to expedite the processing of requests for pass-through and new technology status and to ensure beneficiaries timely access to new and appropriate technologies. Therefore, applicants may submit a single application as detailed in the April 2000 final rule (65 FR 18481) for such items that do not have an established HCPCS code to ATTN: PPS New Tech/Pass-Throughs, Division of Practitioner and Ambulatory Care, Mailstop C4-03-06, Health Care Financing Administration, 7500 Security Boulevard, Baltimore, MD 21244-1850. HCPCS applications unrelated to the pass-through and new technology provisions should continue to follow the regular HCPCS application process found on the Internet at http://www.hcfa.gov/medicare/hcpcs.htm.

As stated in the April 2000 final rule, if the item for which pass-through or new technology status is requested requires approval/clearance by the Food and Drug Administration (FDA), submit a copy of the FDA approval/clearance letter. Products may be considered for pass-through status as soon as they are approved/cleared by the FDA without a specified period of marketing experience. This approach reflects our policy on assigning “C” codes since the creation of these codes under the HCPCS.

Following publication of the April 2000 final rule, some hospitals and their representatives have asked whether it is our intent that the beneficiary notice requirement in new § 413.65(g)(7) be followed in cases when the prohibition on patient dumping requirements in § 489.24, sometimes referred to as the Emergency Medical Treatment and Active Labor Act (EMTALA) requirements, apply. The concern expressed is that, in such cases, it would not be appropriate to delay mandated screening and stabilization services to deliver a notice of patient financial liability. Questions also have arisen as to whether hospitals can reasonably be expected to furnish an exact statement of the patient's financial liability, since the exact scope of services needed may not be known at the time notice must be given.

We understand this concern and wish to confirm that in EMTALA cases the requirements of § 489.24 continue to apply, so that hospitals are not required to deliver the notices before screening and stabilizing a patient with an emergency medical condition. We further understand the concerns that have been expressed regarding estimates of financial liability. We are clarifying that when the exact type and extent of care needed is not known, the hospital may furnish a written notice to the patient that explains the fact that the beneficiary will incur a coinsurance liability to the hospital that they would not incur if the facility were not provider-based. The hospital may furnish an estimate based on typical or average charges for visits to the facility or organization, while stating that the patients actual liability will depend upon the actual services furnished by the hospital. We are developing a separate proposed rule that will further revise and clarify the notice requirements and will issue that proposed rule for public comment as soon as possible.

Following publication of the April 2000 final rule, some hospitals and their representatives have asked whether it is our intent that the staff of off-campus departments described in new § 489.24(i)(2)(ii)), such as physical therapy, radiology, or other facilities not routinely staffed with physicians, RNs, or LPNs, be required to contact emergency personnel at the main hospital campus (as described in new § 489.24(i)(3)(ii) before arranging an appropriate transfer to a medical facility other than the main hospital. This question refers to cases in which an appropriate transfer is necessary either because the main hospital campus does not have the specialized capability or facilities required by the individual or because the individual's condition is deteriorating so rapidly that the time needed to move the individual to the main hospital campus would significantly jeopardize the individual's life or health.

We understand this concern and do not intend that new § 489.24(i)(2)(ii) be interpreted in a way that could delay an appropriate transfer. Therefore, we are clarifying that in any case arising in an off-campus department, of the kind described in new § 489.24(i)(2)(ii), the contact with emergency personnel at the main hospital campus should be made either after or concurrently with, the actions needed to arrange an appropriate transfer under new § 489.24(i)(3)(ii) if doing otherwise would significantly jeopardize the individual's life or health. We note that this clarification does not relieve the off-site department of the responsibility for making this contact, but only clarifies that the contact may be delayed in specific cases when doing otherwise would endanger a patient subject to EMTALA protection.

This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995.

We have examined the impacts of this rule as required by Executive Order 12866 and the Regulatory Flexibility Act (RFA) (Pub. L. 96-354). Executive Order 12866 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 annually). This interim final rule is not a major rule because we have determined that the economic impact will be negligible for the revisions related to the transitional pass-through payments for new or innovative medical devices and the grandfathering of FQHCs and “look-alikes.”

In addition, the budget impact related to the transitional pass-through provision has already been addressed in the April 2000 final rule (65 FR 18530). As stated in that rule, the pass-through provision is budget neutral as required by section 1833(t)(2)(E) of the Act as amended by section 201(c) of the BBRA. Section 1833(t)(6)(D) of the Act caps the projected additional payments annually at 2.5 percent of the total projected payments for hospital outpatient services each year before calendar year 2004 and no more than 2.0 percent in year 2004 and in subsequent years. Under this provision, we have the authority to reduce pro rata the amount of the additional payments, if before the beginning of a year, we estimate that these payments would otherwise exceed the caps. We advised, in the April 2000 final rule, that it is extremely difficult for us to estimate projected pass-through expenditures as required by law because we do not have claims data available for most items that would be eligible for pass-through payments and because many eligible items would be added after the new system is implemented. For these reasons, in the April 2000 final rule, we stated that there would be no uniform reduction applied to the pass-through payments for calendar years 2000 and 2001. The pass-through change incorporated in this interim final rule does not alter these circumstances.

Also, the budgetary impact related to the grandfathering provision was already calculated in the April 2000 final rule (65 FR 18530) as if these providers were designated before April 7, 2000.

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 $5 million or less annually. For purposes of the RFA, all FQHCs and “look-alikes” are considered to be small entities. Individuals and States are not included in the definition of a small entity.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis for any final rule that may have a significant impact on the operations of a substantial number of small rural hospitals. Such an analysis must conform to the provisions of section 604 of the RFA. With the exception of hospitals located in certain New England counties, for purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital with not more than 100 beds that is located outside of a Metropolitan Statistical Area (MSA) or New England County Metropolitan Area (NECMA). Section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98-21) designated hospitals in certain New England counties as belonging to the adjacent NECMA. Thus, for purposes of the prospective payment system, we classify these hospitals as urban 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 an expenditure in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million. This interim final rule will not have a significant economic effect on these governments or the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct compliance costs on State and local governments, preempts State law, or otherwise has Federalism implications. This interim final rule will not have a substantial effect on States or local governments.

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.

Because of the large number of items of correspondence we normally receive on Federal Register documents published for comment, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document.

We ordinarily publish a notice of proposed rulemaking in the Federal Register and invite public comment on the proposed rule. The notice of proposed rulemaking includes a reference to the legal authority under which the rule is proposed, and the terms and substances of the proposed rule or a description of the subjects and issues involved. This procedure can be waived, however, if an agency finds good cause that a notice-and-comment procedure is impracticable, unnecessary, or contrary to the public interest and incorporates a statement of the finding and its reasons in the rule issued. For the reasons set forth below, we find good cause to waive the requirement for notice and comment procedures for the refinement of rules concerning provider based status for FQHCs (including “look-alike” facilities).

We believe that implementing the provider-based provisions contained in the April 2000 final rule without the refinements incorporated in this document could jeopardize continuity of care at certain facilities currently treated as provider-based FQHCs, and consequently disrupt care for Medicare beneficiaries served in those facilities. It would have been impracticable to complete notice-and-comment procedures by August 1, 2000. Given the limited timeframe and the time required to complete notice-and-comment procedures (to develop proposed policies, draft the proposed rule, provide a 60-day public comment period, consider public comments, develop final policies, and draft a final rule), it would not have been possible to issue this document as a proposed rule and issue a final rule by August 1, 2000. Therefore we find that notice and comment procedures on this issue would be impracticable and contrary to the public interest.

With respect to outpatient PPS, this rule revises a policy reflected in the April 7 final rule with comment period. The April 7 rule provided a waiver of notice and comment procedures for, among other things, the outpatient PPS policy revised herein.

We find the circumstances surrounding this interim final rule make it impracticable and contrary to the public interest to allow a 30-day delay in its effective date with respect to outpatient PPS. This interim final rule refines policies set forth in the April 2000 final rule including the definition of new medical devices, drugs, and biologicals eligible for pass-through payments. The provisions contained in the April 2000 final rule regarding the transitional pass-through payments will be implemented on August 1, 2000, while the provider-based provisions will be implemented on October 10, 2000. We do not believe that it would be feasible or desirable to implement pass-through provisions contained in the April 2000 final rule without the refinements incorporated in this document. We believe that it would be impracticable and contrary to the public interest to have an effective date for the policy revisions in this document relating to devices that differs from the effective date for the rest of outpatient PPS. If we allow a 30-day delay in the effective date of this rule, hospitals and fiscal intermediaries will be placed at greater risks to make additional changes soon after implementing major systems changes; will find it cumbersome; and will consider it an inefficient use of resources.

Therefore, we find good cause to waive the 30-day delay in the effective date.

Operators of U.S.-flag oceangoing vessels in U.S. foreign trade and certain foreign-flag vessels must report on their locations pursuant to 46 CFR part 307 to enhance the safety of vessel operations at sea and provide a contingency for events of national emergency. AMVER means Automated Mutual-Assistance Vessel Rescue System operated by the U.S. Coast Guard. The “AMVER Bulletin” is available from the U.S. Coast Guard, AMVER Maritime Relations Office, Battery Park Building, New York, NY 10004.

Previously, the “AMVER Bulletin” was available from the U.S. Coast Guard at AMVER Center, Governors Island, New York, NY 10004. However, the U.S. Coast Guard base on Governors Island is closed. Therefore, we are updating the address to reflect the Coast Guard's change of location.

This is a summary of a Commission's Order in CC Docket No. 94-129 released on May 3, 2000. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 Twelfth Street, SW., Washington, DC 20554.

1. In our Second Report and Order and Further Notice of Proposed Rulemaking (Section 258 Order), 64 FR 7763 (February 16, 1999) we adopted rules to implement section 258 of the Communications Act of 1934 (Act), as amended by the Telecommunications Act of 1996 (1996 Act). The goal of section 258 is to eliminate the practice of “slamming,” which is the unauthorized change of a subscriber's preferred carrier. In the Section 258 Order, we adopted various rules addressing verification of preferred carrier changes and preferred carrier freezes. We also adopted liability rules designed to take the profit out of slamming. In this First Order on Reconsideration (Order), we amend certain of our liability rules, granting in part petitions for reconsideration of our Section 258 Order. Specifically, the revised rules provide for slamming disputes between consumers and carriers to be brought before appropriate state commissions, or this Commission in cases where the state has not opted to administer our rules, rather than to authorized carriers. In light of this decision, we deny a petition filed by several long distance carriers seeking waiver of the slamming liability rules and proposing an industry-sponsored slamming liability administrator. In this order, we also modify the liability rules that apply when a consumer has paid charges to a slamming carrier. In such instances, our new rules require slamming carriers to pay out 150% of the collected charges to the authorized carrier, which, in turn, will pay to the consumer 50% of his or her original payment. Finally, the order sets forth certain notification requirements to facilitate carriers' compliance with the liability rules. We believe these modifications will strengthen the ability of our rules to deter slamming, while addressing concerns raised with respect to our previous administrative procedures.

2. We restate our conviction that the limited absolution of consumer charges ordered by our slamming rules is essential to deterring slamming. By depriving unauthorized carriers of slamming revenues in the first instance, absolution takes the profit out of this illegal practice. Several petitioners and commenters, including all of the groups representing consumer and state interests, agree that absolution is “a reasonable and practical extension of the statutory intent reflected in section 258 that the slamming carrier not be allowed to keep any of its ill-gotten gains.” The only commenters who oppose absolution are carriers that would be subject to the more stringent liability created by these rules.

3. As detailed in the Section 258 Order, we concluded that more aggressive slamming liability rules are essential because our previous rules had failed to stem the growth of slamming. As we summarized in that order:

4. Accordingly, we reject the arguments of those long distance carriers that assert we failed to explain our departure from the slamming liability policies adopted in the 1995 Order, 60 FR 35846 (July 12, 1995). Under those previous rules, consumers remained obligated to pay charges to their slamming carriers in the amount they would have paid their authorized carriers absent the unauthorized change. Several commenters quote piecemeal from the 1995 Order to support their argument that our current approach to slamming liability is inexplicably inconsistent. We note, however, that those commenters fail to include in their filings the cautionary language in that order. In particular, the Commission there specifically warned that absolution might be an appropriate rule if the prior rules failed to abate the growth of slamming:

5. As noted, the number of slamming complaints processed by this Commission have more than doubled since adoption of the 1995 Order. The state commissions, which cumulatively receive a larger share of slamming complaints than this Commission, have seen a similar growth. Thus, consistent with our previous warning, and in light of the need for stronger and more effective deterrents to slamming, we are convinced that absolving consumers of liability for charges incurred over a limited time-period is now the appropriate policy. We point out that consumer groups and states support absolution from slamming charges as an effective method of deterring slamming. Indeed, many states have adopted absolution as a remedy for their own consumers.

6. As we stated in the Section 258 Order, absolution minimizes slamming carriers' physical control over slamming revenues, and thereby minimizes the incentive to slam consumers. The Commission has seen several cases in which slamming carriers went out of business or declared bankruptcy after the Commission or state enforcement agencies detected their illegal activities. Such evasion has made it difficult to provide restitution to injured consumers. Accordingly, it is important to deprive a slamming carrier of slamming revenues in the first instance.

7. Our absolution rules also place appropriate incentives on both consumers and carriers. They encourage consumers to scrutinize their telephone bills immediately and carefully. In doing so, absolution engages the general public in detecting slamming. Absolution also provides carriers with the incentive to verify all carrier changes properly, in order to protect themselves against any possible inappropriate consumer claims of slamming. The rules will motivate carriers not only to comply strictly with our verification procedures, but also to use methods that provide convincing proof of a subscriber's authorization.

8. Finally, limited absolution compensates a slammed subscriber, at least in part, for the inconvenience and frustration that results from an unauthorized change. In our extensive experience handling slamming complaints since the 1995 Order, it has become evident that consumers often experience a high level of confusion upon being slammed. After discovering the unauthorized change, consumers frequently have great difficulty in returning to their authorized carriers and in getting their telephone bills adjusted correctly. Indeed, as long as slamming carriers continue to receive payment, they have little incentive to be responsive to consumer complaints. Therefore, absolution also furthers Congress' desire to “provide that consumers are made whole.”

9. As stated previously, the only parties that oppose the concept of absolution are the carriers themselves. States and consumer groups overwhelmingly support absolution as the best method to deter slamming. We are unpersuaded by the arguments of TRA and others that our absolution rule is inconsistent with the provisions of section 258 requiring slamming carriers to reimburse authorized carriers for forgone revenue. As we explained in the Section 258 Order, we believe that our absolution remedies are complementary to the congressional scheme and not inconsistent. The language of section 258 does not mandate that slammed consumers pay either the authorized or the unauthorized carrier. Rather, by its terms, section 258(b) applies only when a consumer in fact has made a payment. Furthermore, section 258 specifically states that its remedies are “in addition to any other remedies available by law.” We emphasized in the Section 258 Order that the authorized carrier is free to seek compensation for lost profits or other damages in proceedings against the slamming carrier before the Commission or in a state or federal court. Furthermore, our rules do not deprive the authorized carrier of all charges incurred by the subscriber. The subscriber only receives absolution for service provided during the first 30 days after being slammed. The authorized carrier is entitled to collect charges for service provided after the first 30 days, even though that service was provided by the slamming carrier.

10. We decline to extend the absolution period beyond the 30-day limit, as suggested by several petitioners, because we find that the 30-day limit strikes a reasonable balance between the interests of consumers and carriers. We find that the period of absolution should be limited in order to give consumers the incentive to look at their bills promptly and not to delay reporting slams. We also find that the time limitation should be tied to an event that is verifiable and easily tracked, such as the date a slam occurs, rather than an event that is not verifiable, such as the date the consumer notices an unauthorized change. Accordingly, we retain the limitation that absolution is only available for charges incurred within the first 30 days after the unauthorized change.

11. Furthermore, as explained in the Section 258 Order, we will grant waivers where special circumstances warrant a longer period of absolution, such as where the subscriber's telephone bill does not provide reasonable notice of a carrier change. We disagree with NTCA's contention that we should extend the time period for absolution because the waiver process is not a practical solution for consumers. NTCA's viewpoint appears to be based on the assumption that large numbers of consumers will be unable to detect carrier changes on their telephone bills. We acknowledged in the Truth-In-Billing proceeding that unclear telephone bills can prevent customers from recognizing that their carrier of choice has been switched. The principles adopted in that order address these concerns by requiring telephone bills to highlight when a consumer's preferred interLATA or intraLATA carrier has been changed. Our Truth-In-Billing Order also requires that telephone bills contain clear and conspicuous disclosure of consumer inquiry information, enabling consumers to report slamming and begin the process of returning to their authorized carrier. Accordingly, in the future, consumers should be better-equipped to detect and respond to unauthorized carrier changes. We also note that deliberate efforts by a carrier to conceal an unauthorized carrier switch may be the basis for extending the 30-day limit, and may also warrant additional enforcement action by the Commission.

12. Frontier has requested reconsideration of the requirement in the Section 258 Order that an authorized carrier that collects slamming proceeds from an unauthorized carrier remit to the subscriber the difference between what the subscriber paid the unauthorized carrier and what he would have paid the authorized carrier absent a slam. Frontier asserts that this “re-rating” requirement is inconsistent with the specific statutory language of section 258, which mandates that the unauthorized carrier “shall be liable to the carrier previously selected by the subscriber in an amount equal to all charges paid by such subscriber after such violation.”

13. In the Section 258 Order, we concluded that requiring authorized carriers to remit to the subscriber amounts in excess of what they would have received but for the slam was consistent with the statute and the Congressional intent underlying section 258. Pointing to the language of the legislative history specifically directing that the Commission's rules implementing section 258 “should also provide that consumers be made whole,” we concluded that Congress intended that subscribers who pay for slamming charges should pay no more than they would have paid their authorized carrier for the same service had they not been slammed. We also noted in the Section 258 Order that such a rule was consistent with existing Commission policy requiring slamming carriers to refund to subscribers amounts in excess of what the subscriber would have paid its preferred carrier; while the interpretation proffered by Frontier on reconsideration would leave consumers worse off than before passage of the legislation.

14. On reconsideration of this issue, we have considered comments filed in response to the Further Notice of Proposed Rulemaking (FNPRM) in this proceeding. Among the issues raised in the FNPRM, we asked whether we had authority under section 258 or other provisions of the Act to require the unauthorized carrier to pay to the authorized carrier double the amount of charges paid by the subscriber during the first 30 days after a slam, with the authorized carrier then remitting one-half that amount back to the subscriber. The modified liability approach we adopt here is a variation on that proposal in that it requires unauthorized carriers to disgorge more than the amount collected from the subscriber in order to compensate both the subscriber and the authorized carrier. In light of the comments received on the FNPRM and petitions for reconsideration, we now adopt a different liability scheme, for cases where the subscriber has paid charges to the unauthorized carrier, that we conclude more fully implements the congressional intent underlying section 258. Specifically, we now establish a remedy that both allows the authorized carrier to retain an amount of money equal to “all charges paid by the subscriber” to the unauthorized carrier, and also ensures that subscribers are “made whole” by reimbursing them the amount they paid in excess of what they would have paid their preferred carrier absent the slam (or a proxy for such amount). Thus, once a state commission or the FCC has made a finding that a slam has occurred, the unauthorized carrier will be required to disgorge to the authorized carrier an amount adequate to satisfy both of these obligations. As discussed, we find that an appropriate proxy for this harm is 150% of the amounts collected by the unauthorized carrier from the subscriber following a slam. Upon receipt of this money, the authorized carrier will then be required to remit one-third of this amount ( i.e., 50% of what the subscriber paid to the unauthorized carrier) to the injured subscriber.

15. We specifically reject Frontier's petition to the extent it asserts that any re-rating of the consumers' bill would be inconsistent with the statute. To the contrary, Frontier's interpretation would completely ignore the congressional intent that consumers be “made whole,” by leaving consumers that pay money to an unauthorized carrier having paid more than they would have paid absent the slam. Even setting aside any time and expense incurred by the consumer in remedying the slam, such an approach cannot be considered making the subscriber “whole” in any meaningful sense. We note, in particular, that many of the long distance carriers favoring reconsideration of the absolution requirement apparently agree that the dual Congressional intent of section 258 mandates that slammed consumers should pay no more than they would have paid absent the slam.

16. We conclude that the approach we adopt here is both authorized by section 258, and is the most appropriate method for satisfying the dual congressional purposes reflected in the legislative history. The specific language of section 258 provides that the unauthorized carrier shall be liable to the authorized carrier for all amounts collected from the subscriber. As Frontier asserts, a reasonable interpretation of this language is that Congress intended for the authorized carrier to retain all such amounts, even though they likely will be more than the authorized carrier would have received from the subscriber absent a slam. Such a bonus may serve as additional incentive for the authorized carrier to go after the unauthorized carrier to collect these amounts, thereby acting as an additional disincentive to slamming. Section 258 also specifically provides that this remedy is “in addition to any other remedies available at law.” One such remedy that assuredly is available is the ability of consumers to bring a claim to the Commission or in federal court, or where allowed under state law to the state commissions, for damages due to slamming. For example, pursuant to sections 206-208 of the Act, a consumer bringing a complaint is entitled to actual and consequential damages following a finding of a slam. Indeed, prior to the Section 258 Order, Commission orders compensated slammed consumers by requiring slamming carriers, pursuant to sections 201(b) and 208 of the Act, to refund to the subscriber any amounts paid to the slamming carrier in excess of what he would have paid his preferred carrier absent the slam. Our modified liability requirements thus satisfy the congressional mandate of making consumers “whole,” by retaining the availability of other existing remedies to ensure that subscribers pay no more for service than they would have but for being slammed. Accordingly, we find that the modifications to our liability rules adopted here most fully satisfy the dual congressional mandate of section 258. Thus, our decision to require the slamming carrier to disgorge 150% of the amount paid to it by the subscriber relies on our section 258 authority only with respect to that provision's express permission for the Commission to use “any other remedies available by law.”

17. We note that, in response to the FNPRM, some carriers assert that we do not have jurisdiction to require the unauthorized carrier to disgorge more than it collected from the subscriber because this would result in punitive damages not authorized by the Act. We disagree. Even if such damages can be considered punitive, rather than purely compensatory, any punitive aspect arises from the specific statutory provision providing that the authorized carrier is entitled to amounts over and above what it would have collected if the slam had not occurred. The amount going to the subscriber, on the other hand, is no more than compensatory, and well within the range of relief authorized in other statutory provisions. As the statute specifically authorizes this additional liability to the authorized carrier, we find that it is clearly within our jurisdiction.

18. Finally, as noted, we find that 50% of the amount collected from the subscriber by the unauthorized carrier is an appropriate proxy for re-rating that also responds to concerns raised by the carriers that actual re-rating is administratively difficult and expensive. Frontier, for example, argues that obtaining the necessary call detail from the offending carrier, collecting the revenues from the offending carrier, re-rating calls, and remitting the difference to affected customers is a time-consuming, manual and expensive process. Other long-distance carriers similarly argue that administrative systems (such as electronic interfaces between carriers) would have to be developed to allow for accurate re-rating, imposing costs on the authorized carrier that has not been accused of slamming. In response to this perceived difficulty, the long-distance carriers themselves (including Frontier and MCI) have argued in conjunction with the Joint Waiver Petition that the Commission should provide carriers the option of refunding 50% to the subscriber, rather than requiring them to engage in an actual calculation of the amount paid by the subscriber in excess what he would have paid his preferred carrier. These carriers assert that such a proxy fully compensates the subscriber while not requiring the carriers to engage in a difficult and expensive comparison of rates of other carriers. As discussed more thoroughly, we agree that this is an appropriate remedy for these purposes and will significantly simplify the flow of money from the unauthorized carrier to the authorized carrier and subscriber.

19. In the Section 258 Order, we set forth rules that imposed on authorized carriers certain responsibilities for resolving disputes between subscribers and allegedly unauthorized carriers. Recognizing that other alternatives might better serve consumer interests under our slamming liability scheme, however, we agreed to entertain requests for waiver of our rules if carriers implemented an independent third party administrator to discharge carrier obligations for resolving slamming disputes. We specified that such a proposal should give consumers a single point of contact to resolve slamming problems and provide consumers with a neutral forum for resolving disputes regarding slamming liability. On March 30, 1999, a coalition of interexchange carriers filed a Waiver Petition proposing a plan for an industry-funded third party to administer our slamming liability rules. On April 20, 1999, state commissions, through the National Association of Regulatory Utilities Commissions (NARUC), filed a letter asserting that they are well-equipped to handle slamming complaints and requesting that the Commission consider allowing them to be the primary adjudicators of slamming disputes. NARUC argues that the state commissions are more appropriate than the industry's proposed third-party administrator to execute our slamming liability provisions because the states have existing, neutral, and comprehensive mechanisms to handle slamming disputes.

20. We conclude that it is in the public interest to have state commissions, rather than a third party designated by carriers, perform the primary administrative functions of our slamming liability rules. In fact, it appears to be both appropriate and effective to establish this type of alliance with the states. The language of Section 258 itself contemplates a state and federal partnership to deter slamming. In addition, the states and the Commission have been working together for some time to share information and develop new and creative solutions to combat slamming. For example, the State and National Action Plan (SNAP), comprising staff from NARUC, the FCC, and the National Regulatory Research Institute, regularly meet to develop joint public information strategies to increase awareness of telecommunications issues affecting consumers, coordinate enforcement actions to protect consumers against abuses in the telecommunications marketplace, and coordinate regulatory initiatives. Joint state-federal activities have been very effective in protecting consumers against various types of telecommunications fraud. It is imperative that the states and the FCC continue to cooperate, and expand their interaction, in order to eradicate slamming.

21. We also find that the state commissions are, for several reasons, more appropriate for resolving slamming disputes than the administrator proposed by the long distance carriers. We agree with NARUC that the states are particularly well- equipped to handle complaints because they are close to the consumers and familiar with carrier trends in their region. As NARUC describes, establishing the state commissions as the primary administrators of slamming liability issues will ensure that “consumers have realistic access to the full panoply of relief options available under both state and federal law. . . .” Moreover, state commissions have extensive experience in handling and resolving consumer complaints against carriers, particularly those involving slamming. In fact, the General Accounting Office (GAO) has reported that all state commissions have procedures in place for handling slamming complaints, and that those procedures have been effective in resolving such complaints. We specifically note that at present more than 35 states have committed to provide the resources necessary to resolve slamming disputes in a timely and fair manner.

22. Based upon these representations and the proven track record of customer satisfaction, we conclude that state commissions have the ability and desire to provide prompt and appropriate resolution of slamming disputes between consumers and carriers in a manner consistent with the rules adopted by this Commission. In most situations, state commissions will be able to provide consumers with a single point of contact for each state, thereby enabling slammed consumers to rectify their situations, receive refunds, and get appropriate relief with one phone call. State commissions also will be able to provide consumers and carriers with timely processing of slamming disputes. Finally, but of critical importance, states will provide a neutral forum for the resolution of slamming disputes. As noted, this was one of the essential criteria we set forth for the approval of a slamming liability administrator. We do not conclude here that an industry-sponsored administrator could not act as a “neutral” adjudicator of disputes between carriers and consumers. Nonetheless, we are troubled by the concerns raised by several consumer groups that such an entity would be perceived by consumers as biased in favor of carriers. The slamming liability rules are intended to protect consumers, and the effectiveness of any administrative mechanism we select will be dependent upon consumers having confidence in the fairness and impartiality of the process. We agree with the arguments of NARUC that state commissions will be perceived by consumers as more “neutral” adjudicators of disputes than the third-party administrator proposed by the interexchange carriers.

23. We recognize, however, that not all states have the resources to resolve these slamming complaints, or may choose not to take on this primary responsibility. Consumers in these states accordingly may seek resolution of their slamming disputes by filing a complaint with this Commission. To provide consumers who opt to file complaints with this Commission the full complement of rights and remedies contemplated by this order, we are amending our own rules for the adjudication of slamming complaints.

24. Our conclusion that states should have primary responsibility for administering our slamming liability rules shall not preclude a consumer from electing to file a slamming complaint with this Commission. In cases where the state has indicated it will administer our rules, however, this Commission will refer informal complaints to the appropriate state commission for resolution, unless the complainant expressly indicates it wishes to have the matter resolved by this Commission. This Commission will not adjudicate a complaint based on an allegation of slamming while the complainant has a complaint arising from the same set of facts pending before a state commission that has opted to administer our slamming rules. Additionally, these rules do not preclude the filing of a petition for declaratory ruling alleging that a state has improperly implemented our verification or liability rules. Finally, nothing in these procedures is intended to abrogate any party's right to pursue relief for a slamming violation in state or federal court.

a. State Notification of Participation in Adjudication of Complaints.

25. To ensure full and seamless administration of complaints among this Commission and the states, each state commission that chooses to take on the primary responsibility for resolving consumer slamming complaints must notify this Commission of the procedures it will use to adjudicate individual slamming complaints on the effective date of these revised rules. Each state commission's notification should explain how consumers may file complaints (including where the complaint is to be filed, what if any filing fees a consumer must pay, and what documentation a consumer must provide in its complaint), any and all deadlines parties must adhere to that are shorter than those explicitly stated in these rules, what safeguards exist to ensure procedural fairness to consumers and carriers, and what rights parties have to appeal an initial decision.

26. If, after the effective date of these rules, additional states opt to administer complaints under the rules, they may do so by filing such notification in the captioned docket and sending a copy to the Chief of the FCC Consumer Information Bureau. In addition, state notification of an intention to discontinue administering complaints under the rules shall be filed in the captioned docket, with a copy of such notification provided to the Chief of the FCC Consumer Information Bureau.

b. Preliminary Consumer Relief is Granted upon Slamming Allegation.

27. We retain the requirement that an alleged unauthorized carrier must remove all charges assessed for the first 30 days of services from a subscriber's bill upon the subscriber's allegation that he or she was slammed. Several carriers state that the allegation of a slam should not trigger preliminary relief because many slamming complaints will turn out to be invalid or fraudulent. As we explained in the Section 258 Order, the fact that a subscriber can only be absolved of liability if he or she has in fact been slammed minimizes our concerns about fraud by consumers. In accordance with the revised rules described, if a carrier is able to produce proof of verification, it is entitled to receive full payment from the subscriber for all services provided. Our rules will motivate carriers to comply strictly with our verification procedures to protect themselves from inappropriate claims of slamming. We also explained in the Section 258 Order that the absolution remedy we adopted provides an easily administered remedy for consumers who have been slammed. The absolution remedy would not be as effective if the consumer had to pay for slamming charges in the first instance; we have emphasized repeatedly how essential it is to minimize the opportunity for unauthorized carriers to physically take control of slamming profits for any period of time. Accordingly, our rules will continue to require that, upon an allegation of a slam, the alleged unauthorized carrier must remove all charges assessed for the first 30 days of service immediately from the subscriber's bill.

28. Our retention of the requirement that an alleged unauthorized carrier must remove all charges assessed for the first 30 days of service from a subscriber's bill upon the subscriber's allegation that he or she was slammed, along with our modification of the administration procedures, creates the need for an additional administrative rule. Specifically, because the subscriber receives preliminary relief pending a final determination of whether or not a slam occurred, our rules need to ensure that the subscriber benefiting from the relief promptly files a complaint with the state commission (or the FCC), thus giving the alleged unauthorized carrier an opportunity to provide proof of verification. Therefore, we modify our rules to require that the allegedly unauthorized carrier notify the subscriber that it must file a complaint with the appropriate state commission (or the FCC) within 30 days of the date it notifies the allegedly unauthorized carrier that a slam occurred, or be subject to re-billing for charges incurred. The allowance of such re-billing does not, however, prohibit the subscriber from subsequently filing a complaint alleging that a slam occurred with the state commission (or the FCC) and proceeding in accordance with the Commission's rules.

c. General procedures.

29. As discussed, when an allegedly unauthorized carrier is informed by a subscriber of an alleged slam, that carrier is required to remove charges for the first 30 days of service from the subscriber's bill. The subscriber must then file a complaint with a state commission (or the FCC) seeking a factual determination that a slam occurred. We recognize that some carriers may choose to make it their practice not to challenge allegations of slamming and to provide subscribers who allege a slam has occurred with all the relief to which they would be entitled under our rules. We do not intend for these rules to discourage carriers from providing subscribers with the most expedient relief possible. Accordingly, where an allegedly unauthorized carrier chooses to not challenge the allegation of a slam and provides the subscriber alleging that a slam occurred with all the relief to which the subscriber would be entitled pursuant to our rules, had the subscriber prevailed on a slamming complaint, the allegedly unauthorized carrier shall inform the subscriber of the remedies our rules provide and that the subscriber has the option of filing a complaint with the appropriate state commission (or the FCC) if the subscriber is not satisfied with the resolution of its dispute with the carrier.

30. We require any carrier that is informed by a subscriber of a slam to direct each unsatisfied subscriber to the proper state commission (or the FCC) for resolution of the slamming problem and inform such unsatisfied subscriber of all the relevant filing requirements. We conclude that this will achieve one of our objectives for a slamming liability administrator set forth in the Section 258 Order—minimizing the effort consumers must expend to resolve slamming disputes. We also expect that the states that have sufficient resources will launch public information campaigns to inform consumers of their rights and responsibilities with regard to slamming liability. We anticipate a productive state and federal partnership in this effort. Additionally, in order to fulfill our responsibilities under section 258 of the Act and to assist our enforcement efforts, we will require states that choose to administer the Commission's rules to regularly file information with the Commission that details slamming activity in their regions. Such filings should identify the number of slamming complaints handled, including data on the number of valid complaints per carrier; the identity of top slamming carriers; slamming trends; and other relevant information. Such reports will help the Commission to identify appropriate targets for slamming enforcement actions, such as forfeiture or section 214 revocation proceedings.

31. We also revise our rules to add a notification requirement to facilitate the administration of long distance slamming complaints. SBC, AT&T, and Sprint state that, because our rules lack a notification requirement that would enable carriers to learn each others' identity, the carriers involved in a slamming incident might not be able to take appropriate action against each other. Furthermore, this notification issue was also raised in the MCI WorldCom Motion for Stay filed with the D.C. Circuit. We will require an executing carrier who is informed of a slam by the subscriber to immediately notify both the authorized and alleged unauthorized carriers of the incident, including the identity of each carrier involved. We note that the industry has already taken steps to facilitate the transfer of this information between carriers. We agree that a notification requirement is important to the correct functioning of the liability mechanism. Requiring the LEC to notify both the authorized and the alleged unauthorized carriers of the other's identity in a slamming incident will enable the unauthorized carrier to forward appropriate amounts collected from the subscriber if it is determined that a slam occurred. This will also enable the authorized carrier to bring appropriate actions, such as a complaint before a state commission (or the FCC), against the unauthorized carrier should the unauthorized carrier fail to fulfill its responsibilities to the authorized carrier.

32. Upon receipt of a slamming complaint, the state commission (or this Commission if the complainant is from a non-participating state or has expressly indicated that it wants this Commission to resolve its complaint) will notify the allegedly unauthorized carrier of the slamming complaint and ensure that the carrier removes immediately all unpaid charges from the subscriber's bill, if it has not done so already. Within 30 days after notification of the slamming complaint, or such lesser time as required by the state commission, the alleged unauthorized carrier shall provide to the state commission (or the FCC) a copy of the valid proof of verification of the carrier change. This proof of verification should contain clear and convincing evidence that the subscriber knowingly authorized the carrier change, such as a written Letter of Agency (LOA) or an audiotape of an independent third party verification. The state commission (or the FCC) will make a determination on whether a slam occurred using proof supplied by the allegedly unauthorized carrier and any evidence supplied by the subscriber.

33. The following review procedures apply when a state commission has resolved a slamming complaint. Challenges to the factual determinations made by a state commission applying our rules shall be made in accordance with the relevant review provisions that are applicable to each state commission. Challenges to whether a state commission's process for resolving slamming complaints are consistent with this order must be brought to the FCC in the form of a petition for declaratory ruling. The following review procedures apply when the staff of this Commission has resolved a slamming complaint. A subscriber seeking to challenge the FCC staff's determination of whether a slam occurred may file a formal complaint against the allegedly unauthorized carrier in accordance with our formal complaint rules. An allegedly unauthorized carrier seeking to challenge the FCC staff's determination of whether a slam occurred may file a petition for declaratory ruling with this Commission.

d. Where the subscriber has not paid charges.

34. The following procedures shall apply when the subscriber has not paid charges to the allegedly unauthorized carrier. If the state commission (or the FCC) determines that the carrier change was authorized, the carrier may re-bill the subscriber for charges incurred. If the state commission (or the FCC) determines that the subscriber was slammed, then the subscriber is entitled to absolution from the charges incurred during the first 30 days after the slam occurred, and the carrier may not pursue any collection actions against the subscriber to recover these charges.

35. If the subscriber has incurred charges for more than 30 days after the slam occurred, then the unauthorized carrier shall forward to the authorized carrier the billing information for service provided from the 31st day after the slam occurred through the date the unauthorized carrier stopped providing service. The authorized carrier has the option of billing the subscriber for calls made after the first 30 days after the slam at the rates the subscriber would have paid the authorized carrier absent the slam. After receiving billing information from the unauthorized carrier, the authorized carrier may re-rate such service according to its own rates and then bill the subscriber for such service. If the authorized carrier so chooses, rather than actually re-rating the service provided by the unauthorized carrier, it may bill the subscriber in accordance with a 50% proxy rate. In other words, it may bill the subscriber for 50% of the rate the unauthorized carrier would have charged. If the subscriber believes, however, that paying 50% results in a greater charge than re-rating to the authorized carrier's rates, at the request of the subscriber, the authorized carrier shall perform actual re-rating.

36. We note that we do not necessarily agree with the carriers' assessment of the administrative difficulty of re-rating. Although the carriers admit that the only information needed for re-rating is the length and time of the call, they fail to explain why the re-rating process, as described in the Section 258 Order, would require “electronic systems that interconnect with other carrier's billing and usage systems, so that they can exchange relevant price and call data electronically.” Indeed, the carriers admit that manual re-rating can be easily accomplished for any particular complainant. Nevertheless, we permit authorized carriers to have the option of using a 50% proxy because the carriers assert that re-rating is an administrative burden, and because we are persuaded that a 50% proxy will generally yield a reasonable and fair result for the subscriber. Giving carriers this option will ensure that, in most cases, the authorized carrier is able to collect charges without having to perform re-rating and that the subscriber will receive adequate compensation.

e. Where the subscriber has paid charges.

37. The following procedures shall apply when the subscriber does not discover a slam until after he or she has already paid charges to the alleged unauthorized carrier. As explained in the Section 258 Order, section 258 requires the unauthorized carrier to pay the authorized carrier any charges collected following an unauthorized switch. We concluded in that order that this provision of the statute prevents us from providing absolution to slammed subscribers who have already paid charges to their unauthorized carriers.

38. As explained, however, we have herein modified the liability rules applicable in cases where the consumer has paid charges to the unauthorized carrier in order to more fully implement the dual goals of section 258 of compensating both the subscriber and the authorized carrier. Pursuant to this modified liability scheme, a carrier found to have slammed will be required to disgorge to the authorized carrier 150% of the amounts collected by that slamming carrier from the subscriber. Accordingly, when the state commission (or the FCC) determines that the alleged unauthorized carrier did slam the consumer, then it shall direct such carrier to forward to the authorized carrier 150% of (or one and one-half times) all amounts collected from the subscriber, as well as a copy of the customer's bill for the amounts paid. Upon receipt of these charges from the unauthorized carrier, the authorized carrier shall remit (either directly or through bill credits) one-third of this amount to the subscriber. As explained, this amount, which equals 50% of the charges paid by the subscriber to the unauthorized carrier, constitutes a reasonable proxy for the damages sustained by the subscriber, while not requiring the authorized carrier to engage in the arguably difficult and expensive task of actually re-rating the subscriber's bill. The authorized carrier shall also notify the state commission (or the FCC) that it has paid this amount to the subscriber. If the subscriber is failed to be made whole by the 50% proxy, the subscriber may ask the authorized carrier to re-rate the unauthorized carrier's charges based on the rates of the authorized carrier and, on behalf of the subscriber, seek an additional refund from the unauthorized carrier, to the extent that the re-rated amount exceeds the 50% of all charges paid by the subscriber to the unauthorized carrier.

39. Finally, we note that if the authorized carrier does not collect any amounts from the unauthorized carrier, the authorized carrier is not responsible for providing refunds or credits to the subscriber. As explained in the Section 258 Order, the authorized carrier should not be, in effect, penalized for the wrongdoing of another carrier by having to pay a refund out of its own pocket. In such cases, of course, both the subscriber and the authorized carrier retain any other existing avenues to obtain relief from the unauthorized carrier.

40. As explained, petitioners filed a Waiver Petition setting forth a proposal for a third-party administrator to administer the liability aspects of the slamming rules. Petitioners seek a waiver of the following liability rules for those carriers electing to participate in the proposed third-party administrator plan: §§ 64.1100(c); 64.1100(d); 64.1170; and 64.1180. On April 8, 1999, the Commission issued a public notice seeking comment on the third-party administrator proposal. Because we believe that it is in the public interest for state commissions to undertake the responsibilities envisioned for the third-party administrator, we deny the waiver request.

41. Waiver of the Commission's rules is appropriate only if special circumstances warrant a deviation from the general rule, and such a deviation will serve the public interest. A waiver of the Commission's general rules may only be granted if such waiver would not undermine the policy underlying that general rule. Petitioners have failed to demonstrate that the third party administrator proposal is in the public interest. In evaluating whether a waiver of these rules is in the public interest, our overriding criterion is whether a waiver would further the policy goals of section 258 and our implementing rules: to protect the rights of consumers who are slammed and, ultimately, to eliminate this type of fraud.

42. We find that adopting the third-party administrator proposal would not be in the public interest because, as described, we have revised our rules to address many of the concerns that prompted the filing of the waiver petition. The Waiver Petition sets forth an alternative administration scheme that would place a neutral, industry-endorsed entity in the role of resolving disputes between alleged slamming carriers and subscribers.

43. In addition to the fact that the state commissions (or the FCC) will better serve the public interest in administering the slamming liability rules, the record demonstrates that segments of the industry have failed to reach consensus on the operation and administration of a third-party administrator. The local exchange and long distance carriers disagree strongly on many important aspects of the third-party administrator proposal. In inviting the industry to submit proposals for a third-party administrator, the Commission did not anticipate that the third-party administrator would be a mandatory requirement for all carriers. We did contemplate, however, that a workable third-party slamming liability administrator would have broad acceptance among different segments of the industry as well as the states and consumer interest groups. As reflected in the comments, the proposal put forth by the petitioning long distance carriers has not engendered such broad support, particularly among state and consumer interest representatives. We find this discord troubling. Despite many months of discussion between the local exchange and long distance carriers, and despite input from consumer groups and the states, the Commission has seen these various groups settle more firmly into their disparate positions rather than moving closer to resolution.

44. This lack of comprehensive industry participation and consumer group support undermines several important potential benefits of the third-party administrator proposal. We find that the lack of consensus will prevent the third-party administrator from being the single point of contact for the consumer. Without local exchange carrier participation and support of the third-party administrator mechanism, we are concerned that local exchange carriers will have no incentive to refer consumers to the third-party administrator. Accordingly, consumers may continue to call several entities in order to resolve their slamming disputes, undermining one of the primary benefits of a third-party administrator identified in the Section 258 Order—providing a single point of contact for slammed subscribers. We have additional concerns that, if a substantial portion of the industry does not participate in the third party administrator process, the non-participants may be able to derail the time limits and other procedures set by the third-party administrator, resulting in the delayed resolution of slamming complaints.

45. We believe that our revised rules address the concerns raised in the Waiver Petition in a manner that more fully satisfies the criteria set forth in the Section 258 Order. Our revised rules provide for state commissions (or the FCC) to handle administration of our slamming liability rules, rather than imposing burdens on authorized carriers, as originally provided in the Section 258 Order. Furthermore, authorized carriers now have the option of using a 50 % proxy to calculate refunds and subscriber charges, rather than performing actual re-rating, as was prescribed in the Section 258 Order.

46. In sum, we conclude that our revised rules will protect consumers more effectively than the third-party administrator proposed by the long distance industry. Consumer interest groups disagree with many aspects of the third-party administrator proposal, contending that the administrator will not be neutral towards consumers. Accordingly, the revised rules provide that state commissions (or the FCC) will resolve slamming disputes, thereby alleviating any neutrality concerns. Based on the states' representations discussed, we find that the majority of states have the resources and knowledge to provide prompt and effective resolution of slamming disputes. For these reasons, the public interest favors adoption of the revised rules, which utilize appropriate state commissions as reliable, timely, and neutral dispute-resolution forums, rather than the proposed industry-sponsored third-party administrator.

47. As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the First Further Notice of Proposed Rulemaking and Memorandum Opinion and Order and Order on Reconsideration. The Commission sought written public comment on the proposals in the Further Notice and Order, including comment on the IRFA. Based on comments received in the Further Notice and Order, a Final Regulatory Flexibility Analysis (FRFA) was incorporated in the Second Report and Order and Further Notice of Proposed Rulemaking. Petitions for Reconsideration and a Joint Petition for waiver of certain rules were filed in response to the rules adopted in the Section 258 Order. This present Supplemental Final Regulatory Flexibility Analysis (SFRFA) conforms to the RFA.

48. The goal of Section 258 of the Act is to eliminate the illegal practice of slamming—the unauthorized change of a subscriber's preferred carrier. Faced with over 20,000 slamming complaints a year from individuals and small businesses, the Commission created a comprehensive framework for combating slamming in the Section 258 Order by adopting rules to implement section 258 and strengthening existing anti-slamming rules. The cornerstone of that framework was a set of aggressive liability rules designed to take the profit out of slamming. In this Order, we make certain modifications to our liability rules, granting in part petitions for reconsideration of the Section 258 Order. The modifications are intended to resolve concerns raised in this proceeding and in the petitions for stay filed both with this Commission and with the D.C. Circuit.

49. We received no petitions for reconsideration directly addressing issues in the previous FRFA.

50. Re-Rating Rules. Commenters contend that requiring each authorized carrier to perform a re-rating to determine the size of the refund to each slammed subscriber would place a complex and costly administrative burden on them. Although we do not necessarily agree with carriers about the dimensions of this burden, we believe that the 50% proxy that authorized carriers propose to give to their slammed subscribers will benefit consumers in most cases. In those instances where a subscriber does not believe that it will benefit from the 50% proxy, the subscriber may request an actual re-rating. In most circumstances, however, authorized carriers will be able to avoid the alleged burden.

51. Creation of an industry-sponsored third-party administrator. As discussed in this Order, some commenters proposed that slamming complaints be adjudicated by an industry-funded third-party administrator. These commenters aver that the third-party administrator would benefit consumers and industry alike by creating a single point of contact to resolve slamming complaints and simplifying the complaint process. We reject this proposal, and instead conclude that state commissions should perform the primary function in administering our slamming liability rules.

52. The benefit claimed by proponents of the third-party administrator was belied by the fact that no workable proposal was offered. Various industry segments disagreed on the form and workings of the proposed third-party administrator, and states and consumer groups expressed their disapproval of, and lack of confidence in, the idea. The absence of consensus, and the accompanying possibility that a substantial portion of the industry would not participate in the third-party administrator, could result in greater confusion for consumers and authorized carriers. The system we adopt, which requires all carriers to forward complaints they receive to the appropriate governmental agency (in most cases, the state commission) will provide a more efficient and comprehensive mechanism for all parties, including small entities. Moreover, the experience, neutrality, and resources of state commissions make them well-equipped forums for resolving slamming complaints.

53. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” “small governmental jurisdiction,” and “small business concern” under Section 3 of the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 1992, there were approximately 275,801 small organizations. “Small governmental jurisdiction” generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than 50,000.” As of 1992, there were approximately 85,006 such jurisdictions in the United States. This number includes 38,978 counties, cities, and towns; of these, 37,566, or 96 percent, have populations of fewer than 50,000. The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, we estimate that 81,600 (96 percent) are small entities. According to SBA reporting data, there were 4.44 million small business firms nationwide in 1992. We further describe and estimate the number of small entity licensees and regulatees that may be affected by the proposed rules, if adopted.

54. The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide, as well as the number of commercial wireless entities, appears to be data the Commission publishes in its Trends in Telephone Service report. In a recent news release, the Commission indicated that there are 4,144 interstate carriers. These carriers include, inter alia, local exchange carriers, wireline carriers and service providers, interexchange carriers, competitive access providers, operator service providers, pay telephone operators, providers of telephone service, providers of telephone exchange service, and resellers.

55. The SBA has defined establishments engaged in providing “Radiotelephone Communications” and “Telephone Communications, Except Radiotelephone” to be small businesses when they have no more than 1,500 employees. We discuss the total estimated number of telephone companies falling within the two categories and the number of small businesses in each, and we then attempt to refine further those estimates to correspond with the categories of telephone companies that are commonly used under our rules.

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

57. Total Number of Telephone Companies Affected. The U.S. Bureau of the Census (“Census Bureau”) reports that, at the end of 1992, there were 3,497 firms engaged in providing telephone services, as defined therein, for at least one year. This number contains a variety of different categories of carriers, including local exchange carriers, interexchange carriers, competitive access providers, cellular carriers, mobile service carriers, operator service providers, pay telephone operators, covered specialized mobile radio providers, and resellers. It seems certain that some of these 3,497 telephone service firms may not qualify as small entities or small ILECs because they are not “independently owned and operated.” For example, a PCS provider that is affiliated with an interexchange carrier having more than 1,500 employees would not meet the definition of a small business. It is reasonable to conclude that fewer than 3,497 telephone service firms are small entity telephone service firms or small ILECs that may be affected by the new rules.

58. Wireline Carriers and Service Providers. The SBA has developed a definition of small entities for telephone communications companies except radiotelephone (wireless) companies. The Census Bureau reports that there were 2,321 such telephone companies in operation for at least one year at the end of 1992. According to the SBA's definition, a small business telephone company other than a radiotelephone company is one employing no more than 1,500 persons. All but 26 of the 2,321 non-radiotelephone companies listed by the Census Bureau were reported to have fewer than 1,000 employees. Thus, even if all 26 of those companies had more than 1,500 employees, there would still be 2,295 non-radiotelephone companies that might qualify as small entities or small ILECs. We do not have data specifying the number of these carriers that are not independently owned and operated, and thus are unable at this time to estimate with greater precision the number of wireline carriers and service providers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that fewer than 2,295 small telephone communications companies other than radiotelephone companies are small entities or small ILECs that may be affected by the new rules.

59. Local Exchange Carriers. Neither the Commission nor the SBA has developed a definition for small providers of local exchange services (LECs). The closest applicable definition under the SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. According to the most recent Telecommunications Industry Revenue data, 1,348 incumbent carriers reported that they were engaged in the provision of local exchange services. We do not have data specifying the number of these carriers that are either dominant in their field of operations, are not independently owned and operated, or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of LECs that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that fewer than 1,348 providers of local exchange service are small entities or small ILECs that may be affected by the new rules.

60. Interexchange Carriers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to providers of interexchange services (IXCs). The closest applicable definition under the SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. According to the most recent Trends in Telephone Service data, 171 carriers reported that they were engaged in the provision of interexchange services. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of IXCs that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 171 small entity IXCs that may be affected by the new rules.

61. Competitive Access Providers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to competitive access services providers (CAPs). The closest applicable definition under the SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. According to the most recent Trends in Telephone Service data, 212 CAP/CLECs carriers and 10 other LECs reported that they were engaged in the provision of competitive local exchange services. We do not have data specifying the number of these carriers that are not independently owned and operated, or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of CAPs that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 212 small entity CAPs and 10 other LECs that may be affected by the new rules.

62. Operator Service Providers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to providers of operator services. The closest applicable definition under the SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. According to the most recent Trends in Telephone Service data, 24 carriers reported that they were engaged in the provision of operator services. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of operator service providers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 24 small entity operator service providers that may be affected by the new rules.

63. Pay Telephone Operators. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to pay telephone operators. The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. According to the most recent Trends in Telephone Service data, 615 carriers reported that they were engaged in the provision of pay telephone services. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of pay telephone operators that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 615 small entity pay telephone operators that may be affected by the new rules.

64. Resellers (including debit card providers). Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to resellers. The closest applicable SBA definition for a reseller is a telephone communications company other than radiotelephone (wireless) companies. According to the most recent Trends in Telephone Service data, 388 toll and 54 local entities reported that they were engaged in the resale of telephone service. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of resellers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 388 small toll entity resellers and 54 small local entity resellers that may be affected by the new rules.

65. Toll-Free 800 and 800-Like Service Subscribers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to 800 and 800-like service (“toll free”) subscribers. The most reliable source of information regarding the number of these service subscribers appears to be data the Commission collects on the 800, 888, and 877 numbers in use. According to our most recent data, at the end of January 1999, the number of 800 numbers assigned was 7,692,955; the number of 888 numbers that had been assigned was 7,706,393; and the number of 877 numbers assigned was 1,946,538. We do not have data specifying the number of these subscribers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of toll free subscribers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 7,692,955 small entity 800 subscribers, fewer than 7,706,393 small entity 888 subscribers, and fewer than 1,946,538 small entity 877 subscribers may be affected by the new rules.

66. Cellular Licensees. Neither the Commission nor the SBA has developed a definition of small entities applicable to cellular licensees. Therefore, the applicable definition of small entity is the definition under the SBA rules applicable to radiotelephone (wireless) companies. This provides that a small entity is a radiotelephone company employing no more than 1,500 persons. According to the Census Bureau, only twelve radiotelephone firms from a total of 1,178 such firms which operated during 1992 had 1,000 or more employees. Therefore, even if all twelve of these firms were cellular telephone companies, nearly all cellular carriers were small businesses under the SBA's definition. In addition, we note that there are 1,758 cellular licenses; however, a cellular licensee may own several licenses. In addition, according to the most recent Telecommunications Industry Revenue data, 808 carriers reported that they were engaged in the provision of either cellular service or Personal Communications Service (PCS) services, which are placed together in the data. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of cellular service carriers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 808 small cellular service carriers that may be affected by the new rules.

67. We analyze the projected reporting, recordkeeping, and other compliance requirements that may affect small entities.

68. Liability Rules That Apply When a Subscriber Has Not Paid Charges. Our liability rules retain the requirement that, upon allegation of a slam, the unauthorized carrier must absolve the subscriber of charges for up to thirty days following the slam, where the subscriber has not paid the unauthorized carrier. If the relevant governmental agency ultimately determines that the carrier change was authorized, and the limited absolution granted to the subscriber was therefore unwarranted, the carrier may re-bill the subscriber for charges incurred. The carrier has the option of re-rating the subscriber's calls from the unauthorized carrier's rates to the authorized carrier's rates using a 50% proxy, that is, reducing what the subscriber would have been billed by the unauthorized carrier by 50%. If, however, the subscriber would prefer an actual re-rating of the calls to the authorized carrier's rates, it can require that of the authorized carrier.

69. Liability Rules That Apply When a Subscriber Has Paid Charges. The revised liability rules require that, where the subscriber has paid the unauthorized carrier, the unauthorized carrier must forward 150% of the charges it collected from the subscriber to the authorized carrier. The authorized carrier will pay the subscriber one-third of that amount (50% of the original payment) and retain the remainder of the money received from the unauthorized carrier. Use of this proxy will reduce administrative burdens on carriers and, we believe, will adequately compensate most subscribers. When a subscriber believes that the 50% proxy refund or credit of the charges it paid is too low, it may request an actual re-rating from the authorized carrier and the authorized carrier may seek any additional money owed as a result of this actual re-rating from the unauthorized carrier.

70. State Resolution of Most Slamming Complaints. Designating appropriate state commissions, or this Commission, as the primary administrators of the slamming liability rules, rather than authorized carriers, is likely to reduce significantly the administrative burdens on carriers associated with these rules. Under this scheme, carriers must comply with certain notification requirements, listed. In addition, a carrier that is the subject of a slamming complaint must respond to the complaints filed with the relevant governmental agency, either the appropriate state commission or this Commission. If the carrier denies the alleged slam, it must provide the relevant governmental agency with evidence to refute the allegation, such as a valid carrier change authorization from the subscriber.

71. Notification Requirements. We revise our rules in this Order to add certain notification requirements to facilitate the resolution of slamming complaints. These include a requirement that, when an executing carrier (typically, the LEC that effects a carrier change) learns about an alleged slam, it must immediately notify both the authorized and alleged unauthorized carriers of the slamming allegation and the identities of the carriers involved. Requiring the LECS to notify the authorized and alleged unauthorized carriers of each others' identities will enable the unauthorized carrier to forward to the authorized carrier all amounts needed to satisfy the remedies this Order requires.

72. The revised rules also add a requirement that an allegedly unauthorized carrier that chooses not to challenge the allegation of a slam and provides the subscriber with all the relief to which the subscriber would be entitled pursuant to our rules, had the subscriber prevailed on a slamming complaint, must inform the subscriber of the remedies our rules provide. In addition, that carrier must inform the subscriber that it has the option to file a complaint with the appropriate state commission, or this Commission, if the subscriber is not satisfied with the resolution of its dispute with the carrier.

73. Under the revised rules, any carrier that is informed by a subscriber of a slam must direct each unsatisfied subscriber to the proper state commission, or this Commission, for resolution of the slamming problem and inform such unsatisfied subscriber of all the relevant filing requirements. To execute this notification requirement, carriers will be obligated to periodically request from this Commission a list of states that have opted to administer federal slamming rules. This modest notification requirement will help achieve an important objective: minimizing the effort consumers must expend to resolve slamming disputes.

74. Liability Rules That Apply When a Subscriber Has Not Paid Charges. Our liability rules retain the requirement that, upon allegation of a slam, the unauthorized carrier must absolve the subscriber of charges for up to thirty days following the slam, where the subscriber has not paid the unauthorized carrier. If the relevant governmental agency ultimately determines that the carrier change was authorized, and the limited absolution granted to the subscriber was therefore unwarranted, the carrier may re-bill the subscriber for charges incurred. The carrier has the option of re-rating the subscriber's calls from the unauthorized carrier's rates to the authorized carrier's rates using a 50% proxy, that is, reducing what the subscriber would have been billed by the unauthorized carrier by 50%. If, however, the subscriber would prefer an actual re-rating of the calls to the authorized carrier's rates, it can require that of the authorized carrier.

75. Liability Rules that Apply When a Subscriber Has Paid Charges. The new requirement, under the revised liability rules, that an unauthorized carrier forward 150% of the charges collected from the subscriber to the authorized carrier is more advantageous to authorized carriers than the remedy provided under the old rules. The authorized carrier generally will pay the subscriber one-third of that amount (50% of the original payment) and retain the remainder of the money received from the unauthorized carrier. When a subscriber believes that the 50% proxy refund or credit of the charges it paid is too low, it may request an actual re-rating from the authorized carrier and the authorized carrier may seek any additional money owed as a result of this actual re-rating from the unauthorized carrier. This modification of the Commission's liability scheme will alleviate some problems of lost revenues that authorized carriers, including small carriers, face when slammed and will make slamming even more unprofitable for unauthorized carriers.

76. Re-rating. Several authorized carriers raised concerns about the administrative burden that re-rating may place on them. Although we do not necessarily agree with carriers about the dimensions of this burden, we revise our rules to address these concerns. The revision allows the authorized carrier to provide a refund or credit to the subscriber of one-third of the payment the unauthorized carrier must make to the authorized carrier, which is prescribed to be 150% of the charges collected from the subscriber. Only when a subscriber believes that the 50% proxy refund or credit of the charges it paid is too low, and requests an actual re-rating, must the authorized carrier provide such re-rating.

77. State Resolution of Most Slamming Complaints. The modifications we adopt in this Order provide that disputes between alleged slamming carriers and subscribers now will be brought before an appropriate state commission, or this Commission in cases where the state has not elected to administer these rules, rather than to the authorized carriers, as provided in the Section 258 Order. Although we considered the third-party administrator alternative proposed by certain carriers, the lack of a consensus among industry, state regulators, and consumer groups left the Commission with concerns about the efficacy of such a plan. Designating states as the primary adjudicators of slamming complaints, rather than authorized carriers, lessens the administrative burden on authorized carriers, including small carriers. By placing these disputes before a neutral arbiter with experience in resolving slamming complaints and resources to do so expeditiously, the new administrative scheme will benefit carriers and subscribers, both groups that include small businesses.

78. Notification Requirements. We believe that the modest notification requirements we have adopted in this Order are necessary to ensure the seamless administration of slamming complaints under this scheme and will not impose an undue burden on carriers who are small businesses. These include a requirement that, when an executing carrier (typically, the LEC that effects a carrier change) learns about an alleged slam, it must immediately notify both the authorized and alleged unauthorized carriers of the slamming allegation and the identities of the carriers involved. This requirement, as pointed out in comments and in the petition for stay filed in the D.C. Circuit, is important to the functioning of the liability mechanism. With this information, the unauthorized carrier will be able to forward to the authorized carrier all amounts needed to satisfy the remedies this Order requires, and the authorized carrier will be able to bring appropriate action against the unauthorized carrier, if necessary. The industry has already taken steps to facilitate the transfer of this information between carriers.

79. The revised rules also add a requirement that an allegedly unauthorized carrier that chooses not to challenge the allegation of a slam and provides the subscriber with all the relief to which the subscriber would be entitled pursuant to our rules, had the subscriber prevailed on a slamming complaint, must inform the subscriber of the remedies our rules provide. This requirement will ensure that the rules do not discourage carriers from providing subscribers with the most expedient relief possible. In addition, the unauthorized carrier in this situation must inform the subscriber of the subscriber's ability to file a complaint with the appropriate state commission, or this Commission, if it is unsatisfied with the resolution of its dispute with the carrier.

80. Under the revised rules, any carrier that is informed by a subscriber of a slam must direct each unsatisfied subscriber to the proper state commission, or this Commission, for resolution of the slamming problem and inform such unsatisfied subscriber of all the relevant filing requirements. To execute this modest notification requirement, carriers will be obligated to periodically request from this Commission a list of states that have opted to administer federal slamming rules. This notification requirement will achieve an important objective: minimizing the effort consumers must expend to resolve slamming disputes.

81. The Commission will send a copy of the Order, including this SFRFA, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996. In addition, the Commission will send a copy of the Order, including the SFRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Order and SFRFA (or summaries thereof) will also be published in the Federal Register .

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

83. Accordingly, it is ordered, pursuant to sections 1, 4(i), 4(j), 206, 207, 208, and 258 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 206, 207, 208, 258 and § 1.429 of the Commission's rules, that the petitions for reconsideration or clarification filed by AT&T Corp., Excel Telecommunications, Inc., Frontier Corp., GTE Service Corp., MediaOne Group, National Association of State Utility Consumer Advocates, National Telephone Cooperative Association, New York State Consumer Protection Board Petition for Reconsideration, RCN Telecom Services, Inc., Rural LECs, SBC Communications, Inc., and Sprint Corp. are granted in part and denied in part to the extent discussed.

84. The provisions of § 0.141, 64.1100, 64.1150, 64.1160, 64.1170, and 64.1180 are amended in accordance with our discussion and as described, and that such rules shall be effective September 5, 2000. The collections of information contained in §§ 64.1150 (a) through (d), 64.1160 (b) through (g), and 64.1170 (b) through (f) are contingent upon approval by the Office of Management and Budget. The procedures and relief described in these sections shall only be available to complainants who allege that the unauthorized carrier change occurred on or after the effective date of these sections.

85. Sections 1.719, 64.1110, 64.1120, 64.1140, and 64.1160 are enacted in accordance with our discussion, and that these rules are effective September 5, 2000. The collections of information contained in §§ 1.719 (a) through (d), 64.1110 (a) and (b), 64.1140 (a) and (b), are contingent upon approval by the Office of Management and Budget. The procedures and relief described in § 1.719 shall only be available to complainants who allege that the unauthorized carrier change occurred on or after the effective date of this section.

86. Pursuant to authority contained in sections 1, 4, and 258, of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154, 258, that the waiver request filed by AT&T Corp., MCI WorldCom, Inc., Sprint Corp., Competitive Telecommunications Assn., Telecommunications Resellers Assn., Excel Telecommunications, Inc., Qwest Communications Corp., and Frontier Corp. on March 30, 1999 is denied.

87. The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this Order, including the Supplemental Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

88. The Joint Parties' Motion for Extension of the Effective Date of the Rules or, In the Alternative, For a Stay, is denied.

NMFS manages the groundfish fishery in the BSAI according to the Fishery Management Plan for the Groundfish Fishery of the Bering Sea and Aleutian Islands Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

In accordance with § 679.20(a)(5)(i)(D)( 3 ) and the revised interim 2000 TAC amounts for pollock in the Bering Sea subarea (65 FR 39107, June 23, 2000), the C/D season allocation of pollock TAC specified to the “open access” vessels in the Bering Sea subarea is 17,953 metric tons (mt).

In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the C/D season allocation of pollock TAC specified for the “open access” vessels, which are catching pollock for processing by the inshore component in the Bering Sea subarea will be reached. Therefore, the Regional Administrator is establishing the C/D season allocation of pollock TAC as the directed fishing allowance (§ 679.20(a)(5)(i)(D)( 2 )). In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance soon will be reached. Consequently, NMFS is prohibiting directed fishing for pollock by “open access” vessels, which are catching pollock for processing by the inshore component in the Bering Sea subarea.

Maximum retainable bycatch amounts may be found in the regulations at § 679.20(e) and (f).

This action responds to the best available information recently obtained from the fishery. It must be implemented immediately in order to prevent exceeding the C/D season allocation of pollock TAC specified for the vessels not participating in cooperatives catching pollock for processing by the inshore component in the Bering Sea subarea. A delay in the effective date is impracticable and contrary to the public interest. Further delay would only result in overharvest. NMFS finds for good cause that the implementation of this action can not be delayed for 30 days. Accordingly, under 5 U.S.C. 553(d), a delay in the effective date is hereby waived.

This action is required by § 679.22 and is exempt from review under E.O. 12866.