Section 218(a) of the Nuclear Waste Policy Act of 1982, as amended (NWPA), requires that “[t]he Secretary [of the Department of Energy] shall establish a demonstration program, in cooperation with the private sector, for the dry storage of spent nuclear fuel at civilian nuclear power reactor sites, with the objective of establishing one or more technologies the [Nuclear Regulatory] Commission may, by rule, approve for use at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the Commission.” Section 133 of the NWPA states, in part, that “[t]he Commission shall, by rule, establish procedures for the licensing of any technology approved by the Commission under Section 218(a) for use at the site of any civilian nuclear power reactor.”

To implement this mandate, the NRC approved dry storage of spent nuclear fuel in NRC-approved casks under a general license, publishing a final rule in 10 CFR Part 72 entitled “General License for Storage of Spent Fuel at Power Reactor Sites” (55 FR 29181, July 18, 1990). This rule also established a new Subpart L within 10 CFR Part 72 entitled “Approval of Spent Fuel Storage Casks,” containing procedures and criteria for obtaining NRC approval of dry storage cask designs.

The NRC subsequently issued a final rule on September 3, 1999 (64 FR 48274), that approved the HI-STAR 100 cask design, added it to the list of NRC-approved cask designs in § 72.214, and issued Certificate of Compliance Number (CoC No.) 1008.

On November 24, 1999, Holtec International (the certificate holder), submitted an application to the NRC to amend CoC No. 1008 and supplemented the application on February 4, 18, and 28, March 2, 16, and 31, and May 23, 2000. Amendment No. 1 revises the HI-STAR 100 cask system in seven areas and includes changes to the CoC and Technical Specifications. The seven areas involve: (1) Revision of the existing fuel specification tables; (2) addition of pressurized water reactor (PWR) Burnable Poison Rod Assemblies (BPRAs) and Thimble Plug Devices (TPDs); (3) addition of two new classes of fuel to the fuel specification tables; (4) addition of a new damaged fuel container that can contain fuel assemblies with known or suspected defects, such as ruptured fuel rods, severed rods, loose pellets; (5) addition of thoria rods in canisters; (6) addition of antimony-beryllium neutron sources [ i.e., reactor startup sources]; and (7) clarifications, editorial corrections, and other minor changes to cask design information and drawings. The staff revised the CoC to include Condition 3 that requires users to prepare written acceptance tests and maintenance program consistent with the technical basis described in Chapter 9 of the SAR. This was done for consistency with other CoC's, in particular, the Hi-STORM 100.

In addition, the amendment includes two minor changes to the HI-STAR 100 listing in § 72.214 of the regulations. First, the “Certification Expiration Date” is changed to “Certificate Expiration Date.” Second, “Final” is added to the title of the SAR. This amendment will allow the holders of power reactor operating licenses to store spent fuel in the HI-STAR 100 cask system, as amended, under a general license. These changes are described in the Revision History for Amendment 1 (CoC, Appendices A and B). The NRC staff performed a safety evaluation of the amendment request and found that the changes provide reasonable assurance that the spent fuel can be stored safely and in compliance with 10 CFR Part 72. The NRC staff documented its review and evaluation in a Safety Evaluation Report. This direct final rule will revise the Holtec International HI-STAR 100 cask system listing within the list of NRC-approved casks for spent fuel storage in § 72.214 by adding Amendment No. 1 to CoC No. 1008. The amended HI-STAR 100 cask system, when used under the conditions specified in the CoC and NRC regulations, will meet the requirements of 10 CFR Part 72; thus, adequate protection of public health and safety will continue to be ensured. Amendment No. 1 applies to any HI-STAR 100 cask loaded after December 26, 2000.

Amendment No. 1 to CoC No. 1008 and the underlying SER, and the Environmental Assessment and Finding of No Significant Impact are available for inspection and comment through September 21, 2000, at the NRC Public Document Room, 2120 L Street, NW (Lower Level), Washington, DC. Beginning September 26, 2000, the NRC Public Document Room wil be located at 11555 Rockville Pike, Rockvill, MD. Single copies of the CoC and SER may be obtained from Gordon Gundersen, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555, telephone (301) 415-6195, email GEG1@nrc.gov. An electronic copy of the proposed CoC and preliminary SER can be found in the NRC's Electronic Reading Room http://www.nrc.gov/NRC/ADAMS/index.html under Accession No. ML003726991.

Certificate No. 1008 will be revised indicating the addition of Amendment No. 1 and its effective date. Also, the “Certification Expiration Date” is changed to “Certificate Expiration Date,” and “Final” is added to the title of the safety analysis report.

This rule is limited to the changes contained in Amendment No. 1 to CoC No. 1008 and does not include other aspects of the HI-STAR 100 cask system design. Because NRC considers this amendment to its rules to be noncontroversial and routine, the NRC is using the direct final rule procedure for this rule. This amendment will become effective on December 26, 2000. However, if the NRC receives significant adverse comments by November 13, 2000, then the NRC will publish a document that withdraws this action and will address the comments received in response to the amendments. These comments will be addressed in a subsequent final rule. Absent significant modification to the revisions requiring republication, the NRC will not initiate a second comment period on this action.

Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” approved by the Commission on June 30, 1997, and published in the Federal Register on September 3, 1997 (62 FR 46517), this rule is classified as Compatibility Category “NRC.” Compatibility is not required for Category “NRC” regulations. The NRC program elements in this category are those that relate directly to areas of regulation reserved to the NRC by the Atomic Energy Act of 1954, as amended (AEA), or the provisions of Title 10 of the Code of Federal Regulations. Although an Agreement State may not adopt program elements reserved to NRC, it may wish to inform its licensees of certain requirements via a mechanism that is consistent with the particular State's administrative procedure laws, but does not confer regulatory authority on the State.

The Presidential Memorandum dated June 1, 1998, entitled “Plain Language in Government Writing,” directed that the Government's writing be in plain language. The NRC requests comments on this direct final rule specifically with respect to the clarity and effectiveness of the language used. Comments should be sent to the address listed under the heading ADDRESSES, above.

Under the National Environmental Policy Act of 1969, as amended, and the NRC regulations in Subpart A of 10 CFR Part 51, the NRC has determined that this rule, if adopted, would not be a major Federal action significantly affecting the quality of the human environment and, therefore, an environmental impact statement is not required. The rule will add Amendment No. 1 to the HI-STAR 100 cask system to the list of approved spent fuel storage casks that power reactor licensees can use to store spent fuel at reactor sites without additional site-specific approvals by the NRC.

Amendment No. 1 revises the HI-STAR 100 cask system in seven areas and includes changes to the CoC and Technical Specifications. The seven areas involve: (1) Revision of the existing fuel specification tables; (2) addition of pressurized water reactor (PWR) Burnable Poison Rod Assemblies (BPRAs) and Thimble Plug Devices (TPDs); (3) addition of two new classes of fuel to the fuel specification tables; (4) addition of a new damaged fuel container; (5) addition of thoria rods in canisters; (6) addition of antimony-beryllium neutron sources [ i.e. , reactor startup sources]; and (7) clarifications, editorial corrections, and other minor changes to cask design information and drawings. The staff revised the CoC to include Condition 3 that requires users to prepare written acceptance tests and maintenance program consistent with the technical basis described in Chapter 9 of the SAR. This was done for consistency with other CoCs, in particular the HI-STORM 100.

In addition, the amendment includes two minor changes to HI-STAR 100 listing in § 72.214 of the regulations. First, “Certification Expiration Date” is changed to “Certificate Expiration Date.” Second, “Final” is added to the title of the safety analysis report. The environmental assessment and finding of no significant impact on which this determination is based are available for inspection at the NRC Public Document Room, 2120 L Street NW. (Lower Level), Washington, DC through September 21, 2000. Beginning September 26, 2000, the NRC Public Document Room will located at 11555 Rockville Pike, Rockville, MD. Single copies of the environmental assessment and finding of no significant impact are available from Gordon Gundersen, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555, Telephone (301) 415-6195, email GEG1@nrc.gov. An electronic copy of the proposed environmental assessment and finding of no significant impact can be found in the NRC's Electronic Reading Room at http://www.nrc.gov/NRC/ADAMS/index.html.

This direct final rule does not contain a new or amended information collection requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Existing requirements were approved by the Office of Management and Budget, Approval Number 3150-0132.

If a means used to impose an information collection does not display a currently valid OMB control number, the NRC may not conduct or sponsor, and a person is not required to respond to, the information collection.

The National Technology Transfer Act of 1995 (Pub. L. 104-113) requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this direct final rule, the NRC will revise the Holtec International HI-STAR 100 cask system listing within the list of NRC approved casks for spent fuel storage in 10 CFR 72.214. This action does not constitute the establishment of a standard that establishes generally-applicable requirements.

On July 18, 1990 (55 FR 29181), the Nuclear Regulatory Commission (NRC) issued an amendment to 10 CFR Part 72 to provide for the storage of spent nuclear fuel under a general license in cask system designs approved by the NRC. Any nuclear power reactor licensee can use NRC-approved casks to store spent nuclear fuel if it notifies the NRC in advance, spent fuel is stored under the conditions specified in the cask's Certificate of Compliance, and the conditions of the general license are met.

A list of NRC-approved cask system designs is contained in § 72.214. On September 3, 1999 (64 FR 48274), the NRC issued an amendment to Part 72 that approved the HI-STAR 100 cask design, added it to the list of NRC-approved cask designs in § 72.214, and issued CoC No. 1008. On November 24, 1999, the certificate holder submitted an application to the NRC to amend the Technical Specifications and CoC No. 1008. Amendment No. 1 revises the HI-STAR 100 cask system in seven areas and includes changes to the CoC and Technical Specifications. The seven areas involve: (1) Revision of the existing fuel specification tables; (2) addition of pressurized water reactor (PWR) Burnable Poison Rod Assemblies (BPRAs) and Thimble Plug Devices (TPDs); (3) addition of two new classes of fuel to the fuel specification tables; (4) addition of a new damaged fuel container; (5) addition of thoria rods in canisters; (6) addition of antimony-beryllium neutron sources [ i.e. , reactor startup sources]; and (7) clarifications, editorial corrections, and other minor changes to cask design information and drawings. In addition, the amendment includes two minor changes to HI-STAR 100 listing in § 72.214 of the regulations. First, the “Certification Expiration Date” is changed to “Certificate Expiration Date.” Second, “Final” is added to the title of the safety analysis report. This amendment will allow holders of power reactor operating licenses to store spent fuel in the HI-STAR 100 cask system.

This rule will permit manufacture of casks under the revisions in Amendment 1. The alternative to this action is to withhold approval of this amended cask system design and give a site-specific license to each utility that proposes to use the casks. This alternative would cost both the NRC and the utilities more time and money because each utility would have to pursue a new site-specific license. Conducting site-specific reviews would be in conflict with the Nuclear Waste Policy Act of 1982, as amended (NWPA), which directed to the NRC to approve technologies for the use of spent fuel storage at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the NRC. This alternative does not foster competition because it would tend to favor new vendors without cause and would arbitrarily limit the choice of cask system designs available to power reactor licensees.

Approval of the direct final rule would eliminate the problems described above and is consistent with previous NRC actions. Further, the direct final rule will have no adverse effect on public health and safety. This direct final rule has no significant identifiable impact or benefit on other Government agencies. Based on the above discussion of the benefits and impacts of the alternatives, the NRC concludes that the requirements of the direct final rule are commensurate with the NRC's responsibilities for public health and safety and the common defense and security. No other available alternative is believed to be as satisfactory, and thus, this action is recommended.

In accordance with the Small Business Regulatory Enforcement Fairness Act of 1996, the NRC has determined that this action is not a major rule and has verified this determination with the Office of Information and Regulatory Affairs, Office of Management and Budget.

In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)), the NRC certifies that this rule will not, if promulgated, have a significant economic impact on a substantial number of small entities. This direct final rule affects only the licensing and operation of nuclear power plants, independent spent fuel storage facilities, and Holtec International. The companies that own these plants do not fall within the scope of the definition of “small entities” set forth in the Regulatory Flexibility Act or the Small Business Size Standards set out in regulations issued by the Small Business Administration at 13 CFR Part 121.

The NRC has determined that the backfit rule (10 CFR 50.109 or 10 CFR 72.62) does not apply to this direct final rule because this amendment does not involve any provisions that would impose backfits as defined. Therefore, a backfit analysis is not required.

On August 9, 2000, SBA issued a final rule in the Federal Register , (65 FR 48601) that revised the small business size standard for SIC Code 4731, Arrangement of Transportation of Freight and Cargo. SBA revised the standard from $18.5 million to $5.0 million in average annual receipts effective September 8, 2000. However, SBA retained the $18.5 million size standard for Non-Vessel Owning Common Carriers and Household Goods Forwarders. SBA, in that same rule, also changed how it calculates the average annuals receipts of freight forwarders and custom brokers for purposes of determining eligibility for Federal small business programs.

In that final rule, SBA referred to the effect that changing the size standard for SIC 4731 would have on the NAICS codes. The industries covered under SIC Code 4731 relate to industries covered under NAICS Code 488510 (Freight Transportation Arrangement) and NAICS Code 541614 (Process, Physical Distribution, and Logistics Consulting Services). SBA detailed the change at 65 FR 48603, “Reclassification of Activities Under the North American Industry Classification System.” The table below summarizes how SIC 4731 corresponds to the NAICS.

When SBA published the NAICS table in the May 15, 2000, Federal Register , Subsector 213, Support Activities for Mining, was inadvertently left out of the published table. SBA is now correcting this oversight by adding the Subsector to the NAICS table.

The FAA has determined that notice and opportunity for prior public comment hereon are impracticable because these procedures would significantly delay issuance of the approval design and thus delivery of the affected airplanes.

Interested persons are invited to submit such written data, views, or arguments as they may desire. Communications should identify the Rules Docket number identified above and be submitted in duplicate to the address specified above. All communications received on or before the closing date for comments specified above will be considered. The special conditions may be changed in light of the comments received.

All comments received will be available in the Rules Docket for examination by interested persons, both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerning this rulemaking will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this request must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number NM176.” The postcard will be date stamped and returned to the commenter.

On April 28, 1999, British Aerospace Systems applied for a change to Type Certificate No. A41NM for the installation of an Amsafe inflatable airbag-seatbelt for the front row passenger seats in the British Aerospace System Jetstream 4101 series airplane. The Model 4101 series airplane is a straight-wing, conventional-tail, twin-engine, turboprop-powered transport. The inflatable lapbelt is designed to limit occupant forward excursion in the event of an accident. This will reduce the potential for head injury, thereby reducing the Head Injury Criteria (HIC) measurement. The inflatable lapbelt behaves similarly to the fixed mounted airbag, but in this case the airbag is integrated into the lapbelt, and deploys away from the seated occupant. While airbags are now standard in the automotive industry, the use of an inflatable lapbelt is novel for commercial aviation.

Title 14 Code of Federal Regulations (14 CFR) § 25.785 requires that occupants be protected from head injury by either the elimination of any injurious object within the striking radius of the head, or by padding. Traditionally, this has required a set back of 35″ from any bulkhead or other rigid interior feature or, where not practical, specified types of padding. The relative effectiveness of these means of injury protection was not quantified. With the adoption of Amendment 25-64 to part 25, a new standard that quantifies required head injury protection was created.

Section 25.562 specifies that dynamic tests must be conducted for each seat type installed in the airplane. In particular, the regulations require that persons not suffer serious head injury under the conditions specified in the tests, and that a HIC measurement of not more than 1000 units be recorded, should contact with the cabin interior occur. While the test conditions described in this section are specific, it is the intent of the requirement that an adequate level of head injury protection be provided for crash severity up to and including that specified. In addition HIC is the only available quantifiable measure of head injury protection. Therefore, the FAA will require that a HIC of less than 1000 be demonstrated for occupants of seats incorporating the inflatable lapbelt.

Because § 25.562, § 25.785, and associated guidance do not adequately address seats with inflatable lapbelts, the FAA recognizes that appropriate pass/fail criteria need to be developed that do fully address the safety concerns specific to occupants of these seats.

The inflatable lapbelt has two potential advantages over other means of head impact protection. First, it can provide significantly greater protection than would be expected with energy absorbing pads, for example, and second, it can provide essentially equivalent protection for occupants of all stature. These are significant advantages from a safety standpoint, since such devices will likely provide a level of safety that exceeds the minimum standards of the Federal Aviation Regulations (FAR). Conversely, airbags in general are active systems, and must be relied upon to activate properly when needed, as opposed to an energy absorbing pad or upper torso restraint that is passive, and always available. These potential advantages must be balanced against the potential disadvantages in order to develop standards that will provide an equivalent level of safety to that intended by the regulations.

The FAA has considered the installation of inflatable lapbelts to have two primary safety concerns: first, that they perform properly under foreseeable operating conditions, and second, that they do not perform in a manner or at such times as would constitute a hazard to the airplane or occupants. This latter point has the potential to be the more rigorous of the requirements, owing to the active nature of the system. With this philosophy in mind, the FAA has considered the following as a basis for the special conditions.

The inflatable lapbelt will rely on electronic sensors for signaling and pyrotechnic charges for activation so that it is available when needed. These same devices could be susceptible to inadvertent activation, causing deployment in a potentially unsafe manner. The consequences of such deployment must be considered in establishing the reliability of the system. BAE Systems must substantiate that the effects of an inadvertent deployment in flight are either not a hazard to the airplane, or that such deployment is an extremely improbable occurrence (less than 10 −9 per flight hour). The effect of an inadvertent deployment on a passenger or crewmember that might be positioned close to the airbag should also be considered. The person could be either standing or sitting. A minimum reliability level will have to be established for this case, depending upon the consequences, even if the effect on the airplane is negligible.

The potential for an inadvertent deployment could be increased as a result of conditions in service. The installation must take into account wear and tear so that the likelihood of an inadvertent deployment is not increased to an unacceptable level. In this context, an appropriate inspection interval and self-test capability are considered necessary. Other outside influences are lightning and high intensity electromagnetic fields (HIRF). Since the sensors that trigger deployment are electronic, they must be protected from the effects of these threats. Existing Special Conditions No. 25-ANM-48 regarding lightning and HIRF are therefore applicable. For the purposes of compliance with those special conditions, if inadvertent deployment could cause a hazard to the airplane, the airbag is considered a critical system; if inadvertent deployment could cause injuries to persons, the airbag should be considered an essential system. Finally, the airbag installation should be protected from the effects of fire, so that an additional hazard is not created by, for example, a rupture of the pyrotechnic squib.

In order to be an effective safety system, the airbag must function properly and must not introduce any additional hazards to occupants as a result of its functioning. There are several areas where the airbag differs from traditional occupant protection systems, and requires special conditions to ensure adequate performance.

Because the airbag is essentially a single use device, there is the potential that it could deploy under crash conditions that are not sufficiently severe as to require head injury protection from the airbag. Since an actual crash is frequently composed of a series of impacts before the airplane comes to rest, this could render the airbag useless if a larger impact follows the initial impact. This situation does not exist with energy absorbing pads or upper torso restraints, which tend to provide protection according to the severity of the impact. Therefore, the airbag installation should be such that the airbag will provide protection when it is required, and will not expend its protection when it is not needed. There is no requirement for the airbag to provide protection for multiple impacts, where more than one impact would require protection.

Since each occupant's restraint system provides protection for that occupant only, the installation must address seats that are unoccupied. It will be necessary to show that the required protection is provided for each occupant regardless of the number of occupied seats, and considering that unoccupied seats may have lapbelts that are active.

Since a wide range of occupants could occupy a seat, the inflatable lapbelt should be effective for a wide range of occupants. The FAA has historically considered the range from the fifth percentile female to the ninety-fifth percentile male as the range of occupants that must be taken into account. In this case, the FAA is proposing consideration of a larger range of occupants, due to the nature of the lapbelt installation and its close proximity to the occupant. In a similar vein, these persons could have assumed the brace position, for those accidents where an impact is anticipated. Test data indicate that occupants in the brace position may not require supplemental protection, and so it would not be necessary to show that the inflatable lapbelt will enhance the brace position. However, the inflatable lapbelt must not introduce a hazard in that case by deploying into the seated, braced occupant.

Another area of concern is the use of seats so equipped by children whether lap-held, in approved child safety seats, or occupying the seat directly. Similarly, if a pregnant woman occupies the seat, the installation needs to address such usage, either by demonstrating that it will function properly, or by adding appropriate limitation on usage.

Since the inflatable lapbelt will be electrically powered, there is the possibility that the system could fail due to a separation in the fuselage. Since this system is intended as crash/post-crash protection means, failure due to fuselage separation is not acceptable. As with emergency lighting, the system should function properly if such a separation occurs at any point in the fuselage. A separation that occurs at the location of the inflatable lapbelt would not have to be considered.

Since the inflatable lapbelt is likely to have a large volume displacement, the inflated bag could potentially impede egress of passengers. Since the bag deflates to absorb energy, it is likely that an inflatable lapbelt would be deflated at the time that persons would be trying to leave their seats. Nonetheless, it is considered appropriate to specify a time interval after which the inflatable lapbelt may not impede rapid egress. Ten seconds has been chosen as a reasonable time since this corresponds to the maximum time allowed for an exit to be openable. In actuality, it is unlikely that an exit would be prepared this quickly in an accident severe enough to warrant deployment of the inflatable lapbelt, and the inflatable lapbelt will likely deflate much quicker than ten seconds.

Finally, it should be noted that the special conditions are certification requirements applied to the inflatable lapbelt system as installed. The special conditions are not an installation approval. Therefore, while the special conditions relate to each such system installed, the overall installation approval is a separate finding and must consider the combined effects of all such systems installed.

Under the provisions of § 21.101, BAE Systems must show that the Model 4101 series airplanes, as changed, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A41NM or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference in Type Certificate No. A41NM are as follows: Amendments 25-1 through 25-66 with exceptions. The U.S. type certification basis for the Model 4101 is established in accordance with §§ 21.29 and 21.17, and the type certification application date to the United Kingdom Civil Aviation Authority. The U.S. type certification basis is listed in Type Certificate Data Sheet No. A41NM.

If the Administrator finds that the applicable airworthiness regulations (i.e., part 25 as amended) do not contain adequate or appropriate safety standards for the Model 4101 series airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

In addition to the applicable airworthiness regulations and special conditions, the Model 4101 must comply with the fuel vent and exhaust emission requirements of part 34 and the noise certification requirements of part 36.

Special conditions, as appropriate, are issued in accordance with § 11.49 after public notice, as required by §§ 11.28 and 11.29(b), and become part of the type certification basis in accordance with § 21.101(b)(2).

Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, the special conditions would also apply to the other model under the provisions of § 21.101(a)(1).

The Model 4101 series airplanes will incorporate the following novel or unusual design features. BAE Systems plans to install an Amsafe Inc, inflatable lapbelt on the front row passenger seats of the Model 4101 series airplanes, in order to reduce the potential for head injury in the event of an accident. The inflatable lapbelt works similarly to an automotive airbag, except that the airbag is integrated with the lap belt of the restraint system.

The CFR states the performance criteria for head injury protection in objective terms. However, none of these criteria are adequate to address the specific issues raised concerning seats with inflatable lapbelts. The FAA has therefore determined that, in addition to the requirements of part 25, special conditions are needed to address requirements particular to installation of seats with inflatable lapbelts.

Accordingly, in addition to the passenger injury criteria specified in § 25.785, these special conditions are adopted for the BAE Model 4101 series airplanes equipped with inflatable lapbelts. Other conditions may be developed, as needed, based on further FAA review and discussions with the manufacturer and civil aviation authorities.

From the standpoint of a passenger safety system, the airbag is unique in that it is both an active and entirely autonomous device. While the automotive industry has good experience with airbags, the conditions of use and reliance on the airbag as the sole means of injury protection are quite different. In automobile installations, the airbag is a supplemental system and works in conjunction with an upper torso restraint. In addition, the crash event is more definable and of typically shorter duration, which can simplify the activation logic. The airplane-operating environment is also quite different from automobiles and includes the potential for greater wear and tear, and unanticipated abuse conditions (due to galley loading, passenger baggage, etc.); airplanes also operate where exposure to high intensity electromagnetic fields could affect the activation system.

The following special conditions can be characterized as addressing either the safety performance of the system, or the system's integrity against inadvertent activation. Because a crash requiring use of the airbags is a relatively rare event, and because the consequences of an inadvertent activation are potentially quite severe, these latter requirements are probably the more rigorous from a design standpoint.

As discussed above, these special conditions are applicable to the Model 4101 series airplanes. Should BAE Systems apply at a later date for modification of any other model included on Type Certificate No. A41NM to incorporate the same novel or unusual design feature, the special conditions would apply to that model as well under the provisions of § 21.101(a)(1).

This action affects only certain novel or unusual design features on the BAE Systems Model 4101 series airplanes. It is not a rule of general applicability, and it affects only the applicant who applied to the FAA for approval of these features on the airplane.

The substance of these special conditions has been subject to the notice and comment period in two prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. For this reason, and because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for British Aerospace (BAE) Systems Model 4101 series airplanes equipped with Amsafe inflatable lapbelts.

1. Seats With Inflatable Lapbelts. It must be shown that the inflatable lapbelt will deploy and provide protection under crash conditions where it is necessary to prevent serious head injury. The means of protection must take into consideration a range of stature from a two-year-old child to a ninety-fifth percentile male. The inflatable lapbelt must provide a consistent approach to energy absorption throughout that range. In addition, the following situations must be considered:

2. The inflatable lapbelt must provide adequate protection for each occupant, regardless of the number of occupants of the seat assembly, considering that unoccupied seats may have active seatbelts.

3. The design must prevent the inflatable lapbelt from being either incorrectly buckled or incorrectly installed such that the airbag would not properly deploy. Alternatively, it must be shown that such deployment is not hazardous to the occupant and will provide the required head injury protection.

4. It must be shown that the inflatable lapbelt system is not susceptible to inadvertent deployment as a result of wear and tear, or inertial loads resulting from in-flight or ground maneuvers (including gusts and hard landings), likely to be experienced in service.

5. Deployment of the inflatable lapbelt must not introduce injury mechanisms to the seated occupant, or result in injuries that could impede rapid egress. This assessment should include an occupant who is in the brace position when it deploys, and an occupant whose belt is loosely fastened.

6. It must be shown that an inadvertent deployment, that could cause injury to a standing or sitting person, is improbable.

7. It must be shown that inadvertent deployment of the inflatable lapbelt, during the most critical part of the flight, will either not cause a hazard to the airplane or is extremely improbable.

8. It must be shown that the inflatable lapbelt will not impede rapid egress of occupants 10 seconds after its deployment, considering the requirements of Special Conditions No. 25-NM-45, issued July 9, 1991, and Special Conditions No. 25-NM-45A, issued November 8, 1994, concerning cabin aisle width.

9. The system must be protected from lightning and high-intensity radiated fields (HIRF). The threats specified in Special Condition No. 25-ANM-48 are incorporated by reference for the purpose of measuring lightning and HIRF protection. For the purposes of complying with HIRF requirements, the inflatable lapbelt system is considered a critical system if its deployment could have a hazardous effect on the airplane; otherwise it is considered an essential system.

10. The inflatable lapbelt must function properly after loss of normal aircraft electrical power, and after a transverse separation of the fuselage at the most critical location. A separation at the location of the lapbelt does not have to be considered.

11. It must be shown that the inflatable lapbelt will not release hazardous quantities of gas or particulate matter into the cabin.

12. The inflatable lapbelt installation must be protected from the effects of fire such that no hazard to occupants will result.

13. There must be a means for a crewmember to verify the integrity of the inflatable lapbelt activation system prior to each flight or it must be demonstrated to reliably operate between inspection intervals.

The FAA has received reports indicating that, on certain Boeing Model 757-200 series airplanes, damage has been detected to the fiberglass pan and fuselage frames located in the forward and aft cargo compartments. This damage has been attributed to incorrect operation of the cargo loader system and subsequent wear damage completely through the fiberglass pan, and in some cases, to the adjacent fuselage frames. This condition, if not corrected, could result in reduced structural integrity of the airplane fuselage and consequent cabin depressurization.

The FAA has reviewed and approved Boeing Alert Service Bulletin 757-25A0233, dated August 10, 2000, which describes procedures for repetitive inspections of the cargo loader system in the forward and aft cargo compartments to detect discrepancies (i.e., improper operation, wear damage of the fiberglass pan and fuselage frames), and corrective actions, if necessary.

The corrective actions include procedures for repair of the cargo loader system if incorrectly installed or deactivation of the system if the fiberglass pan is worn to the extent that fibers are exposed; follow-on inspection of the fuselage frames if there is a hole worn through the fiberglass pan anywhere within the two-inches forward or aft of any frame location; repair or replacement of the damaged pan; and repair of the fuselage frames if damaged and damage is within the limits specified in the structural repair manual, as described in the alert service bulletin. Following accomplishment of the corrective actions, the alert service bulletin recommends testing the cargo loader system for proper operation. The alert service bulletin also contains instructions to contact the manufacturer for reactivation of the cargo loader system and disposition of certain inspection and repair procedures.

Since an unsafe condition has been identified that is likely to exist or develop on other products of this same type design, this AD would require accomplishment of the actions specified in the alert service bulletin described previously, except as discussed below.

Operators should note that, although the alert service bulletin permits reactivation of the cargo loader system after contacting the manufacturer for disposition of inspection and repair procedures, this AD requires reactivation of the system and disposition of the inspection and repair procedures be accomplished in accordance with a method approved by the FAA.

Although the alert service bulletin specifies accomplishment of inspections, this AD refers to those inspections as detailed visual inspections. The FAA finds that “detailed visual inspection” is the appropriate terminology for the inspections described in the service bulletin. Additionally, a definition of a detailed visual inspection is included in Note 2 of this proposed AD.

The alert service bulletin also specifies repetitive inspections at intervals not to exceed 300 flight cycles provided no damage is detected following accomplishment of the initial inspection. However, paragraph (a) of this AD also requires accomplishment of the repetitive inspections if the cargo loader system is reactivated after damage is repaired.

This is considered to be interim action. The manufacturer has advised that it currently is developing a modification that will positively address the unsafe condition addressed by this AD. Once this modification is developed, approved, and available, the FAA may consider additional rulemaking.

Since a situation exists that requires the immediate adoption of this regulation, it is found that notice and opportunity for prior public comment hereon are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule that involves requirements affecting flight safety and, thus, was not preceded by notice and an opportunity for public comment, comments are invited on this rule. Interested persons are invited to comment on this rule by submitting such written data, views, or arguments as they may desire. Communications shall identify the Rules Docket number and be submitted in triplicate to the address specified under the caption ADDRESSES. All communications received on or before the closing date for comments will be considered, and this rule may be amended in light of the comments received. Factual information that supports the commenter's ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether additional rulemaking action would be needed.

Submit comments using the following format:

• Organize comments issue-by-issue. For example, discuss a request to change the compliance time and a request to change the service bulletin reference as two separate issues.

• For each issue, state what specific change to the AD is being requested.

• Include justification (e.g., reasons or data) for each request.

Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify the rule. All comments submitted will be available, both before and after the closing date for comments, in the Rules Docket for examination by interested persons. A report that summarizes each FAA-public contact concerned with the substance of this AD will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2000-NM-286-AD.” The postcard will be date stamped and returned to the commenter.

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.

The FAA has determined that this regulation is an emergency regulation that must be issued immediately to correct an unsafe condition in aircraft, and that it is not a “significant regulatory action” under Executive Order 12866. It has been determined further that this action involves an emergency regulation under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979). If it is determined that this emergency regulation otherwise would be significant under DOT Regulatory Policies and Procedures, a final regulatory evaluation will be prepared and placed in the Rules Docket. A copy of it, if filed, may be obtained from the Rules Docket at the location provided under the caption ADDRESSES.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Airbus Model A300 and A300-600 series airplanes was published in the Federal Register on May 10, 2000 (65 FR 30033). That action proposed to require a high frequency eddy current (HFEC) inspection to detect cracking of the rear fittings of fuselage frame FR40 at stringer 27, and repetitive inspections or repair, as applicable. In lieu of accomplishing the repetitive inspections, that action proposed to require a modification that would allow the inspection to be deferred for a certain period of time.

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

The commenter questions the compliance times specified in the proposed AD. The commenter notes that there are small discrepancies between the compliance thresholds recommended in the referenced service bulletins for Airbus Model A300 B2, B4-100, and B4-600 series airplanes, and the thresholds specified by the proposed AD. The commenter suggests that it would be preferable for the compliance times in the AD to be in line with those in the service bulletins, since this would avoid confusion by operators and reduce the number of questions that may be raised.

The FAA concurs. For the reasons stated in the proposed AD, the FAA specified fixed compliance times for accomplishment of the required actions, rather than permitting use of the “adjustment-for-range” formula for calculating compliance times. During discussions with the manufacturer to determine an interim method of calculating the fixed compliance times, flight cycle thresholds and intervals for certain models were recommended for reduction from those in the service bulletins, based on the average flight times of those models. Subsequently, a revised method for calculation of such fixed compliance times was defined by the manufacturer. This method allows use of the flight cycle thresholds and intervals specified in the referenced service bulletins.

The FAA has determined that, consistent with the manufacturer's revised method for calculation of fixed compliance times, the flight cycle thresholds and intervals recommended in the referenced service bulletins constitute acceptable compliance times for this AD. The final rule has been revised accordingly. Because the flight cycle compliance times for certain airplane models have been increased rather than reduced, and the flight hour compliance times are unchanged, such revision imposes no additional restrictions on operators.

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

The FAA estimates that 85 airplanes of U.S. registry will be affected by this AD, that it will take approximately 1 work hour per airplane to accomplish the required HFEC inspection, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the inspection on U.S. operators is estimated to be $5,100, or $60 per airplane, per inspection cycle.

Should an operator be required to accomplish the modification rather than the repetitive inspections, it will take approximately 3 work hours per airplane to accomplish. Based on these figures, the cost impact of the modification required by this AD on U.S. operators is estimated to be $15,300, or $180 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.

On June 7, 2000, Airspace Docket No. 97-AWA-1, FR Doc. 00-14046, was published amending the legal description of the San Francisco, CA, Class B airspace area. This rule included a legal description of the San Francisco, CA, Area E airspace that included a small area within the Travis AFB approach control area, which should have been omitted. This action excludes that airspace from the San Francisco Class B airspace area, thereby correcting this error.

On April 4, 2000, the Federal Aviation Administration published two final rules, the Modification of the Dimensions of the Grand Canyon National Park Special Flight Rules Area and Flight Free Zones (Air Space Modification), and the Commercial Air Tour Limitation in the Grand Canyon National Park Special Flight Rules Area (Commercial Air Tour Limitation). See 65 FR 17736; 65 FR 17708; April 4, 2000. The FAA also simultaneously published a notice of availability of Commercial Routes for the Grand Canyon National Park (Routes Notice). See 65 FR 17698, April 4, 2000. The Commercial Air Tour Limitations final rule because effective on May 4, 2000. The Air Space Modification final rule and the routes set forth in the Routes Notice are scheduled to become effective December 1, 2000. The implementation of the Air Space Modification final rule and the new routes was delayed to provide the air tour operators ample opportunity to train on the new route system during the non-tour season. The Final Supplementary Environmental Assessment for Special Flight Rules in the Vicinity of Grand Canyon National Park (SEA) was completed on February 22, 2000, and the Finding of No Significant Impact was issued on February 25, 2000.

On May 8, 2000, the United States Air Tour Association and seven air tour operators (hereinafter collectively referred to as the Air Tour Providers) filed a petition for review of the two final rules before the United States Court of Appeals for the District of Columbia Circuit. The FAA, the Department of Transportation, the Department of Interior, the National Park Service and various federal officials were named as respondents in this action. On May 30, 2000, the Air Tour Providers filed a motion for stay pending review before the Court of Appeals. The federal respondents in this case filed a motion for summary denial on grounds that petitioners had not exhausted their administrative remedies. The Court granted the federal respondents summary denial on July 19, 2000. The Grand Canyon Trust, the National Parks and Conservation Association, the Sierra Club, the Wilderness Society, Friends of the Grand Canyon and Grand Canyon River Guides, Inc. (The Trust) filed a petition for review of the same rules on May 22, 2000. The Court, by motion of the Federal Respondents, consolidated that case with that of the Air Tour Providers. The Hualapai Indian Tribe of Arizona filed a motion to intervene in the Air Tour Providers petition for review on June 23, 2000. The Court granted that motion on July 19, 2000.

On July 31, 2000, the Air Tour Providers filed a motion for stay before the FAA. Both the Hualapai Indian Tribe and the Trust filed oppositions to the Air Tour Providers' stay motion.

The Air Tour Providers requested that the FAA stay the effective date of the Air Space Modification Final Rule and suspend the effectiveness of the Commercial Air Tour Limitation final rule “to avoid imposing additional irreparable harm to the Air Tour Providers.” Motion at 7. The Air Tour Providers also requested that the stay continue pending the outcome of the judicial proceeding currently before the United States Court of Appeals for the District of Columbia Circuit. Specifically, the Air Tour Providers claim that the four-part test elucidated in Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc. , 559 F.2d 841, 843 (D.C. Cir. 1977) applies to the FAA and thus, based on this test the FAA should grant the motion for stay. In Washington Metropolitan, the Court specified the following four factors that it must look at when considering whether to grant a stay pending review. Those factors are as follows: (a) The likelihood that the moving party will prevail on the merits; (b) the prospect of irreparable injury to the moving party if relief is withheld; (c) the possibility of harm to other parties if relief is granted; and (d) the public interest.

The Air Tour Providers claimed that there is a substantial likelihood that they will prevail on the merits because Air Tour Providers will suffer great harm through these rules. Motion at 8. Additionally, the Air Tour Providers argued that the FAA's actions in issuing the final rules were arbitrary and capricious for the following reasons: (1) The goal of “natural quiet” has been achieved and thus these final rules are unnecessary, Motion at 9; (2) the agencies offered no “reasoned analysis” for “abandon[ing] the definition of ‘natural quiet’ they have used since the Overflights Act was enacted, in 1987, substituting a ‘detectability’ standard for the ‘noticeability standard,’ ” Motion at 9-10; (3) the agencies failed to distinguish between aircraft sound generated by commercial aircraft and that generated by other aircraft (military, recreational), Motion at 10; (4) the agencies “failed to develop quiet technology standards for the Grand Canyon or to use the existing quiet technology incentive route,” Motion at 9-10; (5) the agencies have “ignor[ed] the issue of safety and abandon[ed] existing rules that ensure aircraft safety,” Motion at 11; (6) the agencies' failed to “accommodate the needs of (the elderly, disabled and mobility impaired)”, Motion at 12; (7) the agencies failed to use current data to impose the flight caps, Motion at 12; (8) the agencies relied on a scientifically invalid computer sound model, Motion at 13; (9) the agencies created an exemption to “protect the economic interest of the Hualapai (sic) * * * while ignoring the economic interests of the Air Tour Providers,” Motion at 13. The Air Tour Providers also maintained that the agencies' actions violate the Regulatory Flexibility Act (RFA) by calculating the costs to the recreational air tour operators using inadequate data; asserting that operators can offset their losses by raising prices; failing to analyze the costs to recreational air tour passengers; overestimating the benefits to ground visitors; and failing to minimize the economic impact of the final rules. Motion at 14-16.

Additionally, the Air Tour Providers argued that their economic losses are irreparable because the loss threatens the very existence of their business and deprives them of their constitutional rights. Motion at 17-19. The Air Tour Providers further maintained that the agencies would not be harmed if the stay is granted since “natural quiet” has already been achieved. Motion at 19. Finally, the Air Tour Providers stated that the public interest strongly favors granting the stay since the “Final Rules deal with sound that the public cannot hear” thus, the “public interest in ‘natural quiet’ at the Grand Canyon is protected.” Motion at 19-20. Also, under the public interest prong of the Washington Metropolitan test, the Air Tour Providers argued that the sudden massive economic losses would result in significant losses to the local economy. Motion at 20. Additionally, the Air Tour Providers maintained that because the elderly, disabled or mobility-impaired individuals who visit the Grand Canyon by recreational air tour will be “specifically and unfairly burdened by the Final Rules, the public interest weighs heavily in favor of staying the Final Rules.” Motion at 21. The Air Tour Providers attached statements from air tour operators, an alternative acoustical analysis, and an alternative economic analysis to support their contentions.

The Hualapai Indian Tribe (Hualapai) submitted its opposition to the Air Tour Providers' request to stay the final rules arguing that the request is an “untimely request to the Administrator for reconsideration of the final rule.” Hualapai Opposition at 1. The Hualapai further argued that the fact that the Air Tour Providers waited three months after the effective date of the final rules to request a stay from the Administrator “strongly indicates the lack of sufficient harm to warrant expedited consideration of the Stay Request, much less to support a stay.” Hualapai Opposition at 2. The Hualapai maintained that the only way of staying the rules is through the reconsideration provision because there is not other applicable regulation “for the issuance of a stay in FAA's procedures for rulemaking.” Hualapai Opposition at 2. Furthermore, the Hualapai argued that the FAA is “without power to reconsider (and stay) its decision now because the time for reconsideration (and a stay) ran several months before the Air Tour Providers submitted their Stay Request to the Administrator.” Hualapai Opposition at 4.

The Air Tour Providers replied to the Hualapai Opposition on August 24, 2000, arguing that the Hualapai were not a party to this proceeding and did not have standing to oppose this request. Additionally, the Air Tour Providers stated that the Hualapai Tribe erred in stating that the Air Tour Providers had failed to demonstrate that they meet the irreparable harm standard set forth in Washington Metropolitan. The Air Tour Providers argued that they “Demonstrated conclusively that the Final Rules have caused them irreparable harm, including: (i) The imminent closure of several of the air tour providers' businesses; (ii) the severe and permanent downsizing of other air tour providers' businesses; (iii) the permanent, and irreparable interference with air tour providers' contractual relationships with their domestic and foreign booking agents; and (iv) the deprivation of the air tour providers' constitutional rights under the Equal Protection component of the Fifth Amendment.” Reply to Hualapai at 2.

Additionally, the Air Tour Providers took issue with the Hualapai's recharacterization of the Air Tour Providers' request, arguing that it did not ask “the FAA to ‘reconsider' its decision. That matter is now before the Court of Appeals. Instead, the Air Tour Providers asked the FAA to stay the implementation of its rules.” Reply to Hualapai at 2. In response to the Hualapai's assertion that the FAA lacks the power to grant a stay request, the Air Tour Providers noted that the FAA affirmatively stated that it has the authority to stay the effective date of action pending judicial review pursuant to 5 U.S.C. section 705. Reply to Hualapai at 2-3. Furthermore, the Air Tour Providers noted that the Court's Order denying the Air Tour Providers' Motion for Stay stated that under the Federal Rules of Appellate Procedure, the Air Tour Providers were required to file a request for a stay pending judicial review first with the FAA because they had not demonstrated that to do so was “impracticale.” Reply to Hualapai at 3. Finally, the Air Tour Providers maintained that the request for a stay is not time-barred because 14 CFR 11.73 does not apply.

The Trust also submitted an opposition to the Air Tour Providers' Motion, arguing the following: (1) The request is time barred; and (2) even if the FAA considers the Motion, the Air Tour Providers have failed to demonstrate that they satisfy the four-pronged test. First, the Trust maintained that the Stay Motion was filed in violation of 14 CFR 11.73 which permits a request for reconsideration to be filed within 30 days after the rule is published. The Trust noted that the Air Tour Providers filed their request 118 days after publication—88 days after the regulatory deadline. Trust Opposition at 2.

Second, the Trust argued that the Air Tour Providers failed to demonstrate that the FAA adopted the final rules arbitrarily and capriciously or abused its discretion. The Trust maintained that the Air Tour Providers' argument that the final rules violate the Administrative Procedures Act (APA) review almost entirely on evidence not in the administrative record. See Trust Opposition at 4-5. In response to the Air Tour Providers argument that the FAA violated the RFA, the Trust argued that Section 603 of the RFA is not subject to judicial review. The Trust also maintained that the “RFA does not require agencies to show that economic impacts of their rules were absolutely minimized; it requires only a description of steps taken to minimize significant economic impact on small entities consistent with the stated objectives of the applicable statutes.” Trust Opposition at 9 (emphasis in original quotation).

The Trust also argued that the Air Tour Providers failed to show that the balancing of interests and injuries weighs in their favor since economic loss does not constitute irreparable harm. Trust Opposition at 9. Moreover, the Trust noted that “other parties, such as the Grand Canyon Trust, et al. will be significantly injured if the FAA grants the requested stay and suspension of the final rules.” Trust Opposition at 10 (emphasis in original quotation). The Trust stated that “Members of the Grand Canyon Trust, et al. are frequent backcountry users who take great strides to enjoy unique wilderness settings * * * Air traffic noise destroys the wilderness experience and constitutes a significant injury to an interest protected by federal law.” Trust Opposition at 10. Furthermore, the Trust argued that Congress has already determined the public interest at stake when it required determination that the “public interest would be served by timely restoration of natural quiet in the Grand Canyon.” Trust Opposition at 10.

The Air Tour Providers replied to the Trust's Opposition on September 14, 2000. The Air Tour Providers maintained that the Request for Stay is an administrative proceeding before the FAA and is completely separate and apart from any legal proceeding to which the Trust is a party. Reply to Trust at 1. The Air Tour Providers thus maintained that the Trust does not have the right to file a response. Furthermore, the Air Tour Providers took issue with the Trust's argument that the Air Tour Providers are time barred from filing their Request for Stay. The Air Tour Providers made the same basic argument in response to the Hualapai's Opposition. See Reply to Trust at 1-2.

The Air Tour Providers argued that the FAA can in fact consider evidence not in the administrative record and there is no authority barring the FAA from so doing. Reply to Trust at 2. The Air Tour Providers maintained that the FAA is “required to consider evidence offered by Air Tour Providers of the irreparable harm they have suffered as a result of the Final Rules.” Reply to Trust at 2.

The Air Tour Providers also took issue with the Trust's assertion that the Air Tour Providers have failed to show that they are likely to prevail in their claim that the final rules are arbitrary and capricious. Specifically, the Air Tour Providers argued that the Trust's position that the Air Tour Providers have provided only “thin evidence” that natural quiet was restored in the Grand Canyon prior to implementation of the Final Rules is without merit. The Air Tour Providers point to the “sworn testimony of two acoustical experts before the Subcommittee on National Parks and Public Lands of the United States House of Representatives on two separate occasions” and the declaration by John Alberti. Reply to Trust at 3-4.

The Air Tour Providers also argued that the Trust's statement that the NPS' computer sound model should be given deference because “it has ‘expertise’ in the field of acoustical measurements” is without support. Reply to Trust at 4. The Air Tour Providers asserted that NPS is “not entitled to any such deference when NPS cannot support its approach even in theory.” Id. The Air Tour Providers then point to a letter from the FAA to NPS in which the FAA allegedly characterized the NPS' methodology as “unrealistic,” “arbitrary and artificial,” and “not scientifically valid.” Id.

The Air Tour Providers also denied the validity of the Trust's contention that the Air Tour Providers cannot support their claims about the significant impact of these rules on the elderly and mobility impaired individuals. Reply to Trust at 5.

In response to the Trust's assertion that Air Tour Providers “cannot even bring the first RFA claim because it is a challenge of the initial regulatory flexibility analysis and therefore, is not subject to review,” the Air Tour Provides stated that they are challenging the “final regulatory flexibility analysis of January 2000” and that challenges under section 604 of the RFA are subject to judicial review. Reply to Trust at 6. The Air Tour Providers also asserted that the Trust's argument that the FAA satisfied its obligations under the RFA by minimizing the significant economic impact is without merit because the FAA has “refused to take such steps” Id. Finally, the Air Tour Providers maintained that the Trust's contention that the parties it represents will be significantly injured if the FAA grants the Stay Request is flawed because the standard is not significant injury but “irreparable injury or harm.” Rely to Trust at 7. The Air Tour Providers maintained that only they have demonstrated irreparable injury. Id.

The FAA is not considering this request to be time-barred-While the FAA would not normally consider a stay motion filed 188 days from the issuance of a rule to be timely, in this instance, the Air Tour Providers first sought remedy in the United States Court of Appeals for the District of Columbia Circuit. The government then filed a Motion for Summary Denial of the Air Tour Provider's motion based on the fact that the Air Tour Providers did not file first before the FAA and thus exhaust its administrative remedies as required by the Federal Rule of Appellate Procedure Rule 18. The Court granted the government's Motion for Summary Denial on July 19, 2000. The Air Tour Providers then filed this Stay Motion with the FAA on July 31, 2000. Thus, the FAA does not intend to act in bad faith by refusing to even consider the Air Tour Providers' Motion because of the length of time that has passed between the issuance of the rule and the Air Tour Providers' stay request to the FAA. Notably, the Air Tour Providers filed their Motion with the FAA twelve days after the Court granted the government's Motion for Summary Denial.

The Department of Transportation has previously found that the four-pronged test enumerated in Washington Metropolitan for deterring whether to grant a stay of rules pending litigation is applicable to the appellate courts only. Albert O. McCauley; Herbert Gene Vance; Duncan Black Parker, FAA Docket CP89SO0149; FAA Docket CP89SO0137; FAA Docket CP89SO0182, 1990 FAA LEXIS 200 (January 12, 1990). “The primary stay consideration at the trial level usually relate[s] to whether the public interest or the interest of the private parties involved, or both would be served by a delay of the proceeding.” Id. at 7. The public interest, in this case, has been expressed by Congress in Public Law 100-91—to substantially restore natural quiet to the Grand Canyon National Park. Congress gave the NPS broad discretion to define substantial restoration of natural quite. The agencies have determined that the final rules at issue in this stay request would make substantial gains in achieving this goal. Thus, to delay or suspend the effective date of these rules would be contrary to the purpose of the Congressional mandate, unless another public interest or private interest was served by a stay. The private interests alleged by the Air Tour Providers primarily concern the economic impact of the rules. These interests have already been considered by the FAA in the final rules. There is no additional evidence presented by the Air Tour Providers that warrants shifting the balance achieved by these rules. Thus, the FAA has determined that implementing the final rules furthers the public interest by limiting the number of air tours that are permitted in the Park and establishing new routes and air space configurations in the Special Flight Rules Area, thereby promoting the statutory goal of substantial restoration of natural quite.

Even if the four-part test enunciated in Washington Metropolitan is applicable to the FAA's administrative proceeding, the Air Tour Providers have not demonstrated that the test is satisfied and thus, that a stay of the Commercial Air Tour Limitations final rule and the Air Space Modification final rule is warranted.

In support of their contention that the FAA has violated the APA by issuing the final rules in an arbitrary or capricious manner, the Air Tour Providers submit contrary acoustical data in an attempt to discredit the agency's analysis supporting the need for the final rule. See Motion for Stay, Exhibit A, Statement of John Alberti. Mr. Alberti takes issue with the sound studies completed by the FAA and NPS in the 1990's and states that he “performed a neutral study of aircraft sound levels in the Grand Canyon.” Alberti Statement at 2. Mr. Alberti's statement is similar to a statement filed in the public docket that is part of the administrative record to this proceeding, see Administrative Record, Document Number 69, Comment No. 38.

As explained in the final rule, the FAA and NPS determined after the 1996 final rule that the aircraft cap did not adequately limit growth and noise modeling “indicated that the potential growth in the number of operations could erode gains made toward substantial restoration of natural quiet.” See 65 FR at 17713. The NPS' conclusion that substantial restoration was not going to be achieved under SFAR 50-2, as amended in December 1996, was explained in detail in the SEA. See SEA at 1-5, 4-17—4-22. The fact that the Air Tour Providers have submitted acoustical studies to contradict the studies conducted by FAA and NPS does not demonstrate that the FAA violated the APA in issuing the final rules. It simply indicates that scientific or statistic analyses can differ. The law is clear, however, that the Court “will give due deference to the agency especially when the agency action involves evaluating complex scientific or statistical data within the agency's expertise.” Natural Resources Defense Council, Inc. v. EPA, 194 F.3d 130 (D.C. Cir., 1999). In this case, the FAA has demonstrated a rational connection between the facts and its choice and thus it has satisfied the rationality standard.

The Air Tour Providers argument that the agencies acted arbitrarily and capriciously by “abandoning the definition of natural quiet they have used since the Overflights Act was enacted, in 1987, substituting a “detectability” standard for the “noticeability standard” is also flawed. See Motion at 8. It is not unexpected that over time new information, data and technology might result in a well-considered refinement in methodology. When such a situation occurs, “* * * an agency changing its course must supply a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored. * * *” Greater Boston Television Corp. v./ FCC, 444 F.2d 841 (D.C. Cir., 1970); cert. denied, 403 U.S. 923, 29 L. Ed. 2d 701, 91 S. Ct. 2233 (1971).

Section 3 of Public Law 100-91 authorizes the Secretary of Interior to provide continued advice and recommendations to the FAA regarding the interpretation of policy on noise impact assessment at GCNP. Section 3 further directs that the FAA adopt the recommendations of NPS “without change unless the Administrator determines that implementing the recommendations would adversely affect aviation safety.” The two agencies have been seeking to achieve substantial restoration of natural quiet at GCNP pursuant to these congressional mandates. Therefore, in the December 1996, Final EA, as part of the noise methodology for determining substantial restoration of natural quiet and based upon NPS' recommendations, the FAA defined the threshold for evaluating the percent of time each day (12 hour daytime period) that aircraft would be audible in the park as three decibels above ambient. The use of this noticeability standard and methodology was upheld in Grand Canyon Air Tour Coalition v. FAA, 154 F.3d 455 (D.C. Cir., 1998).

Since 1996, NPS has refined the noise impact assessment methodology to be used in defining substantial restoration of natural quiet at GCNP to more accurately reflect the potential for aircraft noise impacts in the park based on the specific characteristics of the different areas of the Park. NPS explained its rationale for refining the methodology used to define substantial restoration of natural quiet in its Public Notice “Change in Noise Evaluation Methodology for Air Tour Operations Over Grand Canyon National Park, 64 FR 3969, published January 26, 1999. See Administrative Record, Document 108. The NPS also published a Notice of Disposition of Public Comments and Adoption of Final Noise Evaluation Methodology, 64 FR 38006, on July 14, 1999. See Administrative Record, Document 121. The January 26, 1999, Federal Register Notice explained that the standard for substantial restoration of natural quiet remained unchanged and only the evaluation methodology was to be refined. 64 FR at 3969-3970; see also 64 FR 38006, 38008. NPS further explained that it would apply two different threshold levels to different parts of the Park based upon its analysis of regions of the park that were determined to have greater or less noise sensitivity. Those areas of the Park encompassing the developed areas would be evaluated using the three decibels above ambient threshold ( i.e., Zone 1), while areas without development, or “back country” areas would be evaluated using the eight below ambient threshold (i.e., Zone 2). NPS described at length how it developed the eight decibels below ambient threshold, the aircraft noise monitoring, natural ambient measurements and INM conversion and calculations required in its July 14, 1999 Notice and Disposition of Comments. 64 FR 38006-38012. In the final rule for the Commercial Air Tour Limitation, NPS and FAA further clarified that “the minus 8 decibels below ambient is not the sound level at which aircraft must operate or the acoustic level that must be achieved. It is a mathematical conversion necesitated by the computer modeling. The minus 8 decibels below ambient describes the ‘starting point’ at which the measurement of substantial restoration begins.” 65 FR at 17721. Therefore, the refinement of the thresholds for evaluating substantial restoration of natural quiet at GCNP was not arbitrary and capricious nor contrary to Public Law 100-91.

In their reply to the Trust's Response to the Administrative Motion for Stay, the Air Tour Provider's cite to a letter from FAA to NPS dated June 6, 2000, to support their contention that the FAA has criticized the NPS' noise methodology. This letter contained FAA comments to NPS on its Draft Director's Order #47, “Soundscape Preservation and Noise Management.” The FAA has never interpreted Director's Order No. 47 as applying to GCNP. The quotes relied upon by the Air Tour Providers to support their assertion that the FAA criticized the NPS noise methodology actually addressed certain assumptions, quantitative assessments and approaches to evaluating the baseline noise environment, aircraft noise impacts and noise levels proposed by NPS to be utilized in National Park units that do not have legislative directives. Therefore, the refined evaluation methodology for substantial restoration of natural quiet at GCNP is not the subject of the June 6th letter, and the Air Tour Providers references to this letter are both out of context and inapplicable to the subject of the Motion for Stay.

The Air Tour Providers also have failed to demonstrate that the FAA acted arbitrarily and capriciously by focusing on aircraft sound generated by commercial air tour operators. Public Law 100-91 set forth a broad mandate that the FAA issue regulations, pursuant to recommendations by NPS, to regulate aircraft overflights so as to substantially restore natural quiet at the Park. Congress gave the NPS maximum discretion to determine the best means to effect the goal. NPS recommended an operations limitation on air tour aircraft in its Report to Congress. See Recommendation 10.3.10.3, Report on Effects of Aircraft Overflights on the National Park System, September 12, 1994. Furthermore, the record supports the decision to focus on commercial air tour aircraft. As the FAA stated in the Commercial Air Tour Limitations Final Rule, “noise generated by aircraft conducting commercial air tours presents a specific type of problem because these aircraft generally are operated repeatedly at low altitudes over the same routes.” 65 FR at 17710. Additionally, FAA data indicates that the volume of commercial air tour traffic is much higher then general aviation traffic. See Regulatory Evaluation Final Rule, Commercial Air Tour Limitation in the Grand Canyon National Park Special Flight Rules Area, at 21 (January 21, 2000). Thus, the FAA's focus on commercial air tour aircraft is supported by the findings in the Record and the broad mandate set forth in Public Law 100-91.

The FAA also did not act arbitrarily and capriciously by determining to impose a limitation on commercial air tours instead of adopting the quiet technology standards proposed in December 1996. In the final rule on Commercial Air Tour Limitations, the FAA reiterated its commitment to developing a quiet technology standard. 65 FR at 17714. However, due to the numerous issues raised by commenters in the NPRM on Noise Limitation of Aircraft Operations in the Vicinity of Grand Canyon National Park (Docket 29770), issuance of the final rule in the Noise Limitations rulemaking has taken longer than anticipated. It is noteworthy that in that rulemaking as well, many commenters maintained that imposition of quiet technology would pose an unreasonable financial burden on the air tour industry. See 65 FR 17714. Because the agencies found that growth in the industry had only temporarily arrested due to economic factors, they determined that an operations limitation was necessary to “make significant strides towards meeting the statutory goal” by the 2008 deadline set by the President of the United States. 65 FR 17714; see 65 FR 17709 (explaining the goals set forth in the President's memorandum of April 22, 1996).

Additionally, the final rules at issue in this stay request were issued prior to the enactment of the National Park Air Tour Management Act. Thus, contrary to the Air Tour Providers' assertions, the issuance of the Commercial Air Tour Limitations final rule and the Air Space Modification final rule does not violate any law. The FAA also notes the fact that operators made equipment decisions to purchase different aircraft is not persuasive since the equipment decision was voluntary and speculative at best. The FAA never finalized the Noise Limitations Final Rule, thus the FAA has not mandated a definition of quiet technology air tour aircraft.

Contrary to the Air Tour Providers' accusations, the FAA considered comments by the air tour operators on the route system in devising the routes. The Air Tour Providers' Motion contains statements by Ms. Brenda Halverson, Papillon Airways, Inc., and Mr. Ron Williams, AirStar Helicopters, opposing the new route structure that goes up over the north rim because there is no turnaround in the Zuni Corridor for helicopters. NPS, in its Report to Congress, indicated that eliminating two way traffic in the flight corridors was critical to achieving substantial restoration of natural quiet. Thus, where possible, FAA has attempted to minimize two-way traffic in the Dragon and Zuni Point Corridors. The Dragon Corridor has a turnaround for helicopters only. The Zuni Point Corridor has a turnaround for fixed wing aircraft. Both helicopters and fixed wing aircraft operating in the Zuni Point Corridor have the option of going up over the North Rim, or if necessary using Black 2 and Green 3 routes that go east around the Desert View Flight Free Zone. The movement of the Black 2 and Green 3 was necessary in order to protect Traditional Cultural Properties identified during the consultation process with the Native American Tribes. See 65 FR 17739; SEA at 4-40-41, Appendix H.

Additionally, the FAA finds that the Air Tour Providers' allegations that the new routes are unsafe are without merit. The new routes were developed based on “airspace configurations, safety considerations, the goal of substantial restoration of natural quiet in the GCNP, economic considerations, consultation with Native American tribes” and comments received in response to the initial Notice and prior route proposals. 64 FR 37191 (July 9, 1999). As is typical when routes are change, the FAA flight checked the routes for safety. Additionally, the FAA created a computer model to assess the impact of peak conditions on the new route system. See 65 FR 17719-20. The FAA's primary concern is that air tour operators do not concentrate the use of their allocations into one season which could pose a safety concern and impede the goal of achieving substantial restoration of natural quiet. Id.

The Air Tour Providers assertion that these rules are arbitrary and capricious because they violate the Rehabilitation Act is unsubstantiated. First, the Air Tour Providers make no specific allegation as to the provisions of the Rehabilitation Act that are violated and the citation referenced in the quotation contained in the Motion is not applicable. Second, The Air Tour Providers' evidence as to the percentage of air tourists who are mobility impaired, elderly or handicapped varies dramatically depending upon which operator is providing the information. (See Statement of Brenda Halverson supporting Motion for Stay indicating that over 75% of the Air Tour Provider's clients are handicapped, mobility impaired or elderly; Statement of Ron Norman supporting Motion for Stay indicating no less than 40% of AirStar Helicopters clients account for handicapped, mobility impaired or elderly; Comments of Grand Canyon Air Tour Council, September 3, 1999, indicate that about 20% of air tourists are “physically challenged.”) The FAA noted in the Commercial Air Tour Limitations Final Rule that “over 50% of the air tour visitors to GCNP also visit the Park on the ground. Also, people who are handicapped, impaired or elderly will continue to enjoy access to the GCNP.” 65 FR 17716. Thus people who are handicapped, mobility impaired, or elderly will have the same ability to access the Grand Canyon by air as other individuals.

The Air Tour Providers also attack FAA's choice of base year for the flight limitation because the FAA did not use current data. The FAA's choice of base year was reasonable and is thoroughly discussed in the Commercial Air Tour Limitations Final Rule wherein the FAA stated:

The Air Tour Providers' assertion that the use of the base year data violates the RFA and that the FAA ignored the Small Business Administration's (SBA) comments is unsubstantiated. The SBA did not provide any comments to the docket on the final rules until December 20, 1999 where SBA presented its concerns at a meeting between the Office of Management and Budget, the FAA and representatives of the Air Tour Providers. (In fact, representatives of the Office of Economics and Policy attempted to meet with SBA several times during the time period the final rule was being drafted, but SBA was unable to attend scheduled meetings.) The comment period to the NPRM closed September 7, 1999. At the OMB meeting the SBA noted that “the use of future years, or an average of the next 2 years, might be an alternative that more accurately reflects the marketplace within the Grand Canyon tour industry and will aid in the forecasting industry growth rates.” See Administrative Record, Document 70, Comment 277. The FAA believes its analyses of the subsequent base year dispels any concern that this year was an aberration; instead it appears that the base year is part of the business cycle. See Exhibit A, Statement of Alan Stevens to Motion to Stay.

The Air Tour Providers' claim that the agencies' were arbitrary and capricious in relying upon an invalid computer sound model and biased sound data is equally unfounded. The Air Tour Providers rely on statements made by John Alberti asserting that the computer model used by the agencies is without scientific basis. To the contrary, the “FAA chose to use the Integrated Noise Model (INM) for GCNP analysis because of its: (1) Widespread scientific acceptance; (2) use of methodology that conforms to industry and international standards; (3) measurement-derived noise and performance data; (4) ability to calculate noise exposure over varying terrain elevation; and (5) adaptability and reliability for assessing a variety of situations, including GCNP noise impacts.” See SEA at 4-5—4-6. The INM is well accepted in the scientific community and meets the standards of the Society of Automotive Engineers Aerospace Information Report (Air) as well as the International Civil Aviation Organization (ICAO) Circular. See SEA at 4-6. The INM was specifically modified for GCNP purposes. These modifications, along with the aircraft and operational data inputted for modeling, assessing and predicting aircraft noise at GCNP were analyzed and explained in detail in the SEA.

The Air Tour Providers did not provide an adequate basis for their statement that the FAA relied on biased sound data. The NPS provided information on data collection in its Disposition or Comments. 64 FR 38006. Additionally, the FAA provided aircraft and operational data utilized in its noise modeling in the SEA. Again, the law is clear, the Court “will give due deference to the agency especially when the agency action involves evaluating complex scientific or statistical data within the agency's expertise.” Natural Resources Defense Council, Inc. v. EPA, 194 F.3d 130 (D.C. Cir., 1999).

Finally, as stated earlier, the final rules were issued and the accompanying SEA and Record of Decision were completed prior to the enactment of the National Parks Air Tour Management Act cited by the Air Tour Providers. Therefore, the agencies are not in violation of the law. Regardless, the INM is a reasonable and professionally accepted method for assessing and predicting aircraft noise impacts and therefore the agencies' reliance on the model and aircraft and operational data is not arbitrary and capricious.

The Air Tour Provider's assertion that the exception created for operators landing at the Hualapai reservation under contract with the Hualapai Tribe is arbitrary and capricious is contrary to law. When Congress passed the Indian Reorganization Act of 1934 an overriding purpose of that Act was “to establish machinery whereby Indian tribes would be able to assume a greater degree of self-government both politically and economically.” Morton v. Mancari et al., 417 U.S. 535, 541; 94 S.Ct. 2474 (1974). Congress in 1934 “determined that proper fulfillment of its trust required turning over to the Indians a greater control of their own destinies.” Id. at 552. The FAA determined that “the Hualapai would be significantly adversely impacted from an economic perspective if the operations limitation were applied to operators servicing Grand Canyon West Airport in support of the Hualapai Tribe.” 65 FR at 17718; see pages 17714-17715 and 17726-17727 (regarding trust responsibility and cost impact on tribe); see also Final Regulatory Evaluation at 98-110. Any operator has the opportunity to obtain the benefits of this exception (i.e., relief from allocations) provided the operator has a contract with the Hualapai Tribe and satisfies the conditions of the exception. The Hualapai decide which operators to contract with.

The exception from allocations applies to the air tour operators servicing the Hualapai Reservation. Contrary to assertions by the Air Tour Providers, this exception does not violate the Air Tour Provider's constitutional rights and in fact, the Air Tour Providers do not actually identify any constitutional rights that have been violated. Furthermore, the Air Tour Providers ignore the fact that if the Hualapai Tribe is enjoying “unparalleled economic growth,” the Air Tour Providers also are benefiting since they are providing the flight service to the Hualapai reservation.

In showing irreparable harm, “the movant must provide the proof that the harm has occurred in the past and is likely to occur again, or proof indicating that the harm is certain to occur in the near future.” Wisconsin Gas Co. v. FERC, 758 F.2d 669, 673 (D.C. Cir. 1985). The Wisconsin Court further stated that “economic loss does not, in and of itself, constitute irreparable harm.” Id. Thus, if the Air Tour Providers are in fact losing customers, it does not constitute irreparable harm since the loss of customers is due to the reduction in flights in the SFRA, which is the purpose of the flight limitation. As discussed above, the reduction in flights is necessary in order to achieve the statutory goal of substantial restoration of natural quiet and to meet the President's goal for achieving substantial restoration by 2008.

The Air Tour Providers also do not provide any direct evidence that the harm they are suffering is immediate and imminent and will occur over the next 6-9 months while this litigation is ongoing. The FAA's Commercial air tour limitations final rule became effective May 4, 2000. The operators received a full years worth of allocations for the year 2000. The operators do not provide evidence that they are close to exhausting or have exhausted these allocations and thus must stop conducting business. In fact, Mr. Alan Stevens of Grand Canyon Airlines only acknowledges the theoretical possibility that he could exhaust his allocations. See Statement of Alan Stevens at page 4. Whether the operators will then incur damages for the year 2001 is also theoretical and depends on demand for air tours during the portion of 2001 that coincides with the litigation. Thus, at this point, there is no clear evidence submitted by the Air Tour Providers that the operators currently are losing money for the year 2000 because of the allocation requirement or that they will lose money for the first half of 2001 because of this requirement. Additionally, while some of the operators' statements assert they may go out of business with the imposition of the limitations rule and the routes, they do not provide direct evidence to demonstrate that their demise is due to these rules and not to the cumulative effect of past business conditions in the market.

The Air Tour Providers also argue irreparable injury because the FAA has not minimized the impact of the longer tour routes or the “use it or lose it provision.” The FAA has attempted to minimize the impact of the longer routes to the extent possible by creating a fixed wing turnaround in the Zuni Point Corridor. The Dragon corridor contains a turnaround for helicopters. See 65 FR at 17698. With regard to the use it or lose it provision, the FAA eliminated the peak/non-peak distinction that was initially contained in the NPRM. Thus, Ron Norman's assertions that the “FAA will rescind any flight allocations that go unused during either the Peak or non-peak season” is unfounded. See Exhibit A Statement of Ron Norman at paragraph 7.

Furthermore, the FAA adopted suggestions by commenters to soften the use it or lose it provision by lengthening the time period. In fact, the FAA adopted a provision similar to Papillon's suggestion in its comments whereby after 180 days of inactivity, the operator simply sends in a letter of intent to operate that indicates why the operator did not operate for 180 days and when it intends to resume business. The operator then may have up to another 180 days to resume operations, as approved by the Flight Standards District Office. An operator would have up to 360 days of inactivity, as suggested by Air Star Helicopters in its comments. See 65 FR 17721-17722.

The FAA's Regulatory Flexibility Act analysis comports with the requirements of the RFA. See generally, Final Regulatory Evaluation, Commercial Air Tour Limitations Final Rule and Airspace Modification Final Rule, January, 2000. Providing statistical analysis to counter an agency's own analysis is not sufficient to show that an agency acted arbitrarily and capaciously since a court will “give due deference to the agency especially when the agency action involves evaluating complex scientific or statistical data within the agency's expertise.” See NRDC v. EPA 194 F.3d 130 (D.C. Cir., 1999). Furthermore, the fact that the FAA did not proceed first with the Quiet Technology Rulemaking or some other alternative now preferred by the Air Tour Providers is not indicative that the agency violated the APA. The law is clear that an “agency is entitled to the highest deference in deciding priorities among issues, including the sequence and grouping in which it tackles them.” Allied Local and Regional Manufacturers Caucus, et al., v. EPA, 215 F.3d 61 (2000). The agency provided a detailed economic analysis and RFA analysis that addressed alternatives to the adopted alternative and discussed reasons why those alternatives were not adopted. Thus it has satisfied its mandate under the RFA.

The FAA, in enacting these rules is carrying out the statutory mandate set forth in Public Law 100-91—to substantially restore natural quiet in the GCNP. It has been 12 years since the enactment of this legislation and the FAA has attempted to work with the Air Tour Providers, the Indian Tribes, the environmental groups and the National Park Service to come to a resolution with regard to the means of substantially restoring natural quiet. The FAA believes that this rule achieves the proper balance that Congress sought in adopting Public Law 100-91 between the interests of the Air Tour Providers and those of the environmental interests and makes significant gains in substantial restoration of natural quiet. See 65 FR 17713. This balance is evidenced by the fact that the government has been sued in the District of Columbia Circuit Court of Appeals for the United States by one party (Air Tour Providers) claiming the government has done too much in effecting the goal of Public Law 100-91 and by another party (Grand Canyon Trust, et al. ) claiming the government has not gone far enough in fulfilling the statutory mandate. The Air Tour Providers have not demonstrated why their interests outweigh the interest expressed by Congress in passing Public Law 100-91.

Given that the Air Tour Providers cannot prevail under either the public interest test followed by the Department of Transportation, or the Washington Metropolitan test followed by the Circuit Court, the FAA hereby denies the Air Tour Providers' Motion to Stay the final rules.

In a DFR published in the Federal Register of May 11, 2000 (65 FR 30352), FDA amended its regulations on environmental impact considerations as part of the agency's implementation of the FDA Modernization Act (FDAMA) of 1997. FDAMA amended the Federal Food, Drug, and Cosmetic Act (the act) by establishing a notification process for authorizing new uses of food additives that are food contact substances. The DFR amended the regulations in 21 CFR 25.20 to add to the list of those actions that require an environmental assessment allowing a notification submitted under section 409(h) of the act (21 U.S.C. 348(h)) to become effective and in 21 CFR 25.32(i), (j), (k), (q), and (r) to expand the existing categorical exclusions from the requirement of an environmental assessment to include allowing a notification submitted under section 409(h) of the act to become effective.

FDA solicited comments concerning the DFR for a 75-day period ending July 25, 2000. FDA stated that the effective date of the DFR would be on August 24, 2000, 30 days after the end of the comment period, unless any significant adverse comment was submitted to FDA during the comment period.

FDA received only one comment (from a trade association) on the DFR, which reiterated the association's views presented in response to an agency public meeting held prior to the initiation of this rulemaking. FDA has determined that the received comment is not a significant adverse comment for several reasons. First, in the preamble to the DFR, FDA referenced the association's prior submission and addressed its substance. Second, the comment does not dispute (or even directly address) the analysis presented in the DFR. It raises no new arguments and provides no new information for the agency's consideration. Finally, the association expressly characterizes the comment as not a “significant adverse comment” and supports the rule becoming effective as drafted.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, the amendments issued thereby became effective August 24, 2000.

The Millers Ferry Highway Swing Bridge, mile 12.1, over the Mokelumne River at Walnut Grove, CA provides 12.8 feet vertical clearance above Mean High Water when closed. Vessels that can pass under the bridge without an opening may do so at all times. This deviation has been coordinated with commercial operators and various marinas on the waterway. No objections were received.

The normal drawbridge regulation requires the bridge to open on demand, 9 a.m. to 5 p.m., May 1 through October 31; and all other times if at least 12 hours advance notice is given.

In accordance with 33 CFR 117.35(c), this work will be performed with all due speed in order to return the bridge to normal operation as soon as possible. This deviation from the normal operating regulations in 33 CFR 117.5 is authorized in accordance with the provisions of 33 CFR 117.35.

On August 28, 2000, we published a notice of proposed rulemaking (NPRM) entitled Drawbridge Operating Regulation; Gulf Intracoastal Waterway, Algiers Alternate Route, Louisiana, in the Federal Register (65 FR 52057). We received no letters commenting on the proposed rule. No public hearing was requested, and none was held.

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

The change in the regulation involves a community event of limited duration and scope. The closure involves only one bridge and alternate routes are available. No comments were received during the comment period included in the Notice of Proposed Rulemaking. No objections from waterway users have been received and the event will be published in the Local Notice to Mariners.

The State Route 23 vertical lift span drawbridge across the Gulf Intracoastal Waterway (Algiers Alternate Route), mile 3.8, at Belle Chasse, Louisiana has a vertical clearance of 40 feet above mean high water in the closed-to-navigation position and 100 feet above mean high water in the open-to-navigation position. Navigation on the waterway consists primarily of tugs with tows, commercial fishing vessels, and occasional recreational craft.

The Department of the Navy requested a rule changing the operation of the State Route 23 vertical lift span drawbridge. The change accommodates the additional volume of vehicular traffic that the New Orleans Open House Air Show generates each year. Between 150,000 and 200,000 members of the public are expected to attend the New Orleans Open House Air Show on each day. The change allows for the expeditious dispersal of the heavy volume of vehicular traffic expected to depart the Naval Air Station, Joint Reserve Base following the event. This event has been held annually on the last weekend in October. This change eliminates the necessity of having to do a rulemaking each year for this annually scheduled event.

No comments were received for the NPRM and no changes have been incorporated into the Final Rule.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not significant under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040; February 26, 1979).

The Coast Guard expects the economic impact of this rule to be so minimal that a full Regulatory Evaluation under paragraph 10(e) of the regulatory policies and procedures of DOT is unnecessary.

This is because the number of vessels impaired during the closed-to-navigation periods is minimal. All commercial vessels still have ample opportunity to transit this waterway before and after each three-hour closure on the last weekend in October. Additionally, a practical alternate route of approximately seven additional miles is available via the Harvey Canal and the Mississippi River.

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

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

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

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

We have analyzed this rule under Executive Order 13132 and have determined that this rule would not have implications for federalism under that Order. No comments were received with regards to federalism during NPRM comment period.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) governs the issuance of Federal regulations that require unfunded mandates. An unfunded mandate is a regulation that requires a State, local, or tribal government or the private sector to incur direct costs without the Federal Government's having first provided the funds to pay those costs. This rule would not impose an unfunded mandate. No comments were received with regards to unfunded mandates during NPRM comment period.

This rule would not effect a taking of private property or otherwise have taking implications under E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. No comments were received with regards to the taking of private property during NPRM comment period.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. No comments were received with regards to the taking of private property during NPRM comment period.

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

We considered the environmental impact of this rule and concluded that, under figure 2-1, paragraph (32)(e), of Commandant Instruction M16475.lC, this rule is categorically excluded from further environmental documentation. Bridge Administration Program actions that can be categorically excluded include promulgation of operating regulations or procedures for drawbridges. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

The Isleton Drawbridge, mile 18.7, over the Sacramento River, Solano County, CA, provides 18 feet vertical clearance above Mean Lower Low Water when closed. Vessels that can pass under the bridge without an opening may do so at all times. This deviation has been coordinated with commercial operators and various marinas on the waterway. No objections were received. The normal drawbridge regulation requires the bridge to open on signal from May 1 through October 31 from 6 a.m. to 10 p.m., and from November 1 through April 30 from 9 a.m. to 5 p.m. At all other times, the draws shall open on signal if at least four hours notice is given.

In accordance with 33 CFR 117.35(c), this work will be performed with all due speed in order to return the bridge to normal operation as soon as possible. This deviation from the normal operating regulations in 33 CFR 117.5 is authorized in accordance with the provisions of 33 CFR 117.35.

The Postal Service proposed changes in conditions for certain mailing categories to automatically reduce every payment transaction by 5 percent for all EMS purchased at basic published prices and paid through an EMCA.

An EMCA is an advanced deposit account developed for Express Mail that enables customers to deposit funds with the Postal Service for payment of anticipated future Express Mail mailings. Express Mail Corporate Accounts can be used for domestic and international Express Mail. The discount is available only for Express Mail sent internationally. Federal agencies are eligible for the discount. The discount is deducted from the total postage amount on the mailer's monthly account, rather than for each piece.

The 5 percent discount is offered on postage only; it does not apply to pickup fees, any special fees, nor postage for shipments being made under an International Customized Mail agreement.

As required under the Postal Reorganization Act, this change results in conditions of mailing that do not apportion the costs of service, so the overall value of the service to its users is fair and reasonable, and not unduly or unreasonably discriminatory or preferential.

The Postal Service received no comments in response to its proposal published in the Federal Register on August 7, 2000 (65 FR 48171). Accordingly, the Postal Service hereby implements the 5 percent discount and amends the International Mail Manual (IMM), which is incorporated by reference in the Code of Federal Regulations. See 39 CFR 20.1.

On May 15, 2000, the State of California requested a one-year attainment date extension for the San Diego serious ozone nonattainment area. This area, which consists of San Diego County, is currently designated a serious ozone nonattainment area. The statutory ozone attainment date, as prescribed by section 181(a) of the Clean Air Act as amended in 1990 (“the Act”), was November 15, 1999.

Section 107(d)(4) of the Act required the States and EPA to designate areas as attainment, nonattainment, or unclassifiable for ozone as well as other pollutants for which national ambient air quality standards (NAAQS) have been set. Section 181(a)(1) required that ozone nonattainment areas be classified as marginal, moderate, serious, severe, or extreme, depending on their air quality.

In a series of Federal Register documents, we completed this process by designating and classifying all areas of the country for ozone. See, e.g., 56 FR 58694 (Nov. 6, 1991), and 57 FR 56762 (Nov. 30, 1992). San Diego County was originally classified as severe, but was reclassified as serious based upon our determination that the ozone value used in the original classification was incorrect. See 60 FR 3771 (Jan. 19, 1995).

Areas designated nonattainment for ozone are required to meet attainment dates specified under the Act. As noted, the San Diego ozone nonattainment area was reclassified as serious. By this classification, its attainment date became November 15, 1999. A discussion of the attainment dates is found in EPA's General Preamble for Implementation of Title I of the Clean Air Act Amendments of 1990. See 57 FR 13498 (April 16, 1992).

Section 181(b)(2)(A) requires the Administrator, within six months of the attainment date, to determine whether ozone nonattainment areas attained the NAAQS. For ozone, we determine attainment status on the basis of the expected number of exceedances of the NAAQS over the three-year period up to, and including, the attainment date. See General Preamble, 57 FR 13506. In the case of serious ozone nonattainment areas, the three-year period is 1997-1999.

A review of the actual ambient air quality ozone data from the EPA Aerometric Information Retrieval System (AIRS) shows that three air quality monitors located in the San Diego ozone nonattainment area recorded exceedances of the NAAQS for ozone during the three-year period from 1997 to 1999. 1 (See Table 1.) There were 9 exceedances at the Alpine monitor, an average of more than 1.0 over the three-year period, which constitutes a violation of the ozone NAAQS for the San Diego area during this three-year period. Thus, the area did not meet the November 15, 1999 attainment date.

CAA section 181(b)(2)(A) states that, for areas classified as marginal, moderate, or serious, if the Administrator determines that the area did not attain the standard by its attainment date, the area must be reclassified upwards. However, CAA section 181(a)(5) provides an exemption from these bump up requirements. Under this exemption, we may grant up to 2 one-year extensions of the attainment date under specified conditions:

Upon application by any State, the Administrator may extend for 1 additional year (hereinafter referred to as the “Extension Year”) the date specified in table 1 of paragraph (1) of this subsection if—

(A) the State has complied with all requirements and commitments pertaining to the area in the applicable implementation plan, and

(B) no more than 1 exceedance of the national ambient air quality standard level for ozone has occurred in the area in the year preceding the Extension Year.

No more than 2 one-year extensions may be issued under this paragraph for a single nonattainment area.

We interpret this provision to authorize the granting of a one-year extension under the following minimum conditions: (1) The State requests a one-year extension; (2) all requirements and commitments in the EPA-approved SIP for the area have been complied with; and (3) the area has no more than one measured exceedance of the NAAQS during the year at any one monitor that includes the attainment date (or the subsequent year, if a second one-year extension is requested).

We have determined that the requirements for a one-year extension of the attainment date have been fulfilled as follows:

(1) California has formally submitted the attainment date extension request, in a letter dated May 15, 2000, from Michael P. Kenny, Executive Officer, California Air Resources Board, to P. Kenny, Executive Officer, California Air Resources Board, to Felicia Marcus, EPA Regional Administrator, Region 9.

(2) California is currently implementing the EPA-approved SIP. The State's letter, cited above, discusses implementation of State measures in the SIP, and shows that these measures plus new State measures have achieved an overall surplus of emission reductions beyond those assumed in the SIP. The State also attached a letter dated March 13, 2000, from R. J. Sommerville, Director, San Diego County Air Pollution Control District, which provides evidence that all District SIP rules have been fully implemented.

(3) California has certified that the area has monitored no exceedances during 1999. This is also reflected in the quality-assured ambient ozone data shown in Table 1 above.

Because the statutory provisions have been satisfied, we approve California's attainment date extension request for the San Diego ozone nonattainment area. As a result, the chart in 40 CFR 81.305 entitled “California—Ozone” is being modified to extend the attainment date for the San Diego ozone nonattainment area from November 15, 1999, to November 15, 2000.

We are approving the attainment date extension without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, elsewhere in the proposed rule section of today's Federal Register we are publishing a proposal to approve this part 81 action should adverse or critical comments be filed. This action will be effective December 11, 2000 unless before November 13, 2000 adverse or critical comments are received.

If we receive such comments, this action will be withdrawn before the effective date by publishing a subsequent document that will withdraw the final action. All public comments received will then be addressed in a subsequent final rule based on this action serving as a proposed rule. We will not institute a second comment period on this action. Any parties interested in commenting on this action should do so at this time. If no such comments are received, the public is advised that this action will be effective on December 11, 2000.

Nothing in this action should be construed as permitting or allowing or establishing a precedent for any future request for revision to any state implementation plan. Each request for revision to the state implementation plan shall be considered separately in light of specific technical, economic, and environmental factors and in relation to relevant statutory and regulatory requirements.

The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 12866, entitled “Regulatory Planning and Review.”

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

This rule is not subject to Executive Order 13045 because it does not involve decisions intended to mitigate environmental health or safety risks.

Under Executive Order 13084, Consultation and Coordination with Indian Tribal Governments, EPA may not issue a regulation that is not required by statute, that significantly affects or uniquely affects the communities of Indian tribal governments, and that imposes substantial direct compliance costs on those communities, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments. If the mandate is unfunded, EPA must provide to the Office of Management and Budget, in a separately identified section of the preamble to the rule, a description of the extent of EPA's prior consultation with representatives of affected tribal governments, a summary of the nature of their concerns, and a statement supporting the need to issue the regulation.

In addition, Executive Order 13084 requires EPA to develop an effective process permitting elected and other representatives of Indian tribal governments “to provide meaningful and timely input in the development of regulatory policies on matters that significantly or uniquely affect their communities.” Today's rule does not significantly or uniquely affect the communities of Indian tribal governments. Accordingly, the requirements of section 3(b) of Executive Order 13084 do not apply to this rule.

Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) revokes and replaces Executive Orders 12612, Federalism and 12875, Enhancing the Intergovernmental Partnership. Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation.

This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely approves a state request for an attainment date extension, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions.

Extension of an area's attainment date under the CAA does not impose any new requirements on small entities. Extension of an attainment date is an action that affects a geographical area and does not impose any regulatory requirements on sources. EPA certifies that the approval of the attainment date extension will not have a significant economic impact on a substantial number of small entities.

Under Section 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated annual costs to State, local, or tribal governments in the aggregate; or to private sector, of $100 million or more. Under Section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule.

EPA has determined that the promulgated attainment date extension does not include a Federal mandate that may result in estimated annual costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

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

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical.

The EPA believes that VCS are inapplicable to this action. Today's action does not require the public to perform activities conducive to the use of VCS.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 11, 2000. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Copies: To order copies of the Federal Register containing this document, send your request to: New Orders, Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date of the issue requested and enclose a check or money order payable to the Superintendent of Documents, or enclose your Visa or Master Card number and expiration date. Credit card orders can also be placed by calling the order desk at (202) 512-1800 or by faxing to (202) 512-2250. The cost for each copy is $8. As an alternative, you can view and photocopy the Federal Register document at most libraries designated as Federal Depository Libraries and at many other public and academic libraries throughout the country that receive the Federal Register .

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

Medicare services are furnished by two types of entities, providers and suppliers. The term “provider”, as defined in our regulations at 42 CFR 400.202, means a hospital, a critical access hospital, a skilled nursing facility, a comprehensive outpatient rehabilitation facility, a home health agency, or a hospice, that has in effect an agreement to participate in Medicare. A clinic, a rehabilitation agency, or a public health agency that has in effect a similar agreement but only to furnish outpatient physical therapy or speech pathology services, or a community mental health center with a similar agreement to furnish partial hospitalization services, is also considered a provider (see sections 1861(u) and 1866(e) of the Social Security Act (the Act) concerning definitions and provider agreements, respectively).

Generally, a Medicare “supplier” is an individual or entity that furnishes certain types of medical and other health items and services under Medicare Part B. There are different types of suppliers and thus, different definitions of the term “supplier,” as well as specific regulations governing the different types of suppliers. A supplier that furnishes durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) is one category of supplier known as a DMEPOS supplier.

In current regulations at § 424.57(a) concerning payment rules for items furnished by DMEPOS suppliers, we define the term “supplier” as an entity or individual, including a physician or Part A provider, that sells or rents Part B covered items to Medicare beneficiaries, and that meets certain standards. The Part B covered items to which the definition refers are DMEPOS.

Section 131 of the Social Security Act Amendments of 1994 (Public Law 103-432, enacted on October 31, 1994) made changes to section 1834 of the Act, “Special Payment Rules for Particular Items and Services.” Specifically, it added a new subsection (j) to section 1834 of the Act that established additional requirements that a DMEPOS supplier must meet in order to obtain a supplier number. (A “supplier number” is the equivalent of a “billing number” that a supplier must have in order to submit claims and receive payment for items and services furnished under Medicare.) In section 1834(j)(1)(B)(ii)(IV) of the Act, the Congress also expressly delegated authority to the Secretary to specify any other requirements that a supplier must meet.

On January 20, 1998, we published in the Federal Register (63 FR 2926) a proposed rule that would require DMEPOS suppliers to meet additional standards in order to submit claims and receive payment. We issued the proposal on the basis of section 1834(j)(1)(B)(ii)(IV) of the Act that authorizes the Secretary to specify additional requirements a DMEPOS supplier must meet. We note that we consulted with representatives of medical equipment and supply companies, carriers, and consumers before issuing the proposal.

As we stated in the proposed rule, we believe it was the Congress' intent in enacting section 131 of the Social Security Act Amendments of 1994 to strengthen existing standards in order to protect the public interest. We also stated our belief that the additional standards we proposed would help safeguard the Medicare program and would serve to protect beneficiaries.

The major provisions of the proposed rule are as follows:

We proposed changes to clarify our current policy concerning certification and recertification for DMEPOS. Specifically, we proposed that in order to obtain a supplier number, a supplier must complete an application certifying that it meets the supplier standards found in § 424.57(c). Additionally, we proposed that when renewing an application for a DMEPOS supplier billing number, a supplier must recertify that it meets all of the supplier standards.

We proposed new standards and revisions to existing standards relating to the following subject areas:

• Compliance with Medicare statutory provisions and applicable regulations.

• Compliance with applicable Federal and State licensure and regulatory requirements.

• Misrepresentation of facts.

• Signature used on a supplier number application.

• Providing requested information and documentation.

• Scope of exclusions.

• Rental or purchase option.

• Warranties.

• Delivery.

• Reassignment of supplier numbers.

• Physical facility.

• Business telephone.

• Liability insurance.

• Telemarketing.

• Prescription drugs.

We also proposed to require that DMEPOS suppliers obtain a surety bond. We based this requirement on section 1834(a)(16) of the Act which requires DME suppliers to provide the Secretary, on a continuing basis, with a surety bond. We requested comments on the advisability of exercising this authority to impose a surety bond on all suppliers of prosthetics, orthotics, and supplies to the same extent as required for suppliers of durable medical equipment.

We received 120 comments on the proposed rule primarily from suppliers of DMEPOS and organizations representing various types of DMEPOS suppliers. A summary of the comments and our responses to them follow.

Comment: One commenter requested that an exception be granted to the effective date provision in a change of ownership situation. The commenter was referring to the statement in the proposed rule that Medicare will not pay for any Medicare covered items provided by a DMEPOS supplier prior to the date HCFA issues a DMEPOS supplier number. The commenter suggested that in the case of a change of ownership, Medicare should pay for covered services as of the date of acquisition.

Response: We are aware of the change of ownership issue. However, at this time we are not prepared to include a change of ownership provision in this final regulation. We plan to address change of ownership issues in a separate rulemaking.

Comment: One commenter stated that a supplier should not receive multiple billing numbers for the same physical location, regardless of how many tax ID numbers they possess.

Response: This suggestion is problematic, in that the Internal Revenue Service (IRS) Employer Identification Number (EIN) is the basic identification number that we use to distinguish between suppliers. Suppliers also may obtain multiple EINs for different lines of business.

We note that section 1834(j)(1)(D) of the Act states that “The Secretary may not issue more than one supplier number to any supplier of medical equipment and supplies unless the issuance of more than one number is appropriate to identify subsidiary or regional entities under the supplier's ownership or control.” Therefore, we encourage suppliers to request only one supplier number per physical location. However, we are not prepared at this time to forbid multiple billing numbers based on multiple EINs if we can establish through a site visit or other means that clearly distinct lines of business are being conducted at a location. In this final rule, we are adding a new paragraph (b)(1) to § 424.57 to require suppliers to enroll separate physical locations, other than warehouses or repair facilities.

Comment: One commenter suggested that we require immediate recertification of all suppliers based on the new standards.

Response: This would create a heavy administrative burden on both HCFA and the suppliers. As we stated in the proposed rule, we will not require all DMEPOS suppliers to submit new applications for billing numbers on the date this regulation becomes effective, but will require DMEPOS suppliers to submit new applications as the old numbers expire. Although we may not routinely check to determine the compliance of current suppliers with new standards, it is important to note that as of the effective date of this regulation, December 11, 2000, all DMEPOS suppliers must comply with these standards. We may perform random or focused reviews of previously enrolled suppliers to determine their compliance with the new standards. We may revoke a supplier number if we find evidence that the standards are not satisfied.

Comment: One commenter stated that physicians should be exempt from supplier standards because they have to meet similar standards in order to be licensed.

Response: While physicians are required to meet State licensing requirements, these may vary by State, and do not necessarily apply to physicians while they are functioning as suppliers. More importantly, standards are different for physicians than suppliers. Therefore, we decline to exempt physicians from the requirements.

Comment: One commenter suggested that HCFA provide a list of the requirements that a supplier would need in order to comply with this standard.

Response: We have not accepted this suggestion. The intent of this standard is to ensure that the supplier meets all Medicare requirements that may apply. The standard is essentially a restatement of section 1834(j)(1)(B)(ii)(I) of the Act. We note that we do make extensive efforts to educate suppliers on the requirements they must meet through manuals, bulletins, seminars, and other means.

Comment: One commenter stated the standard requiring that a supplier must operate its business and furnish Medicare covered items in compliance with all applicable Federal and State licensure and regulatory requirements is vague and excessive. Additionally, one commenter stated that when Medicaid requirements are stricter than Medicare's, we should use the Medicaid requirements. One commenter also suggested that we allow no exceptions to State licensing requirements. One commenter recommended that consideration be given to waiving Federal standards where applicable State safeguards exist. The commenter added that complying with layers of rules adds confusion, cost, and diverts resources from clinical functions to administrative functions.

Response: This requirement is merely a restatement of the law—see section 1834(j)(l)(B)(ii)(I) of the Act. While we agree with the philosophy of requiring suppliers to meet the highest possible standards, it would introduce an increased level of complexity and administrative burden on providers operating in more than one State to meet different requirements in different States in order for the supplier to bill Medicare. For this reason, we have declined to pursue this option. We will take under consideration the possibility of granting waivers, from parts of the National Supplier Clearinghouse (NSC) review process (for example, site visits), to suppliers who are certified or licensed by States with sufficiently stringent requirements. We intend to allow no exceptions to applicable State licensing requirements.

The proposed standard states that a supplier must not make, or cause to be made, any false statement or misrepresentation of a material fact on an application for a billing number. A supplier must provide complete and accurate information in response to questions on its application for a billing number. Any changes in information supplied on the application must be reported within 35 days of the change.

Comment: One commenter stated that this standard needs further clarification. One commenter requested a definition of “false statement” and “misrepresentation”. Also, one commenter suggested that the application form use simple, clear terminology to provide unambiguous guidance as to the information required.

Response: This standard is now located at § 424.57(c)(2). We are not providing definitions of the terms “false statement” and “misrepresentation”. These are not technical terms and carry the common meaning normally associated with them. We will continue to develop the application form to be as clear, simple and unambiguous as possible. We note that we are revising the time frame allowed to a supplier to report changes to the information supplied on the application form. We are changing the proposed “35 days” to “30 days” to be consistent with the standard established through the application form. In addition to revocation of the billing number, if the supplier knowingly fills out the application incorrectly (for example, misrepresentation of facts or failure to report critical information) the supplier may be subject to civil and criminal penalties for submitting a false statement in connection with a health care matter.

Comment: One commenter suggested that HCFA should clarify that the signature does not have to be that of an officer of the company, but of a responsible official with first hand knowledge of the requirements listed on the application.

Response: We have not changed the proposed language because we believe that the specificity suggested by the commenter is addressed in the instructions for the DMEPOS application form (Form HCFA-855S). This standard is now located at § 424.57(c)(3). Those instructions specify that the application must be signed by an authorized representative of the supplier. An authorized representative is defined as “The appointed official (for example, officer, chief executive officer, general partner, etc.) who has the authority to enroll the entity in Medicare or other Federal health care programs as well as to make changes and/or updates to the applicant's status, and to commit the corporation to Medicare or other Federal health care program laws and regulations.” We believe this requirement protects the integrity of the supplier's information and makes the supplier accountable for its dealings with the Medicare program.

This section, as published in the January 20, 1998 proposed rule, stated that a supplier must agree to furnish to HCFA all information or documentation HCFA requires, including—

• Information or documentation needed to process or adjudicate Medicare claims;

• Upon request, copies of contracts with third parties for furnishing Medicare covered items to Medicare beneficiaries;

• Upon request, documentation that it has advised beneficiaries that they may either rent or purchase inexpensive or routinely purchased equipment and about the purchase option for capped rental equipment;

• Upon request, documentation that it has advised Medicare beneficiaries about Medicare covered items covered under warranty;

• Upon request, documentation demonstrating that it has delivered Medicare covered items to Medicare beneficiaries;

• Upon request, documentation that it maintains and repairs directly, or through a service contract with another company, Medicare covered items rented to beneficiaries;

• Upon request, proof of liability insurance; and

• Any other information required by this or other Medicare requirements.

Comment: Several commenters stated that the intent of the requirement to furnish copies of contracts (proposed § 424.57(c)(5)(ii)) is unclear. Several commenters also objected to requiring Health Maintenance Organizations (HMO) and Managed Care Organizations (MCO) contracts. Many commenters stated that Medicare has no right to “Most Favored Nation” treatment. One commenter requested clarification of the requirement pertaining to contracts for the delivery of items.

Response: Regarding the comments concerning copies of contracts with third parties for furnishing Medicare covered items to Medicare beneficiaries, we never intended to require information that would lead to “Most Favored Nation” treatment. (By “Most Favored Nation” treatment we believe the commenter is referring to a situation in which the seller gives the purchaser a better price than he or she gives any of the seller's other customers.) We think the commenter believes that we intend to gain special privileges for the Medicare program. We only expect assurance of the supplier's compliance with the provisions currently shown in § 424.57(c)(6). Medicare pays based on the lower of the supplier's actual change or the fee schedule. We also do not require copies of HMO/MCO contracts. We have clarified this standard to require only copies of contracts that a supplier has with other entities that deliver supplies to Medicare beneficiaries on the supplier's behalf or that provide supplies to the supplier for use in providing items to Medicare beneficiaries. This would include arrangements for providing componentry. Note, however, that the standard in proposed § 424.57(c)(3), requires a contract if the supplier has no inventory of its own. This standard is now located at § 424.57(c)(4).

Comment: Several commenters questioned the type of documentation required by HCFA and whether beneficiaries would have to sign the documents. A number of commenters suggested that we remove redundancy by including the documentation requirements in the specific standards to which they apply.

Response: Neither the proposal nor this final rule specifies that the beneficiary has to sign documents under this requirement. As suggested by the commenters, we have moved most of the documentation requirements to the specific standards to which they apply, for clarity and to eliminate redundancy.

Comment: With respect to the standard requiring documentation advising beneficiaries that they may either rent or purchase inexpensive or routinely purchased equipment, one commenter objected to additional documentation requirements and paperwork because most beneficiaries prefer to purchase inexpensive and routinely purchased equipment. The commenter believed that HCFA would increase the cost of processing claims if patients rented equipment up to the purchase price, when by physician order, other medical documentation, or expected length of need, one would anticipate usage beyond the months required to reach the purchase price. In addition, the standard would require that the purchase option for capped rental equipment must be given to the beneficiary and documented. The commenter stated that a conversation is usually held with the beneficiary at the time they receive a capped rental item, in order to ensure that they understand the equipment is owned by the supplier until such time as the purchase option is offered in the tenth month. At the tenth month, the purchase option letter is forwarded to the beneficiary, and suppliers customarily make every effort to communicate with the beneficiary with regard to the purchase or continued rental option. The commenter believed that this section of the standards is unnecessary because the purchase option letter should fulfill the need for this documentation.

Response: We have not specified any additional documentation requirements and paperwork. A purchase option letter is one way to document compliance with this requirement. The requirements for the purchase option are spelled out in § 414.229(d) of this part and in section 1834(a)(7)(A) of the Act. It is not the intent of this regulation to address the purchase option requirement other than to state that it must be met and documented.

Comment: With respect to the standard requiring documentation advising beneficiaries about Medicare covered items covered under warranty, one commenter questioned whether the supplier has to obtain a signed statement to this effect from the beneficiary, pointing out that it would add to the cost of providing services to Medicare patients.

Response: A signed statement by the beneficiary is not necessary to comply with this requirement. We will also consider other documentation, such as delivery logs and copies of warranty information provided to beneficiaries.

Comment: With respect to the standard requiring documentation that the supplier has delivered Medicare covered items to Medicare beneficiaries, several commenters asked what is considered reasonable documentation for orthotic and prosthetic devices and services because there are no delivery slips as there are in DME.

Response: We believe it is reasonable to require a receipt for delivery of an orthotic or prosthetic device if they are not routinely provided items.

Comment: With respect to the standard requesting any other information required by this or other Medicare requirements, several commenters stated that this requirement needs limits, otherwise it will generate meaningless paper. Several commenters stated that we should follow the rules in 42 CFR 300 et. seq. concerning access to records and contracts between suppliers and subcontractors. One commenter stated that we cannot argue that we are entitled to greater access to information and documentation from Part B suppliers than from Part A suppliers' subcontractors. One commenter suggested that we add a requirement for telephone logs showing contacts with physicians, regarding physicians orders, and with beneficiaries and that we should require a list of delivery charges billed to Medicare or the beneficiary. One commenter stated that they had no objection to this requirement as long as the information required is referenced in the Medicare Carriers Manual and the DMERC supplier manual.

Response: We concur with much of the comment and are clarifying this requirement. Specifically, we are requiring that a supplier must agree to furnish to HCFA any information required by this or other applicable Medicare statute and regulations. We believe the references to 42 CFR 300ff should have been to 42 CFR 420.304, which contain the procedures that the Department of Health and Human Services follows in obtaining access to books, documents, and records in order to verify the costs of subcontractor services to a Medicare supplier. Although the procedures are reasonable for the purposes to which they are addressed, we believe that the changes we have made are a reasonable accommodation to purposes addressed in this regulation.

We disagree with the comment that we are not entitled to greater access to information from suppliers than from suppliers' subcontractors. The Congress specifically gave us authority with respect to DMEPOS suppliers in section 1834(j) of the Act.

Although we consider the maintenance of telephone logs for physician and beneficiary contacts good business practice, we are not prepared at this time to mandate their use because there may be other means to satisfy the requirements. We also are not prepared to require information on delivery charges. We will consider referencing the information required in the suggested manuals.

Comment: With regard to the standard prohibiting a supplier from contracting with entities excluded from the Medicare program, one commenter stated that it may be necessary to contract with excluded entities in some situations—for example, if there is limited availability. Several commenters stated that it is unreasonable to expect that health care suppliers be able to accurately avoid such entities. They have no source to obtain this information and would, therefore, have to rely solely on the word of the subcontractor, which might not be accurate. Therefore, such policing activity should be the responsibility of HCFA. One commenter questioned the impact this requirement would have on inventory on-hand and servicing items under warranty.

Response: Information on excluded entities is available from the Government Printing Office and from the HHS Office of Inspector General (OIG). The OIG web site shows sanctioned entities. The web site address is: http//www.hhs.gov/progorg/oig/cumsan/index.htm. Allowing an excluded entity to contract with a Medicare supplier and indirectly receive Medicare funds because they are a source of items of limited availability would place the entity above the law because of this scarcity. We believe that the marketplace would soon adapt to fill this need, or that suppliers can be resourceful enough to find other accommodations. We would also expect suppliers to take reasonable steps to determine if an entity with which they have a contractual arrangement is excluded or debarred. The standard is now located at § 424.57(c)(4).

Comment: One commenter suggested that we revise the standard stating that a supplier must advise beneficiaries that they may either rent or purchase inexpensive or routinely purchased equipment and of the purchase option for capped rentals. The commenter suggested that the standard give suppliers the discretion of making the decision on whether to rent or purchase based on the length of need estimated by the ordering physician. A related issue is that warranty information should be provided to beneficiaries at the time the title to an item transfers. Including warranty information in the explanation of capped rental may serve to further confuse beneficiaries. Additionally, several commenters suggested that we clarify that this standard applies only to the inexpensive or routinely purchased and capped rental DME categories—and not other items, such as home dialysis supplies and equipment.

Response: This standard is merely a reinforcement of our regulations at § 414.229(d) which refer to the purchase option on capped rental items, and the statute, at section 1834(a)(7) of the Act referring to payment for other items of DME. Since it is the beneficiary's decision whether to rent or purchase items, the supplier must explain the ramifications of this decision to the beneficiary at the required points in time to help the beneficiary make an informed decision. We are clarifying the standard in this final rule to state that it applies only when DME items are provided. This standard is now located at § 424.57(c)(5).

This proposed standard states that a supplier must honor all warranties, expressed and implied under applicable State law. A supplier must not charge the beneficiary or the Medicare program for the repair or replacement of Medicare covered items or for services covered under warranty.

Comment: One commenter suggested that the supplier be required to give the beneficiary a list of the warranty periods for all products sold by that supplier. This provides the beneficiary with full disclosure and ensures basic supplier compliance with the standard. One commenter suggested that warranty information be provided to beneficiaries at the time the title to an item transfers. Another commenter requested that this documentation be provided as part of the delivery document, rather than a separate notice.

Response: With regard to the suggestion about providing a complete list of warranties, we think that this requirement is too onerous for larger suppliers. We do not specify at what point in time the warranty information is to be provided—at the time of delivery or at time of transfer of title both seem to be reasonable points of time. This standard is located at § 424.57(c)(6).

Comment: One commenter suggested that this standard covers equipment components only. The commenter noted that the cost of repair or replacement not only includes the cost of the actual component(s), but also the extensive labor to remove the old units, install the new, refit and possibly realign the device. In addition, the commenter stated that the warranty from the manufacturer covers only the component costs. A related comment stated that, while the warranty provisions that were set forth in the proposed rule may make sense for off-the-shelf items, they create anomalies for customized devices. Medicare fees for orthotics and prosthetics devices include evaluation, fitting, costs of components, and repairs due to normal wear and tear for 90 days when not necessitated by changes in the residual limb or the patient's functional capabilities. Medicare fees do not include professional service charges for repairs beyond 90 days even though the manufacturer's warranty for parts may exceed 90 days. The commenter suggested that it is in the best interest of the Medicare program to pay the labor cost to replace a component part of a device rather than replace the entire device; therefore, the rules should clarify that the professional service costs to evaluate, fit, disassemble and reassemble an orthotic or prosthetic component covered under a manufacturer's warranty is a covered service.

Response: Medicare does not cover maintenance and servicing of equipment when such services are covered under warranty. Medicare does not make separate payment for “fees” charged to process warranty items, paperwork, etc. These fees have been built into the reimbursement rate. We do make payments for maintenance and servicing of equipment after the warranty has expired.

This proposed standard stated that a supplier must be responsible for the delivery of Medicare covered items to beneficiaries. A supplier must provide beneficiaries with necessary information and instructions on how to use Medicare covered items safely and effectively.

Comment: One commenter stated that the capability of providing proof of delivery exists only when someone is at a beneficiary's home to sign for each delivery. They recommended, instead, that proof of delivery may be maintained by drivers in their individual daily “log worksheets,” as well as in the bills of lading for the supplies and equipment that are delivered. One commenter suggested that we include persons who are hearing impaired or have other disabilities. One commenter stated that, in some situations, instructions on how to use Medicare covered items are provided by physicians or other facilities (an ESRD facility, for example), so that the supplier is not directly responsible. One commenter urged that we coordinate any further developments of these standards with the Food and Drug Administration (FDA), insofar as they involve product information that is made available to the public. One commenter stated that instructions often are verbal rather than written, so that documentation in the medical record should suffice.

Response: It is our intention that all beneficiaries, including beneficiaries who are hearing impaired, or have other disabilities, always receive the necessary information to safely and effectively use the items they receive. We recognize that this may be accomplished through different means. This requirement can be satisfied as long as the supplier can establish that the necessary training/instructions have been delivered at an appropriate time and in an appropriate manner. We are modifying the language of this standard to clarify that a supplier must document that it, or other qualified parties, has provided the beneficiaries with necessary information and instructions at an appropriate time. This standard is now located at § 424.57(c)(12). When questions arise on the use of products, we consult with the FDA.

Comment: One commenter stated that the standard stating that a supplier must maintain and repair directly, or through contract, Medicare covered items it has rented to beneficiaries does not address the issue of whether a supplier may function under the manufacturer's warranty and meet the standard, that is, instead of repairing the item, the supplier simply replaces the product and returns the item in need of repairs to the manufacturer. Another commenter questioned how this was to be documented and what level of repair is needed.

Response: We are modifying this standard, now located at § 424.57(c)(14), to allow suppliers to replace items and to clarify that the level of repair should be sufficient that the item functions as required and intended.

This proposed standard states that a supplier must accept returns from beneficiaries of substandard (less than full quality for the particular item) or unsuitable items (inappropriate for the beneficiary at the time it was fitted and/or sold).

Comment: One commenter suggested that the supplier should be required to maintain a log of all returns from beneficiaries of substandard or unsuitable items. This would be helpful to ensure compliance with the standard. Another commenter suggested that the standard needed a time limit. One commenter stated that, if an item is ordered by a physician and used by the beneficiary, a supplier should not be required to accept returns if the beneficiary no longer wants the item for reasons other than quality.

Response: While we agree that such a log would be helpful in verifying compliance, we believe that such a mechanism is not the only method for ensuring compliance. Therefore, we have not modified this standard. This standard is located at § 424.57(c)(15). With regard to the comments regarding time limits and reasons for return, this standard has been in place since December 11, 1995 with few problems. Since the revision suggested regarding time limit contained no suggestion for a time limit, and we received no other suggestions, we are retaining the requirement without change. We also believe the requirement is clear enough with regard to the intent that it is the quality or suitability of the item that must determine whether it should be returnable. If necessary, we will address this last issue through program instructions.

This proposed standard states that a supplier must maintain a physical facility on an appropriate site. The physical facility must contain space for storing business records including the supplier's delivery, maintenance, and beneficiary communication records. For purposes of this requirement, a post office box or commercial mailbox is not considered a physical facility.

Comment: One commenter suggested that all suppliers need to be in compliance with the Americans with Disabilities Act and be beneficiary accessible. The requirement should apply to both commercial business and residential locations. The commenter also stated that the standard should require that the business have a sign and have hours of operation posted.

Response: Medicare suppliers must meet all laws and regulations that might apply to them, including any applicable provisions of the Americans with Disabilities Act. This is provided for under the standard at § 424.57 (c)(1), which requires that suppliers operate their business in compliance with all applicable Federal and State licensure and regulatory requirements. The requirements apply whether the supplier is located at a commercial location or a residence, because it is still a business. In response to the comment concerning the posting of a sign and hours of operation, we are adding to this final rule a statement at § 424.57(c)(8), that the supplier location must be accessible during reasonable business hours to beneficiaries and to HCFA, and must maintain a visible sign and posted hours of operation.

Comment: One commenter suggested that this standard should restate the guidance established in title XVIII of the Act that only one supplier number is allowed per location, regardless of whether multiple Tax Identification Numbers are obtained. This would eliminate numerous questionable supplier operations in which several supplier numbers are located at the same address. Another commenter suggested that HCFA develop protocols for conducting an on-site inspection of every entity that submits an initial application for a supplier number prior to approving the application. One commenter stated that some suppliers have no physical facility where they treat clients, placing the commenter at a competitive disadvantage because he had a large and ongoing investment in real estate, tools, supplies, equipment, etc. Several commenters suggested that HCFA exempt national concerns with central sites for record storage from this requirement, or more clearly define the objectives underlying this requirement as a performance specification, and allow companies to satisfy the government's needs in other ways. One commenter stated that warehouses should not be covered by the standards.

Response: As previously noted in describing our changes to § 424.57(c)(6), section 1834(j)(1)(D) of the Act states that the Secretary may not issue more than one supplier number to any supplier of medical equipment and supplies unless the issuance of more than one number is appropriate to identify subsidiary or regional entities under the supplier's ownership or control. We are adding a sentence to state that in the case of a multi-site supplier, records may be maintained at a centralized location. A supplier must demonstrate a legitimate need for additional numbers. With regard to the physical site requirement, it is not our intention to ensure that no entities have competitive advantage over others. This is a natural by-product of the marketplace and business environment. Our intention is to ensure that we do business with legitimate entities who can provide safe and effective service to Medicare beneficiaries. We recognize that some suppliers may have multiple sites from which they do business, and may maintain records at one central site. Such suppliers may supply evidence of such recordkeeping, as long as the central site is an enrolled Medicare supplier site or represents a central function of a larger corporation of which the supplier is a part. We note that locations serving simply as warehouses are not subject to these standards.

This proposed standard states that a supplier must maintain a primary business telephone at the physical facility. This telephone number must be listed under the name of the business and in the business portion of the local telephone company directory. The exclusive use of a beeper number, answering service, pager, facsimile machine, car phone, or an answering machine may not be used as the primary business telephone.

Comment: Several commenters strongly supported the standard requiring a supplier to maintain a business telephone at the physical facility where it does business. One commenter, however, noted that some suppliers maintain centralized customer service lines. A strict interpretation of the proposed standard would preclude this practice. Likewise, many suppliers maintain warehouse locations that are not used for retail customers. These types of locations should not be subject to the telephone standard because appropriately trained customer service representatives would not be available to respond to the public's questions. The commenters suggested that HCFA should modify the proposed regulation to state that the telephone standard would not apply in the above scenarios. One commenter noted that telephone directories are normally published annually, contracts for inclusion are made several months in advance. Therefore, unless the regulations allow adequate time for suppliers to comply with the requirement, they will not be able to meet the standard.

Response: We recognize the practices of large organizations with regard to centralized telephone service as well as centralized records. Therefore, we are modifying the standard now at § 424.57(c)(9) to permit the use of toll free numbers that may not be listed in the business portion of the local telephone directory. Documentation of a paid application for a telephone listing will be considered to meet this requirement. However, the telephone number itself must be in place and available through the telephone company's directory services (information).

This proposed standard states that a supplier must have a comprehensive liability insurance policy that covers both the supplier's place of business and any and all customers and employees of the supplier.

Comment: One commenter suggested that, if we feel that minimum coverage of $500,000 is adequate for most businesses, then state it clearly as part of the standard requiring that suppliers have a comprehensive liability insurance policy. Experience has indicated that most suppliers and many agents are confused by the lack of such guidance. Another commenter suggested that $300,000 was adequate for the types of businesses under consideration. Several commenters supported this requirement and some suggested that suppliers of custom devices should be required to have professional and product liability insurance to protect the patient and themselves. One commenter stated that national, publicly traded companies with large assets maintain adequate insurance and reinsurance coverages through multiple carriers, but that coverage necessarily includes self-insured retentions. The commenter further stated that HCFA should make it clear that corporations with assets in excess of some fixed amount should not be required to change their insurance profile to satisfy this requirement. Another commenter stated that HCFA's general description of the required “comprehensive liability insurance policy” is inadequate. The commenter felt that it is necessary for a seller and supplier of medical equipment to have a Comprehensive General Liability Insurance Policy plus coverage for product liability and completed operations. The commenter, a national group of home medical equipment supply companies, stated that more than 80 percent of the claims it had received during the last 11 years involved alleged product deficiencies or failures.

Response: We are revising this standard, now at § 424.57(c)(10), to require a comprehensive liability insurance policy of at least $300,000. We agree that partial self insurance is an acceptable means of meeting this requirement for publicly traded companies with sufficient assets. However, we are not able at this time to sufficiently define how this would be accomplished. We are also revising this standard to refer to product and operation liability and clarifying that the insurance must remain in force at all times. In addition, we have revised the language to allow suppliers with multiple sites to procure an umbrella policy for each tax ID number.

This proposed standard states that a supplier of a Medicare covered item must agree not to contact a beneficiary by telephone regarding the furnishing of a Medicare covered item to the individual unless certain specified situations apply.

Comment: One commenter suggested that we add an exception to this standard. Specifically, the commenter suggested that we permit telephone contact if the supplier receives a referral from a medical professional involved in the patient's care.

Response: While this may be reasonable in some situations, we find it problematic in that it may have unintended consequences as a loophole by allowing suppliers to purchase “referrals” (client lists) from medical professionals. This standard is located at § 424.57(c)(11).

This proposed standard states that only a supplier that is licensed by the State to dispense the drug may bill for a drug used as a Medicare covered supply with durable medical equipment or prosthetic devices. A supplier of drugs must bill and receive payment for the drug in its own name.

Comment: One commenter requested that we clarify that physicians may dispense and bill for drugs if permitted by the State. One commenter requested that we clarify that it is not necessary to have a pharmacy license in order to dispense drugs in connection with ESRD. One commenter requested that we clarify that suppliers may dispense oxygen with a prescription, consistent with FDA requirements. Several commenters supported this requirement completely.

Response: We are revising the standard, now at § 424.57(b)(4) to reflect that physicians may dispense and bill for drugs if authorized to do so under State law. There is no exception to the licensure requirement for dispensing drugs furnished in connection with ESRD.

We received many comments on the proposed surety bond provisions. Most of the commenters were opposed to the provisions citing costs as their major objection. Because we have decided to make extensive changes to this requirement and build on our experience with surety bond requirements for home health agencies, as well as a General Accounting Office Study of Medicare surety bonds, we have decided not to incorporate the provisions related to surety bonds in this final rule. Rather, we will issue the surety bond provisions as a proposed rule at a future date and will consider the comments in the development of that rule.

Comment: One commenter suggested that we require that suppliers be certified by appropriate national certification bodies, including the Board for Certification in Pedorthics, before they are eligible to dispense therapeutic shoes for diabetics.

Response: This is a good suggestion. Because of the potential impact on the supplier community and the need for public opportunity to comment, we will consider it for future revisions.

Comment: One commenter suggested that we implement a specialty code for pedorthics.

Response: This can be done administratively, without a regulation. If deemed feasible, we will consider it.

Comment: One commenter stated that no physician or hospital should own, in whole or in part, a DME supplier. This is a common practice and is strictly self-referral, which leads to corruption.

Response: Although the supplier standards do not address the issue of whether a physician may have an ownership interest in a DME supplier, the physician self-referral provisions in section 1877 of the Act do address this issue. Under the physician self-referral provisions, a physician may not refer a Medicare or Medicaid patient for any “designated health services” listed in section 1877(h)(6) of the Act to an entity with which the physician or an immediate family member of the physician has a financial relationship, unless an exception applies. Designated health services include, but are not limited to, DME and supplies; parenteral and enteral nutrients (PEN); equipment and supplies; and prosthetics; orthotics, and prosthetic devices and supplies. A financial relationship may be through an ownership or investment interest or a compensation relationship. There are certain exceptions that apply to ownership interests. Some exceptions apply to compensation relationships, and some exceptions apply to both ownership and compensation. The physician referral prohibition also has an effect on Federal health care programs (including Medicaid and Medicare). For additional information about physician referral issues, please contact Joanne Sinsheimer at (410) 786-4620.

The current supplier standards do not address the issue of whether a hospital should own a DME supplier. We may consider this suggestion in future revisions because of the potential impact on the supplier community and the need for public opportunity to comment.

We want to draw your attention to the possibility that, based on the facts in each case, referrals may be prohibited under the anti-kickback statute. This statute applies to those who knowingly and willfully offer, pay, solicit, or receive remuneration to induce the furnishing of items or services paid for, in whole or in part, by any Federal health care program, including Medicare or Medicaid. For further information about the anti-kickback statute, please contact the Office of the Inspector General for HHS at (202) 619-0335.

Comment: One commenter suggested that HCFA ensure that the application form itself uses simple, clear terminology to provide unambiguous guidance as to the information required. The Form HCFA-855 should be reviewed by the OIG prior to issuance to ensure that the use of vague and ambiguous terminology is minimized and that instructions are clear.

Response: The Form HCFA-855 was reviewed by OIG prior to issuance. In addition, we are in the process of revising the Form HCFA-855. We will solicit input from all concerned parties, via a Federal Register notice prior to requesting the Office of Management and Budget's (OMB) approval of the revised form. We will consider detailed recommendations related to the revised Form HCFA-855.

Comment: One commenter stated that we should submit this rule to the Congress for a 60-day review in accordance with the Contract with America Advancement Act (P.L. 104-121).

Response: We are submitting a report to Congress for this rule pursuant to the congressional review procedures established by the Contract with America Advancement Act. We note that OMB has determined that this rule is not a major rule as defined by the Act.

Comment: One commenter stated that the proposed rule did not categorize the range of DMEPOS services and items. In addition, we did not provide in Table 2 a breakdown distribution by service or item speciality.

Response: The range of DMEPOS services and items are stipulated in various sections of the Act. The preamble of the proposed rule makes references to some of the sections of the Act. We do not have the data to provide a national geographic distribution of each type of service or item furnished by DMEPOS suppliers.

Comment: Several commenters stated that orthotics and prosthetics suppliers should be licensed or certified. They believed that the provision of custom orthotic and prosthetic devices should be limited to facilities that are accredited by, or practitioners certified by, the American Board for Certification in Orthotics and Prosthetics or that meet equivalent educational and performance standards. One commenter suggested that we allow accreditation by the American Board for Certification in Orthotics and Prosthetics to serve as the equivalent of meeting the Medicare provider standards. One commenter stated that orthotics and prosthetics suppliers should be required to document each case in writing; should be required to give treatment alternatives in writing to each customer; should be required to give written cost estimates to each customer; and should be required to give a one year guarantee. Several commenters stated that orthotics and prosthetics suppliers should be required to have a bond. Several commenters suggested that orthotics and prosthetics suppliers should have separate standards from other suppliers.

Response: We will consider these suggestions in future revisions because of the potential impact on the supplier community and the need for public opportunity to comment.

The Balanced Budget Act of 1997 (BBA) requires the Secretary to establish service standards for home oxygen suppliers. The U.S. General Accounting Office (GAO), in Report GAO/HEHS-99-56: Access to Home Oxygen Equipment, states that such service standards “such as the frequency of maintenance visits and the level of patient education * * * would define what Medicare is paying for in the home oxygen benefit and what beneficiaries should expect from suppliers.” We solicit comments as to what should comprise such supplier standards.

In addition, section 1861(s)(12) of the Act permits Medicare payment for extra-depth shoes with inserts or custom molded shoes with inserts for an individual with diabetes, if, among other things, the shoes are fitted and furnished by a podiatrist or other qualified individual (such as a pedorthist or orthotist, as established by the Secretary). We solicit comments as to what standards should be established for suppliers of such shoes and the qualifications to require of the fitting individual.

The Office of the Inspector General in a report titled “Medicare Orthotics” (OEI-02-95-00380) recommended that HCFA “consider stricter standards for who is allowed to bill for orthotics, such as requiring professional credentials for orthotics suppliers.” We solicit comments as to what standards should be established for suppliers of Medicare-covered orthoses. We also solicit comments as to whether similar standards should be applied to prostheses.

We also welcome comments as to whether and what kind of standards should apply for home infusion therapy, durable medical equipment such as wheelchairs, or any other item provided under the DMEPOS benefit.

We are adopting the provisions set forth in the proposed rule with the exceptions noted in the Analysis of and Responses to Public Comments (section III. above) as well as the following change.

Throughout § 424.57, we are changing most of the references to “billing number” to “billing privileges”, noting in § 424.57(b)(2) that billing privileges must be conveyed along with a billing number.

Also, we reiterate that although we do not intend to require suppliers with current numbers to immediately certify to HCFA their compliance with these revised standards (they will do so when they reapply), it is important to note that as of the effective date of this regulation, all DMEPOS suppliers must comply with the standards as revised. We may revoke a supplier number if we find evidence that the standards are not satisfied.

This final regulation contains requirements that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). However, all have been approved by OMB. The OMB approval numbers associated with these approved requirements are 0938-0717, DMEPOS Supplier Standards: Additional Information Collection Requirements, for which the approval expires on April 30, 2001, and 0938-0685, Medicare Carrier Provider/Supplier Enrollment Application, for which the approval expires on September 30, 2001.

If you comment on these information collection and recordkeeping requirements, please mail copies directly to the following:

We have examined the impacts of this final rule under Executive Order 12866, the Unfunded Mandate Act of 1995, and the Regulatory Flexibility Act. 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. In addition, a Regulatory Impact Analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more annually).

The costs associated with this rule are as follows:

• Liability insurance requirement (§ 424.57(c)(10)). We estimate that only 10 percent of DMEPOS suppliers do not already have liability insurance that meets this requirement. Based on Medicare data as of May 1999, 10 percent of the total DMEPOS suppliers is approximately 6,600 suppliers. We note that commenters on the proposed rule gave varying estimates of the cost of liability insurance. The range commenters suggested was between $1300 and $1800 annually. Using the highest estimate received ($1,800 annually), results in an approximate additional liability insurance cost of $11.9 million annually (6,600 times $1,800) to the DMEPOS industry due to this rule.

• Primary business telephone listed under the name of the business locally or toll-free for beneficiaries requirement (§ 424.57(c)(9)). We estimate that only 1 percent of DMEPOS suppliers do not already meet this requirement. Based on Medicare data as of May 1999, we determined that one percent of DMEPOS suppliers is 660 suppliers. Therefore, 660 times the approximate $600 annual cost of telephone service results in an additional cost of $0.4 million annually.

Total Cost = $11.9 Million + $0.4 = $12.3 million annually.

The Unfunded Mandates Reform Act of 1995 requires (in section 202) that agencies prepare an assessment of 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 final rule has no consequential effect on State, local, or tribal governments.

Consistent with the Regulatory Flexibility Act, we prepare a Regulatory Flexibility Analysis (RFA) unless we certify that a rule will not have a significant economic impact on a substantial number of small entities. For purposes of the Act, suppliers with annual sales of $5 million or less are considered to be small entities. (Individuals and States are not included in the definition of a small entity.) The RFA is to include a justification of why action is being taken, the kinds and number of small entities which the rule will affect, and an explanation of any considered meaningful options that achieve the objectives and would lessen any significant adverse economic impact on the small entities.

We believe that our standards will help bar fraudulent suppliers from participating in the Medicare program and provide an added level of protection to Medicare beneficiaries. Therefore, we expect to have an impact on an unknown number of persons and entities who will effectively be prevented from practicing their aberrant billing activities. The vast majority of suppliers will not be significantly affected by this rule. The reduction in program overpayments and the added level of protection to beneficiaries that we expect to achieve as a result of this rule justifies the relatively small burden the rule would impose on all small entities.

The following analysis, together with the rest of this preamble, explains the rationale for and purposes of the rule, details the estimable costs and benefits of the rule, analyzes alternatives, and presents the measures we propose to minimize the burden on small entities.

We expect this rule to deter some entities that supply DME to Medicare beneficiaries from abusive billing practices or defrauding the Medicare program. For example, abusive practices include refusing to honor manufacturers' warranties or improperly installing equipment in Medicare beneficiaries' homes.

Fraudulent practices include billing the Medicare program for supplies that were not furnished. In a surprisingly large number of instances, when either the beneficiaries or HCFA attempted to contact suppliers alleged to have committed abuses, it was difficult to reach them because they did not have a fixed address or had closed the business and fled. Our experience has been that the market has failed to address these problems because of the motivation for unseemly profits, inadequate control by gatekeepers, and insufficient information on the part of Medicare beneficiaries to detect abuse. This market failure makes it necessary for HCFA to impose standards on DME suppliers and establish safeguards that enable the Medicare program to better protect beneficiary interests.

The single most striking characteristic of Medicare DMEPOS suppliers is their diversity. DMEPOS suppliers fill a business need and do it in a variety of ways. Some suppliers set out from the beginning to establish a business furnishing DMEPOS items; others evolve into being suppliers. For example, a firm dealing with the oxygen needs of the medical community may add a department that provides oxygen services and supplies as a medical supply as a logical extension of an existing business.

Similarly, a retail rental store may add wheelchairs or hospital beds and a pharmacy may add walkers to an inventory of otherwise unrelated commodities and use existing advertisements to announce the availability of these items.

Based on the small size of some businesses, it is more characteristic that suppliers furnish a limited number of items in greater demand than to maintain a large inventory of items covering the gamut of covered DMEPOS items. Thus, the only things any two suppliers may have in common is their provision of DMEPOS items and their understanding that the activity will meet the needs of the business. Suppliers are in a position to direct their marketing activities to optimize their most profitable revenue sources, and in seeking to meet patient demand, can choose to provide only those items that meet their business objectives.

For purposes of the RFA, a small entity is one with annual revenues of less than $5 million. Medicare data indicates that more than 95 percent of all DMEPOS suppliers generate billings of less than $350,000 in Medicare revenues annually, and 99 percent less than $5 million.

Individual patients may receive their durable medical equipment, supplies, and prosthetics either from a local supplier or from a regional or national concern that functions much like a mail order catalogue distribution center. As shown in Table 1, which is based on Medicare data as of May 1999, suppliers locate in areas where there is greatest demand, leaving other areas to be served by catalog, mail order or drop shipments. No States appear to be under served, and competition exists in large population areas, leading us to believe that the imposition of some additional standards will not have adverse effects on competition or on the availability of an adequate number of suppliers to meet patients' needs.

We note that the purpose of Table 1 is to illustrate the locations that provide durable medical equipment and supplies to Medicare beneficiaries. Many of these entities are members of chain organizations. While Table 1 indicates there are more than 109,000 suppliers, due to the affiliation of some suppliers with chains, as of May 1999, there were only 65,528 unique billing numbers. Hence, although in several sections of this preamble we mention 65,528 billing numbers, this reference and Table 1, which describes the more than 109,000 actual locations, describe the same universe of suppliers. According to an industry source, Medicare accounts for approximately 40 percent of the average DMEPOS supplier's revenue. The approximate percentage amounts for other revenue sources are 25 percent private insurance, 15 percent Medicaid, 10 percent institutional, and 10 percent private credit and cash sales. For calendar year 1997, Medicare program allowed charges amounted to $6.7 billion for DMEPOS items. We believe that for most suppliers any additional costs imposed by our standards would be outweighed by the benefits gained by continuing to be a Medicare DMEPOS supplier.

These standards should not result in changes in the number of legitimate business suppliers, because, as set forth below and elsewhere in this preamble, most requirements are logical extensions of good business practices that we believe currently are being met by the vast majority of suppliers.

We believe it was the intent of the Congress to strengthen DMEPOS supplier standards to protect beneficiaries and ensure the integrity of the Medicare program. Therefore, we proposed expanded supplier standards, using as our statutory basis section 1834(j)(1)(B)(ii)(III) of the Act for liability insurance and section 1834(j)(1)(B)(ii)(IV) of the Act, which states that the supplier must meet such other requirements as the Secretary may specify. This final rule will provide a basis to better screen applicants and to revoke the supplier numbers of those who do not meet these standards.

For purposes of this impact statement, we have divided the supplier standards into the following two broad categories: statutory requirements and good business practices.

Liability Insurance—The statutory authority for § 424.57(c)(10) is section 1834(j)(1)(B)(ii)(III) of the Act. This rule requires a supplier to have comprehensive liability insurance, including product liability and completed operations in the case of a supplier that makes its own items, that covers the supplier's place of business and any and all customers and employees. Based on comments received on the proposed rule, we are requiring a minimum of $300,000 in coverage. Based on discussions with industry experts, we estimate that approximately 10 percent of all suppliers do not currently carry liability insurance. Based on comments received, we estimate the cost per year for a supplier to carry liability insurance in the amount of $300,000 would be no more than approximately $1,800. We believe that the $1,800 cost per supplier does not represent a significant economic impact on the estimated 10 percent of suppliers not currently carrying liability insurance. We also believe that it is good business practice to carry such insurance, as indicated by the fact that 90 percent or more of suppliers already do so.

Most of the supplier standards in this final rule deal directly with business practices. We do not believe that these standards will result in a significant impact on any sizeable number of legitimate suppliers. For these additional standards, the economic impact on most suppliers is negligible, although the benefits to the program and to the beneficiary will be greater. For example, the requirement at § 424.57(c)(6) that a supplier must not charge Medicare for repair or replacement of Medicare covered items or for services covered under warranty, coupled with the requirement that the supplier provide documentation, upon request, that it has advised Medicare beneficiaries about Medicare covered items covered under warranty, should result in claims for repairs, parts or replacement being made against the warranty, thus decreasing the monies paid by Medicare. The monies paid out by the program and the beneficiary also may decrease as a result of the requirement that the supplier inform the beneficiary of the rental or purchase option and the copay implications involved. More beneficiaries may elect to purchase their equipment, instead of renting for long periods of time.

In most instances, these standards do not exceed the usual business practices necessary for any retail business to succeed. In other words, we believe that a supplier that expects to conduct a successful business would already have in place procedures to meet these standards. We did not develop alternatives because we consider the final supplier standards to be basic requirements that a business would have to meet in order to provide satisfactory customer service and manage properly its inventory.

Under § 424.57(c)(9), a supplier is required to maintain a telephone that is used primarily for business purposes at its physical facility and is listed under the name of the business locally or toll-free for beneficiaries. In order to accept inquiries from potential customers, maintain relationships with current customers, and conduct business with contractors in today's business market, it is necessary that virtually every business have telephonic access. Beneficiaries also need access to their supplier in case they have a problem with or questions about their DMEPOS items.

We believe that this standard is currently met by nearly all legitimate businesses. However, we believe approximately one percent of DMEPOS suppliers currently do not meet the fixed telephone requirement. The estimated cost per year for any supplier to establish and maintain a telephone line to conduct business would be approximately $600 ($50 a month). Thus, the aggregate cost is negligible. We believe the benefits of full time access to the supplier will far exceed the minor economic impact on a supplier.

This requirement will help beneficiaries contact their suppliers in the event of equipment problems and failures, and to resolve questions. Telephonic access to a supplier is also crucial so that the Durable Medical Equipment Regional Carriers may call and obtain additional information to process and pay claims.

As indicated elsewhere in this preamble, to the extent that we are imposing a burden, it is a necessary one. The public interest is best served by establishing safeguards that prevent suppliers from taking advantage of the current minimal supplier standards. It is by design that these standards would have the greatest impact on those suppliers that need to change the most. We believe that the loss of a few suppliers as a result of these supplier standards, for example those who operate out of a van or who do not provide a value added service, is far outweighed by the benefits of protecting the health and safety of beneficiaries and preserving the Medicare Trust Fund.

Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. Such an analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, a small rural hospital is a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 50 beds. We are not preparing a rural impact statement since we have determined, and certify, that this proposed rule will not have a significant impact on the operations of a substantial number of small rural hospitals.

We have reviewed this final rule under the threshold criteria of Executive Order 13132, Federalism and we have determined that it does not significantly affect the rights, roles, and responsibilities of States.

Editorial Note: This document was received at the Office of the Federal Register September 29, 2000.

This is a synopsis of the Commission's Report and Order, MM Docket No. 00-76, adopted September 29, 2000, and released October 2, 2000. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Services, Inc., (202) 857-3800, 1231 20th Street, NW., Washington, DC 20036.

We published a document amending part 73 in the Federal Register of September 26, 2000, 65 FR 57745 (FR Doc. 00-24647). In that document, the Commission is correcting § 73.202(b) to reflect a change in the community in the Table of FM Allotments from Ravenwood, Florida to Ravenwood, Missouri. In rule FR Doc. 00-24647, published September 26, 2000, 65 FR 57745, make the following corrections:

This Memorandum Opinion & Order (MO&O) in PR Docket No. 93-144, adopted August 2, 2000, and released August 4, 2000, is available for inspection and copying during normal business hours in the FCC Reference Center, 445 Twelfth Street, S.W., Washington D.C. The complete text may be purchased from the Commission's copy contractor, International Transcription Service, Inc., 1231 20th Street, N.W., Washington D.C. 20036 (202) 857-3800. The document is also available via the internet at: http://www.fcc.gov/Bureaus/Wireless/Orders/2000/fcc00288.doc.

In this Memorandum Opinion and Order (MO&O) , we set forth the construction requirements that the Commission will impose on incumbent 800 MHz Specialized Mobile Radio (SMR) commercial licensees operating wide area systems that include Business and Industrial/Land Transportation (BI/LT) channels obtained prior to 1995 through inter-category sharing. This action is taken in light of the Commission's decision in its Memorandum Opinion and Order on Remand (Remand Order), 14 FCC Rcd. 21679 (1999), published 65 FR 7751 (Feb. 16, 2000), which responded to the decision of the U.S. Court of Appeals for the District of Columbia Circuit (Court) in Fresno Mobile Radio, Inc. v. FCC (Fresno) , 165 F.3d 965 (D.C. Cir. 1999). Incumbent wide-area licensees must file certifications of construction within fifteen (15) days after the licensee's applicable construction deadline or December 11, 2000, whichever is later.

The 800 MHz band is divided into four channel groups—SMR, General Category, BI/LT, and Public Safety, each with its own eligibility rules. 800 MHz SMR channels are designated for commercial use, while 800 MHz BI/LT channels are designated for non-commercial internal use by the licensee. Prior to 1995, in certain circumstances, the Commission allowed SMR licensees to apply for BI/LT channels under inter-category sharing rules, which the SMR licensee could then use commercially despite the eligibility criteria that otherwise reserved these channels for private internal use. Inter-category sharing by SMR licensees was permitted if the BI/LT channel sought by the SMR licensee was unoccupied and if there were no SMR channels available in the licensee's service area.

On December 23, 1999, in response to a remand of its 800 MHz SMR Reconsideration Order , 12 FCC Rcd. 9972 (1997), published at 62 FR 41225 (July 31, 1997), by the District of Columbia Circuit in Fresno , the Commission released its Remand Order determining that incumbent 800 MHz SMR licensees who had obtained extended implementation (“EI”) authority to build wide-area systems and who were within their extended construction periods at the time of the Fresno decision could apply construction requirements similar to those given to SMR Economic Area (“EA”) licensees in the 800 MHz band. In the Remand Order , however, we granted relief only to wide-area incumbents operating on SMR channels. We did not address the construction status of wide-area incumbents operating on non-SMR channels obtained through inter-category sharing, because we concluded that this issue was beyond the scope of the proceeding. We indicated that we would determine the construction requirements for wide-area licensees on these channels in WT Docket No. 99-87, the pending Balanced Budget Act (BBA) proceeding.

Upon further reflection, the Commission decided to determine the construction status of BI/LT channels used by wide-area 800 MHz SMR licensees in this proceeding which responds to the court's action in Fresno, rather than in the BBA proceeding. On March 2, 2000, therefore, we released a Public Notice seeking comment on whether we should adopt construction rules for wide-area incumbent 800 MHz SMR licensees using BI/LT channels that would be similar to those adopted in the Remand Order for wide-area SMR licensees using SMR channels. We also requested comment on the applicable construction requirements ( e.g. , substantial service or population-based) for wide-area incumbent 800 MHz SMR licenses using BI/LT channels.

In response to that Public Notice , we received four comments and one reply comment. All but one of the commenters contend that wide-area 800 MHz SMR licenses using BI/LT channels should receive the same construction requirements established by the Remand Order for wide-area incumbents using SMR channels. Nextel Communications, Inc. (Nextel) and Southern Communications (Southern) maintain that regulatory parity requires giving wide-area 800 MHz SMR licenses using BI/LT channels the same flexible construction requirements as those given to other CMRS providers because they provide similar services. The American Mobile Telecommunication Association, Inc. (AMTA) maintains that all channels properly licensed to a wide-area SMR system under the Commission's rules are part of that system and should be subject to the same regulatory treatment.

We conclude that wide-area incumbent 800 MHz SMR licensees operating on BI/LT channels are sufficiently similar to wide-area incumbent 800 MHz licensees operating on SMR channels that they should have the same flexibility with respect to construction requirements. The record demonstrates that some of the wide-area SMR licensees who received EI authorizations from the Commission are licensed to operate both on SMR channels and on BI/LT channels that they obtained through inter-category sharing for commercial use. In Southern's case, the vast majority of channels in its wide-area SMR system are BI/LT channels obtained through inter-category sharing. The record further demonstrates that wide-area SMR licensees such as Southern use inter-category BI/LT channels interchangeably with SMR channels, and that the BI/LT channels licensed on this basis are used to provide service that is similar, if not identical, to that provided on SMR channels by 800 MHz EA and incumbent wide-area SMR licensees. Accordingly, we agree with Southern, AMTA, and other supporting commenters that wide-area 800 MHz SMR licensees using BI/LT channels should be subject to the same construction requirements given to 800 MHz SMR EA licensees by our rules and to eligible wide-area SMR licensees by our Remand Order.

Recognizing that these licensees may already have constructed their systems in accordance with the requirements in place at the time (i.e., site-by-site, channel-by-channel), we will give eligible wide-area 800 MHz SMR licenses using BI/LT channels the option of complying with the site-specific construction requirements associated with their EI authorizations or applying the EA population coverage requirements to their wide-area systems. This option applies only to wide-area 800 MHz SMR licensees using BI/LT channels obtained through inter-category sharing. We believe that giving wide-area 800 MHz SMR licenses using BI/LT channels the choice between applying site-specific requirements or the EA coverage requirements will establish regulatory parity among all similarly situated wide-area 800 MHz SMR licensees.

We did not receive any comment on when the five-year construction period should begin for BI/LT channels licensed to wide-area SMR licensees that elect to apply the EA construction requirements. We therefore adopt the framework outlined in the Remand Order , which begins the construction period from the licensee's EI grant date. Therefore, an eligible wide-area SMR licensee that elects to apply the EA construction requirements to its BI/LT channels must have constructed and placed into operation a sufficient number of base stations to provide coverage to at least two-thirds of the population of its wide-area system, or must provide substantial service to the licensed area, within five years of EI grant plus the tolling period described.

For all licensees entitled to relief under this decision, we will add 546 days to their construction periods, representing the amount of time between the Fresno decision and the release of this order. Therefore, the applicable construction deadline for any eligible wide-area licensee that elects to apply the EA coverage requirements will be five years from the date of EI grant plus 546 days. Likewise, the applicable construction deadline for eligible licensees that do not elect the EA requirements will be 546 days after the EI deadline established in the 800 MHz Rejustification Orders , 13 FCC Rcd. 1533 (WTB: 1997), recon., 12 FCC Rcd. 18349 (WTB: 1997).

A wide-area SMR licensee that is eligible for relief under this Order must certify in a filing with the Bureau that it has either met the EA construction requirements, as set out herein, or complied with the terms of its EI authorization. In addition to the certification, if a licensee chooses to meet the EA requirements for channels in the lower 230 channels using the substantial service option, it must demonstrate in the same filing with the Bureau how it is providing substantial service. All filings must be made within fifteen (15) days after the licensee's applicable construction deadline, as defined supra, or December 11, 2000, whichever is later.

When determining if an eligible licensee has met a specific coverage requirement (i.e., covering two-thirds of the population), the population should be measured using the licensee's wide-area “footprint” as established in the licensee's EI rejustification submission. For this purpose, we adopt the guidelines in the Remand Order , i.e., the licensee should compute the population covered within its footprint on a county basis using 1990 U.S. Census information. In cases in which the footprint does not align with county boundaries, the licensee should include the entire population of the county if the licensee covers any portion of it.

For the reasons given above, any incumbent wide-area 800 MHz SMR licensee that uses BI/LT channels obtained through inter-category sharing and was still in its construction period as of the date of the Fresno decision may choose to apply either the existing site-by-site, channel-by-channel construction requirements or the alternative construction requirements set forth in this MO&O . Eligible licensees must certify in a filing with the Commission their compliance with one of the enumerated requirements within the later of fifteen days from their applicable construction benchmarks, as defined herein, or December 11, 2000.

Supplementary Information: This MO&O contains a modified information collection, which has been submitted to the Office of Management and Budget for approval. As part of our continuing effort to reduce paperwork burdens, we invite the general public to take this opportunity to comment on the information collection contained in this MO&O, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Public comments should be submitted to OMB and the Commission, and are due November 13, 2000. Comments should address: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.

OMB Approval Number: 3060-0307.

Title: Rules to Facilitate Future Development of SMR Systems in the 800 MHz Frequency Band.

Form No.: N/A.

Type of Review: Revision of a currently approved collection.

Respondents: Business or other for-profit.

Number of Respondents: 15.

Estimated Time Per Response: 2 hours.

Total Annual Burden: 30 hours.

Frequency of Response: Single response.

Total Annual Estimated Costs: $6,000. This cost includes an estimate that 100% of the respondents will hire an outside consultant at $200 per hour to prepare the information.

Needs and Uses: The Commission will use this information to determine whether wide-area SMR licensees have complied with the Commission's 800 MHz construction requirements for their respective systems.

Address: In addition to filing comments with the Secretary, a copy of any comments on the information collections contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 1-C804, 445 12th Street, S.W., Washington, D.C. 20554, or via the Internet to jboley@fcc.gov; and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725-17th Street, N.W., Washington, D.C. 20503 or via the Internet to fain_t@al.eop.gov .

The order, adopted by the Commission on August 17, 2000, contained a Supplemental Final Regulatory Flexibility Analysis that is now being retracted. As part of this submission we are including a Final Regulatory Flexibility Act Certification in its place. The Regulatory Flexibility Act (RFA) requires that an agency prepare a regulatory flexibility analysis for notice and comment rulemakings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.”  1 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 our rules. 2 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.”  3 More specifically the Commission has used the term “small business” in the wireless auction context as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years.

We certify that this memorandum opinion and order (MO&O) will not have a significant economic impact on a substantial number of small business entities for the following reasons. First, the direct effect of this MO&O is to give eligible wide-area 800 MHz SMR licensees using BI/LT channels through inter-category sharing the option of complying with the site-specific construction requirements originally given with their EI authorizations or of complying with the more liberal EA population coverage requirements. For any small entity that would be able to exercise this new option as its buildout requirement, we believe there would be no detrimental impact or economic cost. In actuality, there might be a positive benefit to the licensees in this category in that small entities might find it easier to satisfy the buildout requirements.

Second, of the nine licensees directly effected by this order, three belong to extremely large corporations. Of the remaining six, all or none could be small business entities, our data do not permit a more accurate estimate at this time. However, as noted above, we believe that they will not experience a significant economic impact as a result of the revisions set forth in this MO&O.

Third, any indirect effects of this decision will be minimal. Currently, Commission rules do not allow the commercial use of BI/LT channels. The directly effected parties, mentioned above, obtained their BI/LT channels prior to 1995. Therefore, they are allowed to use those channels commercially. However, since 1995 users of newly available BI/LT channels are restricted to private mobile service use—that is, a non-commercial, non-business use. Consequently, even though the more liberalized build-out requirement adopted in this MO&O may lead to fewer channels reverting to the BI/LT channel pool because the licensees failed to timely construct, there will be no impact on small business entities because any such reversionary channels could not be licensed for commercial purposes.

Accordingly, we certify, pursuant to Section 605(b) of the RFA, that any effects flowing from this MO&O will not have a significant economic impact upon a substantial number of small entities, as that term is defined in the RFA. The Commission will send a copy of this MO&O, including a copy of this certification, in a report to Congress pursuant to SBREFA. 4 In addition, the MO&O and this certification will be sent to the Chief Counsel for Advocacy of the Small Business Administration, and will be published in the Federal Register . 5

Accordingly, pursuant to the authority of section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), incumbent wide-area 800 MHz SMR licensees eligible for relief as described herein must comply with the terms of their extended implementation authorizations or apply the alternative construction requirements described herein.

Incumbent wide-area 800 MHz SMR licensees eligible for relief as described herein must certify in a filing with the Wireless Telecommunications Bureau their compliance with the construction requirements as described herein within the later of fifteen days after the licensee's applicable construction deadline or December 11, 2000.

The Commission's Consumer Information Bureau, the Reference Information Center, SHALL SEND a copy of this MO&O, including the Final Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the Small Business Administration.

On August 7, 2000 (65 FR 48174), a new § 101.83 entitled “Reimbursement of relocation expenses in the 2115-2150 MHz and 2165-2200 MHz bands” was added. However, § 101.83 entitled “Modification of station license” was added on September 7, 2000 (65 FR 54155). This correction renumbers the section added on August 7, 2000 as § 101.99.

On September 29, 2000, RSPA published a final rule under Docket HM-189Q (65 FR 58614) to correct editorial errors, make minor regulatory changes and, in response to requests for clarification, improve the clarity of certain provisions in the HMR. This amendment makes minor changes to correct wording omissions and typographical errors to the September 29 final rule, which was effective October 1, 2000.

Because the amendments do not impose new requirements, notice and public comment are unnecessary.

In the final rule, titled Endangered and Threatened Species; Regulations Consolidation; Final Rule, published in the Federal Register on March 23, 1999,(64 FR 14052), three errors were made in identifying the eastern population of Steller sea lions.

NMFS is correcting these errors and is making no substantive change to the document in this action.

As published, the final regulations contain errors which misidentify the stock parameters of the eastern population of the Steller sea lion ( Eumetopias jubatus ).