In a final rule published in the Federal Register on July 18, 2007 (72 FR 39482-39528, Docket No. APHIS-2005-0106), and effective on August 17, 2007, we revised and reorganized our regulations pertaining to the importation of fruits and vegetables. Among other things, the final rule established criteria that, if met, will allow us to approve certain new fruits and vegetables for importation into the United States more effectively and expeditiously by way of a notice-based process and to do away with the practice of listing in the regulations specific commodities that may be imported subject to certain types of phytosanitary measures.

As explained in the preamble, the regulatory text included changes made to the fruits and vegetables regulations by several other final rules published just prior to July 18. In one of those other final rules, published on June 21, 2007 (72 FR 34163-34176, Docket No. APHIS-2006-0040), and effective on July 23, 2007, we amended the fruits and vegetables regulations to allow the importation into the United States of litchi, longan, mango, mangosteen, pineapple, and rambutan from Thailand under certain conditions. As a condition of entry, those fruits must be grown in production areas that are registered with and monitored by the national plant protection organization of Thailand, treated with irradiation in Thailand, and subject to inspection. The fruits must also be accompanied by a phytosanitary certificate with an additional declaration stating that the fruit had been treated with irradiation in Thailand. In the case of litchi, the additional declaration must also state that the fruit had been inspected and found to be free of Peronophythora litchii, a fungal pest of litchi. Additionally, under that final rule, litchi and longan imported from Thailand may not be imported into or distributed to the State of Florida, due to the presence of litchi rust mite in Thailand.

In the July 18 final rule, we stated that mango, mangosteen, pineapple, and rambutan required only mitigations that were eligible for the notice-based approach and as such, it was not necessary to list those commodities in the regulations. This was incorrect because the growing condition requirements for those fruits exceed the designated measures provided in the July 18 final rule. We also noted that litchi and longan had labeling requirements that went beyond the designated measures set forth in the final rule, making it necessary to add entries for litchi and longan from Thailand to the table in § 319.56-13 of the final rule. While it is necessary to include litchi and longan from Thailand in the regulations, we should have done so by listing their requirements for importation in a new section in order to specify that litchi and longan from Thailand are subject to additional measures besides inspection and labeling requirements. Therefore, the conditions governing the importation of litchi, longan, mango, mangosteen, pineapple, and rambutan from Thailand need to remain in the regulations. In addition, we provide in the table in § 319.56-13 that certain varieties of pineapples from Thailand may be imported into Guam and the Northern Mariana Islands without treatment; however, we neglected to note in the table that pineapples from Thailand may also be imported into the continental United States under the conditions provided in the June 21 final rule. Therefore, in this document we are amending the entry for Thailand in the table in § 319.56-13(a) by amending the provisions for pineapple and by removing the provisions for litchi and longan. We are also adding a new § 319.56-47, “Certain fruits from Thailand.”

The Federal Reserve Banks make primary and secondary credit available to depository institutions as a backup source of funding on a short-term basis, usually overnight. The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under these programs. In accordance with the Federal Reserve Act, the primary and secondary credit rates are established by the boards of directors of the Federal Reserve Banks, subject to the review and determination of the Board.

The Board approved requests by the Reserve Banks to reduce by 50 basis points the primary credit rate in effect at each of the twelve Federal Reserve Banks, thereby decreasing from 6.25 percent to 5.75 percent the rate that each Reserve Bank charges for extensions of primary credit. As a result of the Board's action on the primary credit rate, the rate that each Reserve Bank charges for extensions of secondary credit automatically decreased from 6.75 percent to 6.25 percent under the secondary credit rate formula. The final amendments to Regulation A reflect these rate changes.

The Board's action narrows the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points. As indicated in the Board's press release announcing this action, the changes to the primary credit discount window facility are intended to promote the restoration of orderly conditions in financial markets. In addition, the press release stated:

Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Board certifies that the new primary and secondary credit rates will not have a significantly adverse economic impact on a substantial number of small entities because the final rule does not impose any additional requirements on entities affected by the regulation.

The Board did not follow the provisions of 5 U.S.C. 553(b) relating to notice and public participation in connection with the adoption of these amendments because the Board for good cause determined that delaying implementation of the new primary and secondary credit rates in order to allow notice and public comment would be unnecessary and contrary to the public interest in fostering price stability and sustainable economic growth. For these same reasons, the Board also has not provided 30 days prior notice of the effective date of the rule under section 553(d).

The FAA proposed to amend 14 CFR part 39 with a proposed AD. The proposed AD applies to PW JT9D-7R4E1, -7R4E4, -7R4G2, and -7R4H1 turbofan engines. We published the proposed AD in the Federal Register on February 2, 2007 (72 FR 4964). That action proposed to require removal of reduced cooling flow 2nd stage HPT vane assemblies. It also proposed to require a visual and an FPI of the 2nd stage HPT air seal assembly.

You may examine the AD docket on the Internet at http://dms.dot.gov ; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is provided in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

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

FEDEX requests that we revise the estimated cost impact to implement the AD because they believe that the actual cost of modification (according to PW Alert Service Bulletin (ASB) JT9D-7R4-A72-596, dated September 15, 2005) for one set of HPT 2nd stage vane assemblies will be approximately $23,000, instead of $5,400 projected by the proposed AD. We do not agree. We provided the estimated material cost of $5,400 per engine from the engine manufacturer in the Costs of Compliance section in the proposed AD. Parts included new 2nd stage HPT vane covers, part number (P/N) 822734, and rivets, P/N ST1219-213, that are required to modify the 2nd stage HPT vane cluster assemblies, as specified in ASB JT9D-7R4-A72-596, dated September 15, 2005. However, based on latest pricing information in the PW spare parts price catalog, we increased the estimated material cost to $6,700. We also estimate that it will take about 65.5 work-hours per engine to perform the actions, and that the average labor rate is $80 per work-hour. Based on these figures, we estimate the total cost of the AD to be $11,940 per engine.

Boeing Company asks that we revise paragraph (c) of the AD to remove the reference to the Boeing model 747-200B, -200C, -200F, and -300 airplanes. Boeing states that the JT9D-7R4E1, -7R4E4, and -7R4H1 are not used on any model Boeing 747 and the description implies that these engines may be installed on the Boeing 747 airplane. We partially agree. We removed the letter designations for the 747-200 series airplanes. However, we do not agree that the airplane listing in paragraph (c) implies that the JT9D-7R4E1, -7R4E4, and -7R4H1 engines may be installed on the Boeing 747. The airplane references in paragraph (c) are informative only. The Type Certificate Data Sheet for an airplane specifies the engines that are installed on the airplane, not the applicability paragraph of an AD.

PW asks that we revise the Applicability section to clarify the affected engine models. They also request that we add the following aircraft to the list of airplanes that can have these engines installed: Boeing 767-200, Airbus A300-600, and A310-300.

We partially agree and revised the Applicability section of the AD to add Boeing 767-200, and Airbus A300-600 and A310-300 airplane models to paragraph (c) of the AD. We do not agree that we need to clarify the engine models with Pratt & Whitney internal model designation. We specify the affected engines by the model designations specified in the Type Certificate Data Sheet for the engine.

PW asks that we revise paragraph (f) of the Compliance section to delete the specific lenticular seal part number reference, as there are other lenticular seal part numbers in the field that will also require visual and FPI inspections at the next HPT module exposure. We partially agree. The specific lenticular seal part number should be removed from paragraph (f) of the Compliance section of the AD because there are other lenticular seal part numbers in the field that will also require inspections. However, to prevent further delay in addressing the unsafe condition, we are issuing this AD with the specific lenticular seal part number listed. Removal of the part number will expand the number of parts requiring inspection and we must give the public an opportunity to comment on this change before we can incorporate it. We will supersede this AD to remove the lenticular seal part number.

PW asks that we revise paragraph (f) of the Compliance section to list all of the specific inspections required for the lenticular seal. We agree and listed each inspection procedure in the PW engine manual required for the lenticular seal. We also changed the paragraph to (g).

PW also asks that we revise paragraph (g) of the Compliance section to reference the associated 2nd stage HPT vane cluster assemblies (higher level assembly) that have reduced cooling flow 2nd stage HPT vane assemblies installed, because airlines may not recognize individual 2nd stage vane assemblies. We agree. We revised paragraph (g) of the Compliance section to state the following: “At the next HPT module exposure, remove reduced cooling flow 2nd stage HPT vane assemblies, P/Ns 797282, 796972, 800082, 800072, 803182, 803282, and 822582, installed in 2nd stage HPT vane cluster assemblies, P/Ns 797592, 797372, 799872, 799782, and 822572.” We also designated the paragraph as (f).

Boeing Company asks that we correct typographical errors for the engine designations in paragraph (c) in the Applicability section. Boeing states that the JT9D-74R4E1, -74R4E4, -74R4G2, and -74R4H1 should be JT9D-7R4E1, -7R4E4, -7R4G2, and -7R4H1, respectively.

Boeing also asks that we revise paragraph (g) in the Compliance section to remove a duplicate reference to part number 803182. We agree and corrected the Applicability section and the duplicate P/N reference in paragraph (g).

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

We estimate that this proposed AD would affect 85 PW JT9D-7R4 series turbofan engines installed on airplanes U.S. registry. We also estimate that it will take about 65.5 work-hours per engine to perform the actions, and that the average labor rate is $80 per work-hour. Required parts will cost about $6,700 per engine. Based on these figures, we estimate the total cost of the AD to U.S. operators to be $1,014,900.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

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

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

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

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

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

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary at the address listed under ADDRESSES .

The collection of information contained in these final regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-2035. Comments on the accuracy of the estimated burden and suggestions for reducing the burden should be sent to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224.

The collection of information in these final regulations is in § 1.853-4(c) and (d). A RIC is required to notify the IRS of amounts of income received from sources within foreign countries and possessions of the United States and taxes paid to each such foreign country or possession in order that the IRS may monitor shareholder compliance with the foreign tax credit provisions. The collection of information is required if a RIC elects to pass through the benefits of the foreign tax credit to its shareholders.

Estimated total annual recordkeeping burden: 80 hours.

Estimated average annual burden per recordkeeper: 2 hours.

Estimated number of recordkeepers: 40.

Estimated frequency of recordkeeping: Annually.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

This document contains amendments to 26 CFR part 1 under section 853 of the Internal Revenue Code (Code). On September 18, 2006, a notice of proposed rulemaking (REG-105248-04) was published in the Federal Register (71 FR 54598). Comments were specifically requested with respect to the effective date of the final regulations. In response, a trade association sent a letter requesting that RICs be allowed to rely on the proposed regulations for 2006. This request was not granted. No public hearing was requested or held.

The proposed regulations are adopted by this Treasury decision with minor modifications. The applicability date for these regulations as adopted, balances the industry's desire promptly to eliminate unneeded RIC reporting with the IRS's need for time in which to update its forms and instructions, thereby reducing potential taxpayer confusion that may arise from the new reporting requirements.

Section 853 provides a foreign tax credit or deduction to shareholders of a RIC that makes an election under, and that meets the requirements set forth in, that section. A RIC more than 50 percent of the value of whose total assets at the close of a taxable year consists of stock or securities in foreign corporations may make an election under section 853 (a “foreign tax passthrough election”). If the RIC makes this election for that taxable year, it forgoes a deduction or credit for certain taxes paid to foreign countries and possessions of the United States (collectively, “foreign taxes”) (but the amount of the foreign taxes is allowed as an addition to the RIC's deduction for dividends paid for the year). Instead, the RIC passes through to its shareholders a credit or deduction for the foreign taxes it has paid during its taxable year. If the RIC makes this election, each shareholder includes the shareholder's proportionate share of these foreign taxes in gross income and treats this proportionate share as paid by the shareholder. Each shareholder of an electing RIC further treats as gross income from sources within foreign countries and possessions of the United States the sum of the shareholder's proportionate share of these taxes and the portion of any dividend paid by the RIC that represents income derived from sources within foreign countries and possessions of the United States. Each shareholder may then deduct, or claim a credit for the payment of, a proportionate share of these taxes.

A RIC electing this treatment must provide information to its shareholders and to the IRS. First, under section 853(c) of the Code, the RIC must designate, in a written notice mailed to shareholders not later than 60 days after the close of its taxable year, each shareholder's proportionate share of foreign taxes paid by the RIC and each shareholder's proportionate share of the RIC's gross income derived from sources within any foreign country or possession of the United States. Section 1.853-3(a) of the current Income Tax Regulations requires that this notice designate the shareholder's portion of foreign taxes paid to each such foreign country or possession of the United States and the portion of the dividend that represents income derived from sources within each foreign country or possession of the United States.

Second, under current § 1.853-4(a), the RIC must file with Form 1099-DIV, “Dividends and Distributions,” and Form 1096, “Annual Summary and Transmittal of U.S. Information Returns,” a statement as part of its income tax return (Form 1120-RIC or its successor) that sets forth the total amount of income received from sources within foreign countries and possessions of the United States; the total amount of foreign taxes paid; the date, form, and contents of the notice to its shareholders; and the proportionate share of this income received and these taxes paid during the taxable year attributable to one share of its stock. The RIC must also file as part of its return for the taxable year a Form 1118, “Foreign Tax Credit—Corporations,” that has been modified so that it is a statement in support of the RIC's foreign tax passthrough election.

The requirement of current § 1.853-3(a) that an electing RIC provide country-by-country information to its shareholders on foreign-source income received and foreign taxes paid was adopted at a time when many shareholders generally needed the information to apply a per-country limitation on the foreign tax credit. Because of changes to the foreign tax credit provisions of the Code, shareholders generally no longer need country-by-country information on the amounts of foreign-source income and foreign taxes paid.

The Treasury Department and the IRS have received comments suggesting that the section 853 regulations should be amended to eliminate per-country reporting to shareholders and that Form 1116, “Foreign Tax Credit—Individual, Estate or Trust,” should be modified to indicate that distributions from RICs are exempt from per-country shareholder reporting. According to these comments, eliminating the reporting of this information not only would reduce the time and expense required of RICs to compile and disseminate this tax information but also would reduce the confusion that their shareholders experience upon receipt of the extensive tables used to report this per-country information.

Even though the section 904 foreign tax credit limitation has been applied on a separate-category-of-income basis, instead of on a per-country basis, since 1976, the Treasury Department and the IRS have continued to require the reporting of per-country information by RICs. This per-country information remains relevant to the IRS's monitoring compliance with the section 901 rules that disallow credits for refundable and noncompulsory payments and for taxes paid to certain countries. See § 1.901-2(e)(2) and (5), providing that credit is not allowed for amounts that are in excess of final liability under foreign law for tax, and section 901(j), denying credit for tax paid to countries described in section 901(j)(2)(A) and subjecting income from sources in those countries to separate foreign tax credit limitations.

Although per-country information with respect to foreign income and foreign taxes is needed for the IRS to monitor compliance, the Treasury Department and the IRS believe that taxpayer burden can be reduced by continuing to require this information to be supplied with the RIC's tax return but generally not requiring it to be reported to the RIC's shareholders as well. Accordingly, the final regulations revise § 1.853-3 and § 1.853-4 to require that a RIC provide aggregate per-country information on a statement filed with its tax return and require that only summary foreign income and foreign tax amounts be reported to its shareholders. The instructions to Forms 1116 and 1118 will be modified to permit summary reporting at the shareholder level similar to the summary reporting currently permitted with respect to “section 863(b) income” on Forms 1116 and 1118.

The final regulations update § 1.853-1 to reflect statutory amendments providing that the foreign tax passthrough election is not applicable to taxes for which the RIC would not be allowed a credit by reason of section 901(j) (denying credit for taxes paid to certain countries, including those with which the United States does not have diplomatic relations), section 901(k) and (l) (denying credit for withholding taxes paid on certain income where certain holding period requirements are not met), or any similar provision.

The final regulations change in two ways the regulations that set forth requirements for a RIC seeking to make and to notify shareholders of a foreign tax passthrough election:

First, references in § 1.853-3(a) and (b) to required statements to shareholders of dollar amounts of taxes paid to specific countries, and to dollar amounts of income considered as received from specific countries, are changed to require that a RIC (or a shareholder of record of the RIC who is a nominee acting as a custodian of a unit investment trust) state only the total amount of the RIC's shareholder's (or the record shareholder nominee's principal's) proportionate share of creditable foreign taxes paid, income from sources within countries described in section 901(j), if any, and income derived from sources within other foreign countries or possessions of the United States.

Second, the final regulations extend various deadlines in § 1.853-3(b) to reflect statutory changes since the regulations were issued. Thus the number of days following the close of its taxable year by which a RIC must notify its shareholders in writing of the making of a foreign tax passthrough election is increased to 60. References to the number of days following the close of the taxable year by which a nominee acting as a custodian of a unit investment trust must notify holders of interests in the unit investment trust is increased to 70. Similarly, references to the number of days following the close of a RIC's taxable year by which a statement that holders of interests in unit investment trusts have been directly notified by the RIC (or a statement that the RIC has failed or is unable to notify these holders of interests) must be filed with the IRS and transmitted to a nominee is increased to 60.

Section 1.853-4 is modified to create more flexibility in the references to specific forms. The current regulations require a RIC to file statements with Form 1099 and Form 1096 and to file, as a part of its return for the taxable year, a Form 1118, modified so that it becomes a statement in support of the election made by a RIC to pass through taxes paid to a foreign country or a possession of the United States. The first of these requirements, the requirement to file statements with Forms 1099 and 1096, is eliminated. The final regulations retain the general requirement that a RIC must file as part of its return a statement that elects the application of section 853 for the taxable year.

Section 1.853-4(a) also requires that a RIC agree to provide certain information on foreign-source income received and foreign taxes paid. The information required to be provided is set forth in § 1.853-4(c). Section 1.853-4(d) continues to provide that this required information is to be provided on or with a modified Form 1118 but adds that it may instead be provided in such other form or manner as may be prescribed by the Commissioner. This change facilitates future changes in administrative practice if, for example, forms are renumbered or become obsolete.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations because these regulations do not impose a collection of information on small entities.

Pursuant to section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b), it has also been determined that the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply to these regulations because these regulations do not have a significant economic impact on a substantial number of small entities. According to the Small Business Administration definition of a “small business,” 13 CFR 121.201, a RIC is classified as a Portfolio Management company, NAICS code 523920, and is considered a small entity if it accumulates less than 6.5 million dollars in annual receipts. It has been determined that RICs affected by these regulations generally will have greater than 6.5 million dollars in annual receipts and therefore will not generally be classified as small business entities.

Because the summary reporting of the foreign tax credit information provided by these regulations is universally less burdensome than the reporting of country-by-country information previously required, it is also clear that these regulations do not have a significant economic impact on affected RICs. Pursuant to section 7805(f) of the Internal Revenue Code, the proposed regulations preceding these regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

The principal author of this regulation is Richard C. LaFalce of the Office of Associate Chief Counsel (Financial Institutions and Products).

The Onslow Beach Swing Bridge has a vertical clearance in the closed position to vessels of 12 feet, above mean high water.

The U.S. Navy (the bridge owner) has requested a temporary deviation from the current operating regulations set out in 33 CFR 117.821(a)(2) to close the drawbridge to navigation to facilitate hydraulic repairs on the northeast and southeast ends and the power components of bridge.

To facilitate the mechanical repairs, the Onslow Beach Swing Bridge will be maintained in the closed-to-navigation position from 8 a.m. on Tuesday, September 11, 2007 until and including 8 a.m. on Thursday, September 13, 2007, and from 8 a.m. on Tuesday, September 25, 2007 until and including 8 a.m. on Thursday, September 27, 2007.

The Coast Guard has informed the known commercial users of the waterway of the change to the regulations concerning this so that these vessels can arrange their transits to minimize any impact caused by the temporary deviation.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the designated time period.

This deviation from the operating regulations is authorized under 33 CFR 117.35.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. The Coast Guard was not given the final voyage plan in time to initiate full rulemaking, and the need for this temporary security zone was not determined until less than 30 days before the SBX-1 will require the zone's protection. Publishing an NPRM and delaying the effective date would be contrary to the public interest since the transit would occur before completion of the rulemaking process, thereby jeopardizing the security of the people and property associated with the operation. 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 COTP finds this good cause to be the immediate need for a security zone to allay the waterborne security threats surrounding the SBX-1's transit.

On approximately August 1, 2007, the SBX-1 is scheduled to transit U.S. navigable waters in the Honolulu Captain of the Port Zone from Pearl Harbor, HI to sea for sea trials. The SBX-1 will be returning to Pearl Harbor, HI and departing again as needed for maintenance and logistical reasons. The Coast Guard is establishing this security zone to ensure the vessel's protection during its transit(s).

This temporary security zone is effective from 9 a.m. (HST) on August 1, 2007, through 11:59 p.m. (HST) on September 30, 2007. It is located within the Honolulu Captain of the Port Zone (See 33 CFR 3.70-10) and covers all U.S. navigable waters extending 500 yards in all directions from the U.S. Forces vessel SBX-1, from the surface of the water to the ocean floor. The security zone moves with the SBX-1 while in transit. The security zone becomes fixed when the SBX-1 is anchored, position-keeping, or moored.

The SBX-1 is easy to recognize because it contains a large white object shaped like an egg supported by a platform that is larger than a football field. The platform in turn is supported by six pillars similar to those on large oil-drilling platforms.

The general regulations governing security zones contained in 33 CFR 165.33 apply. Entry into, transit through, or anchoring within this zone is prohibited unless authorized by the Captain of the Port or a designated representative thereof. The Captain of the Port will cause notice of the enforcement of the security zone described in this section to be made by broadcast notice to mariners. Any Coast Guard commissioned, warrant, or petty officer, and any other Captain of the Port representative permitted by law, may enforce the zone. The Captain of the Port may waive any of the requirements of this rule for any person, vessel, or class of vessel upon finding that application of the security zone is unnecessary or impractical for the purpose of maritime security. Vessels or persons violating this rule are subject to the penalties set forth in 33 U.S.C. 1232 and 50 U.S.C. 192.

This rule is not a “significant regulatory action” under § 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under § 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

The Coast Guard expects the economic impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. This expectation is based on the limited duration of the zone, the limited geographic area affected by it, and its ability to move with the protected vessel.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule will have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. We expect that there will be little or no impact to small entities due to the narrowly tailored scope of this security zone.

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

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and either preempts State law or imposes a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

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

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards is inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, under figure 2-1, paragraph (34)(g) of the Commandant Instruction M16475.1D, this rule is categorically excluded from further environmental documentation because this rule establishes a security zone. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES .

On July 5, 2007 (72 FR 36601), EPA published in the Federal Register a final rule redesignating the Kentucky portion of the bi-state Louisville 8-hour ozone nonattainment area to attainment for the 8-hour ozone NAAQS. On page 33604 in the table titled “EPA-Approved Kentucky Non-Regulatory Provisions” under the subject “State submittal date/effective date” for the entry “Louisville 8-hour Ozone Maintenance Plan” EPA inadvertently omitted the State effective date. This omission is being corrected by adding the State effective date of September 29, 2006.

EPA has determined that today's action falls under the “good cause” exemption in section 553(b)(3)(B) of the Administrative Procedure Act (APA) which, upon finding “good cause,” authorizes agencies to dispense with public participation where public notice and comment procedures are impracticable, unnecessary or contrary to the public interest. Public notice and comment for this action are unnecessary because today's action to add the State effective date of the Louisville 8-hour ozone maintenance plan has no substantive impact on EPA's July 5, 2007, redesignation approval. That is, the addition of the State effective date makes no substantive difference to EPA's redesignation analysis as set out in our July 5, 2007, rule, and merely corrects an error made in that prior rulemaking. In addition, EPA can identify no particular reason why the public would be interested in being notified of the correction of this error or in having the opportunity to comment on the correction prior to this action being finalized, since this correction action does not change the redesignation approval and merely states when the Louisville 8-hour ozone maintenance plan was State effective.

EPA also finds that there is good cause under APA section 553(d)(3) for this correction to become effective on the date of publication of this action. Section 553(d)(3) of the APA allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” 5 U.S.C. 553(d)(3). The purpose of the 30-day waiting period prescribed in APA section 553(d)(3) is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. Today's rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, today's rule merely corrects an inadvertent omission by adding the State effective date of the Louisville 8-hour ozone maintenance plan. For these reasons, EPA finds good cause under APA section 553(d)(3) for this correction to become effective on the date of publication of this action.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely corrects an inadvertent omission and imposes no additional requirements beyond those imposed by State law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule merely corrects an inadvertent omission by adding the State effective date of the Louisville 8-hour ozone maintenance plan and does not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does 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). This action merely corrects an inadvertent omission, does not impose any new requirements on sources or allow a State to avoid adopting or implementing other requirements, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act (CAA). This rule also is not subject to Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant and because the Agency does not have reason to believe that the rule concerns an environmental health risk or safety risk that may disproportionately affect children.

In reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 23, 2007. 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) of the CAA.)

I. Background

On May 30, 2007 (72 FR 29901), EPA published a notice of proposed rulemaking (NPR) for the Commonwealth of Pennsylvania. The NPR proposed approval of Pennsylvania's redesignation request, a SIP revision that establishes a maintenance plan for the Reading Area that provides for continued attainment of the 8-hour ozone NAAQS for at least 10 years after redesignation, and a 2002 base-year emissions inventory. The formal SIP revisions were submitted by PADEP on January 25, 2007. Other specific requirements of Pennsylvania's redesignation request and SIP revision for the maintenance plan, and the rationale for EPA's proposed actions are explained in the NPR and will not be restated here.

On December 22, 2006, the U.S. Court of Appeals for the District of Columbia Circuit vacated EPA's Phase 1 Implementation Rule for the 8-hour Ozone Standard (69 FR 23951, April 30, 2004). South Coast Air Quality Management Dist. v. EPA, 472 F.3d 882 (D.C. Cir. 2006). On June 8, 2007, in South Coast Air Quality Management Dist. v. EPA, Docket No. 04-1201, in response to several petitions for rehearing, the D.C. Circuit clarified that the Phase 1 Rule was vacated only with regard to those parts of the rule that had been successfully challenged. Therefore, the Phase 1 Rule provisions related to classifications for areas currently classified under subpart 2 of Title I, part D of the Act as 8-hour nonattainment areas, the 8-hour attainment dates, and the timing for emissions reductions needed for attainment of the 8-hour ozone NAAQS remain effective. The June 8 decision left intact the Court's rejection of EPA's reasons for implementing the 8-hour standard in certain nonattainment areas under subpart 1 in lieu of subpart 2. By limiting the vacatur, the Court let stand EPA's revocation of the 1-hour standard and those anti-backsliding provisions of the Phase 1 Rule that had not been successfully challenged. The June 8, 2007 decision reaffirmed the December 22, 2006 decision that EPA had improperly failed to retain four measures required for 1-hour nonattainment areas under the anti-backsliding provisions of the regulations: (1) Nonattainment area nonattainment New Source Review (NSR) requirements based on an area's 1-hour nonattainment classification; (2) Section 185 penalty fees for 1-hour severe or extreme nonattainment areas; and (3) measures to be implemented pursuant to section 172(c)(9) or 182(c)(9) of the Act, on the contingency of an area not making reasonable further progress toward attainment of the 1-hour NAAQS, or for failure to attain that NAAQS. In addition the June 8, 2007 decision clarified that the Court's reference to conformity requirements for anti-backsliding purposes was limited to requiring the continued use of 1-hour motor vehicle emissions budgets until 8-hour budgets were available for 8-hour conformity determinations, which is already required under EPA's conformity regulations. The Court thus clarified that 1-hour conformity determinations are not required for anti-backsliding purposes.

For the reasons set forth in the May 30, 2007 (72 FR 29901) proposed rulemaking, EPA does not believe that the Court's rulings alter any requirements relevant to this redesignation action so as to preclude redesignation, and do not prevent EPA from finalizing this redesignation. EPA believes that the Court's December 22, 2006 and June 8, 2007 decisions impose no impediment to moving forward with the redesignation of this Area to attainment, because even in light of the Court's decisions, redesignation is appropriate under the relevant redesignation provisions of the Act and longstanding policies regarding redesignation requests.

With respect to the requirement for transportation conformity under the 1-hour standard, the Court in its June 8, 2007 decision clarified that for those areas with 1-hour motor vehicle emissions budgets in their 1-hour maintenance plans, anti-backsliding requires only that those 1-hour budgets must be used for 8-hour conformity determinations until replaced by 8-hour budgets. To meet this requirement, conformity determinations in such areas must continue to comply with the applicable requirements of EPA's conformity regulations at 40 CFR Part 93. As discussed elsewhere in this document, EPA is approving 8-hour MVEBs for the Reading Area. Approval of the 8-hour MVEBs means that the 1-hour budgets no longer apply under anti-backsliding. The court clarified that 1-hour conformity determinations are not required for anti-backsliding purposes.

EPA received one comment. The comment did not object to the proposed approvals of the redesignation request, maintenance plan or the 2002 base year inventory. The comment merely pointed out that EPA's notice had incorrectly identified the metropolitan planning organization (MPO) with jurisdiction over the Reading Area. EPA acknowledges that, as the commenter notes, we mistakenly identified the MPO as the “Northern Tier RPO” in the notice. The MPO, however, is identified correctly in the maintenance plan for the Reading Area (Berks County). The reference to the “Northern Tier RPO” on page 29911 of the May 30, 2007 notice therefore should have been to Reading Metropolitan Planning Organization (“Berks County MPO”).

EPA finds that there is good cause for this redesignation to attainment, and SIP revisions to become effective fifteen days after publication because a more delayed effective date is unnecessary due to the nature of a redesignation to attainment which relieves the area from certain Clean Air Act requirements that would otherwise apply to it. The effective date for this redesignation is authorized under both 5 U.S.C. 553(d)(1), which provides that rulemaking actions may become effective less than 30 days after publication if the rule “grants or recognizes an exemption or relieves a restriction” and section 553(d)(3), which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.”

EPA is approving the Commonwealth of Pennsylvania's redesignation request, maintenance plan, and the 2002 base-year emissions inventory because the requirements for approval have been satisfied. EPA has evaluated Pennsylvania's redesignation request that was submitted on January 25, 2007, and determined that it meets the redesignation criteria set forth in section 107(d)(3)(E) of the Clean Air Act. EPA believes that the redesignation request and monitoring data demonstrate that the Reading Area has attained the 8-hour ozone standard. The final approval of this redesignation request will change the designation of the Reading Area from nonattainment to attainment for the 8-hour ozone standard. EPA is approving the maintenance plan for the Reading Area submitted on January 25, 2007 as a revision to the Pennsylvania SIP. EPA is also approving the MVEBs submitted by PADEP in conjunction with its redesignation request. In addition, EPA is approving the 2002 base-year emissions inventory submitted by PADEP on January 25, 2007, as a revision to the Pennsylvania SIP. In this final rulemaking, EPA is notifying the public that we have found that the MVEBs for nitrogen oxides (NO X ) and volatile organic compound (VOC) emissions in the Reading Area for the 8-hour ozone maintenance plan are adequate and approved for conformity purposes. As a result of our finding, the Reading Area must use the MVEBs from the submitted 8-hour ozone maintenance plan for future conformity determinations. The adequate and approved MVEBs are provided in the following table:

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Redesignation of an area to attainment under section 107(d)(3)(e) of the Clean Air Act does not impose any new requirements on small entities. Redesignation is an action that affects the status of a geographical area and does not impose any new regulatory requirements on sources. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). Because this action affects the status of a geographical area or allows the state to avoid adopting or implementing other requirements and because this action does not impose any new requirements on sources, this action also does not have Federalism implications because it does 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). This action merely approves a state rule implementing a Federal requirement, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a state rule implementing a Federal standard.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Redesignation is an action that affects the status of a geographical area and does not impose any new requirements on sources. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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 . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

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 October 23, 2007. 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, approving the redesignation of the Reading Area to attainment for the 8-hour ozone NAAQS, the associated maintenance plan, the 2002 base-year emissions inventory, and the MVEBs identified in the maintenance plan, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Submitting Comments: We welcome comments from the public on all issues set forth in this rule to assist us in fully considering issues and developing policies. You can assist us by referencing the file code CMS-3014-IFC and the specific “issue identifier” that precedes the section on which you choose to comment.

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking. Click on the link “Electronic Comments on CMS Regulations” on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.

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 Web site address is: http://www.access.gpo.gov/fr/index.html.

In accordance with section 1861(e) of the Social Security Act (the Act), hospitals must meet certain conditions in order to participate in the Medicare program. These conditions are intended to protect patient health and safety and ensure that high-quality care is provided. Hospitals receiving payment under Medicaid must meet the Medicare conditions of participation.

Regulations containing the Medicare conditions of participation for hospitals are located in the Code of Federal Regulations (CFR) at 42 CFR part 482. The condition of participation for hospital laboratory services at § 482.27(c) currently specifies the steps hospitals must take when they become aware they have administered potentially human immunodeficiency virus (HIV) infectious blood or blood components to a patient. The more detailed requirements for laboratories appear in 42 CFR part 493, which sets forth requirements for all laboratories participating in the Medicare, Medicaid, and Clinical Laboratory Improvement Amendments (CLIA) programs.

The Centers for Medicare & Medicaid Services (CMS) and Federal agencies that comprise the Public Health Services, including the Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC), and the National Institutes of Health (NIH), are responsible for ensuring the safety of blood and blood components. In the November 16, 2000 proposed rule (65 FR 69416), we used the term “blood banks” to refer to establishments that supply blood. However, for consistency, we will use the FDA's term of “a blood collecting establishment” (BCE) since blood suppliers include hospital blood banks and blood donor centers. BCEs are subject to the FDA regulations for current good manufacturing practice and additional standards for the manufacture of blood and blood components under 21 CFR parts 211, 600, 601, 606, 610, and 640. Laboratories that provide transfusion services are subject to CLIA requirements for quality control and health and safety standards (42 CFR part 493, subpart K). Laboratories in hospitals are also subject to the hospital conditions of participation for adequacy of laboratory services (42 CFR 482.27). We coordinate inspections of hospital-based BCEs with the FDA to minimize duplication of effort and reduce the burden on affected facilities.

Hepatitis C virus (HCV) was first discovered and established as a causative agent of transfusion-associated hepatitis in the late 1980s. In October 1989, FDA's Blood Products Advisory Committee (BPAC) first discussed steps to identify and quarantine potentially HCV infectious blood and blood components remaining in storage and notify recipients that they may possibly have received infectious blood or blood products. (These steps are known as a lookback.) BPAC advised that there was insufficient information available concerning HCV infection to propose either product quarantine or notification of recipients transfused with blood and blood components prepared from prior collections from donors later determined to be at increased risk for transmitting HCV.

In 1996, the Tenth Report of the U.S. House of Representatives Committee on Government Reform and Oversight (H. Rpt. No. 104-746) focused attention on the significant public health problem that HCV infections pose for the nation. HCV infection is the most common chronic blood-borne infection in the United States. The CDC estimates that during the 1980s, as many as 230,000 new HCV infections occurred each year. Since 1989, the annual number of new infections has declined by 80 percent. The decline is in part attributed to the blood collection establishments' implementation of a donor screening test (HCV enzyme linked immunosorbent assay (EIA) screening test) that was licensed in May 1990. In 1996, however, data from the Third National Health and Nutritional Examination Survey conducted from 1988 to 1994 indicated that approximately 3 million individuals in the United States were believed to have been chronically infected with HCV and that chronically infected persons might not be aware of their infection.

Despite progression of the disease, HCV infection is often asymptomatic for about 20 years, but in many cases eventually causes serious liver injury that is thought to be a leading cause of end stage liver disease among adults in the United States. HCV is also thought to play a significant role in the development of liver cancer. Between 8,000 and 12,000 deaths annually result from HCV-related chronic liver disease.

HCV can be transmitted in a number of ways, including sharing of drug use equipment among injection drug users, blood transfusion and solid organ transplants from infectious donors, exposure to infectious blood or body fluids in healthcare settings (for example, hemodialysis or occupational exposure to blood), perinatal exposure of infants to infected mothers, and possibly by unprotected sex.

In response to scientific data that show that HCV is transmissible through blood and blood components, FDA has implemented an extensive system of donor screening and testing procedures performed before, during, and after a donation takes place to help prevent the transfusion of blood and blood components that are infected with HCV.

Blood collecting establishments are currently testing each donation of blood and blood components for evidence of HCV infection. Current testing for HCV includes antibody screening, as well as direct viral detection through the current use of nucleic acid tests (NAT). FDA restricts the use of donations that test reactive for evidence of HCV infection for transfusion or further manufacture. (The term “repeatedly reactive” has been used to indicate that the initial HCV antibody screening test is reactive (in which case it is retested in duplicate), and that one or both of the duplicate tests are reactive.) FDA now refers to screening tests as “reactive,” instead of “repeatedly reactive” to accommodate the different testing algorithms established for NAT and other screening tests. In cases where the screening algorithm requires initial and repeat testing as part of a single screening procedure, FDA would interpret the term “reactive” to mean “repeatedly reactive.”

As a result of blood donor screening and testing procedures, the risk of transmitting HCV infections through blood transfusion is very low. Despite the best practices of blood establishments, however, a person may donate blood early in the infection process when the testable marker to HCV is not detectable by the test but HCV is nevertheless present in the donor's blood (called a “window” period).

If the donor later tests reactive for evidence of HCV infection, or when the blood collecting establishment is made aware of other reliable test results or information indicating evidence of HCV infection, previously collected blood and blood components would be at increased risk for transmitting HCV. We believe that approximately 7 percent of the estimated 3.9 million Americans ever infected with HCV were infected as a result of transfusion of blood components before the availability of donor screening tests or due to past use of non-viral-inactivated plasma derivative products.

As a result of advances in identifying the presence of HCV, most notably through screening tests based on nucleic acid amplification technology, the window period and risk of HCV transmission from blood continues to shrink. The preamble to FDA's proposed rule entitled “Current Good Manufacturing Practice for Blood and Blood Components: Notification of Consignees and Transfusion Recipients Receiving Blood and Blood Components at Increased Risk of Transmitting HCV Infection (lookback),” published on November 16, 2000 (65 FR 69378), and FDA's final rule published elsewhere in this issue of the Federal Register provide more information on the length of the window period and discuss various diagnostic modalities for HCV infection.

The incidence of transfusion-transmitted HCV infection has decreased markedly since the implementation of donor screening and testing for HCV, and viral inactivation of derivatives. Blood establishments implemented donor screening tests after a single antigen, enzyme linked immunosorbent assay (EIA) for antibody to HCV (HCV EIA 1.0 screening test) was licensed in May 1990. The FDA issued a memorandum to all registered blood establishments in November 1990, “Testing for the Antibody to Hepatitis C Virus Encoded Antigen (Anti-HCV),” recommending use of approved donor screening tests for antibody to HCV. A lookback program was not recommended at that time because: (1) Screening tests available at the time could not distinguish between on-going infection and recovery, thus making unclear the meaning of a reactive test for any one individual; (2) donor screening for the antibody to HCV did not include confirmatory testing, and most notification would have been based on false positive donor test results; (3) there was limited knowledge of routes of transmission for HCV other than parenteral; and (4) no potential long-term benefits of therapy were known.

A significantly more sensitive multiantigen screening test (HCV EIA 2.0 screening test) was licensed in March 1992. In June 1993, FDA licensed an HCV 2.0 strip immunoblot assay (HCV RIBA 2.0), also known as recombinant immunoblot assay (RIBA), a supplemental test for antibody to HCV. Supplemental tests for HCV antibodies are used to counsel and resolve the donor's status. Following the December 1993 BPAC meeting, BPAC recommended product quarantine of prior collections from a donor who later tests repeatedly reactive for the antibody to HCV and tests positive or indeterminate on a supplemental test; however, BPAC only marginally endorsed consignee notification for the purpose of transfusion recipient notification because the public health benefit of the notification was not clear.

The Public Health Service Advisory Committee on Blood Safety and Availability (PHS Advisory Committee) discussed improvements in the treatment and management of HCV infection and improvements in testing for the antibody to HCV at public meetings held on April 24, 1997 and on August 11 and 12, 1997. The PHS Advisory Committee also discussed the public health benefits of notifying transfusion recipients receiving prior collections from a donor who subsequently tests repeatedly reactive for evidence of HCV infection. Following the Department of Health and Human Services' acceptance of recommendations from the PHS Advisory Committee, the FDA developed guidance, published in March 1998, regarding procedures for testing blood for HCV, quarantining blood and blood components, and notifying patients who may have received HCV-infected blood and blood components.

In response to comments received, the March 1998 guidance was withdrawn and FDA issued a revised guidance dated September 1998, which it announced in the Federal Register on October 21, 1998 (63 FR 56198), entitled “Guidance for Industry: Current Good Manufacturing Practice for Blood and Blood Components: (1) Quarantine and Disposition of Units From Prior Collections From Donors With Repeatedly Reactive Screening Test for Antibody to Hepatitis C Virus (Anti-HCV); (2) Supplemental Testing, and the Notification of Consignees and Blood Recipients of Donor Test Results for Anti-HCV” (the September 1998 guidance). The September 1998 guidance provided recommendations to enable quarantine and disposition of blood and blood components from prior collections from donors with repeatedly reactive screening test results.

At public meetings on November 24, 1998 and January 28, 1999, the PHS Advisory Committee reconsidered the issue of recipient notification related to repeatedly reactive results on the single antigen screening test. The PHS Advisory Committee recommended that targeted lookback should be initiated based on a repeatedly reactive HCV EIA 1.0 screening test result on a repeat donor unless a supplemental test was performed and the result did not indicate increased risk of HCV infection or, in the absence of a supplemental test result, unless the signal to cut off value of the repeatedly reactive HCV EIA 1.0 screening test was less than 2.5 or follow-up testing of the donor was negative.

The FDA published a notice in the Federal Register on June 22, 1999 (64 FR 33309) announcing the availability of a revised draft guidance titled “Draft Guidance for Industry: Current Good Manufacturing Practice for Blood and Blood Components: (1) Quarantine and Disposition of Prior Collections from Donors with Repeatedly Reactive Screening Tests for Hepatitis C Virus (HCV); (2) Supplemental Testing, and the Notification of Consignees and Transfusion Recipients of Donor Test Results for Antibody to HCV (Anti-HCV).” Consistent with the recommendations of the PHS Advisory Committee, this revised draft guidance addressed lookback actions related to donor screening by HCV EIA 1.0 and also recommended that the search of historical testing records of prior donations from donors with repeatedly reactive EIA 1.0, EIA 2.0, or EIA 3.0 screening tests for HCV should extend back indefinitely to the extent that electronic or other retrievable records exist.

In October 2004 FDA issued a final guidance, “Guidance for Industry: Use of Nucleic Acid Tests on Pooled and Individual Samples from Donors of Whole Blood and Blood Components (Including Source Plasma and Source Leukocytes) to Adequately and Appropriately Reduce the Risk of Transmission of Human Immunodeficiency Virus Type 1 and Hepatitis C Virus” which was announced in the Federal Register on October 28, 2004 (69 FR 62902). The guidance informed blood collecting establishments that FDA had licensed NAT as tests to screen blood donors for HIV-1 RNA and HCV RNA, that the licensed tests could detect evidence of infection at a significantly earlier stage than was possible under previously approved tests using antibody or antigen detection technology, and that the FDA believed that these newly licensed tests were widely available and met the criteria in 21 CFR 610.40(b) for screening tests that are necessary to reduce adequately and appropriately the risk of transmission of communicable disease through blood products.

In order to have consistent industry standards for potentially infectious blood and blood components, on November 16, 2000 (65 FR 69416), we proposed to adopt as our requirements for hospitals the procedures for HCV proposed by the FDA in that same Federal Register (65 FR 69378). Since our proposed rule was published in conjunction with the FDA's proposed rule, we have considered comments we received in conjunction with the FDA. We specifically requested in the proposed rule comments on the reasonableness of our adopting the FDA requirements.

The FDA proposed rule for HCV lookback would require blood establishments (in this IFC we changed the reference of “blood establishments” to “blood collecting establishments” (BCE)) to search historical testing records of prior donations from donors with repeatedly reactive EIA 1.0, EIA 2.0, or EIA 3.0 screening tests for HCV, extending back indefinitely for computerized electronic records, and to January 1, 1988 for other retrievable records. Under the FDA rule, a BCE would be required to notify a hospital if it supplied such hospital with potentially HCV infectious blood.

We proposed to amend the hospital conditions of participation to require a hospital to develop agreements with outside BCEs under which the BCE would notify the hospital if it supplied the hospital with potentially HCV infectious blood and blood components. We proposed to establish a lookback, similar to that now in effect for HIV, requiring hospitals, when notified by BCEs, to quarantine prior collections from a donor who later tested repeatedly reactive for evidence of HCV infection, and to notify transfusion recipients of the prior collections, based on further testing of the donor, as appropriate.

We proposed to remove current paragraph (a) in the existing § 482.27 and re-designate paragraphs (b) and (c) as (a) and (b), respectively. In addition, we proposed adding a definition of “potentially HCV infected blood and blood components” as previous collections from a donor—(1) Who tested repeatedly reactive for evidence of HCV infection on a single antigen screening test with a signal to cut off value equal to or greater than 2.5 for at least two of the three EIA tests, or when the signal to cut off value for such donor could not be calculated, with no record of further testing; (2) who tested repeatedly reactive for evidence of HCV infection and positive on a multiantigen supplemental test licensed at an earlier or later date by FDA; (3) who tested repeatedly reactive for evidence of HCV infection and indeterminate on a supplemental test for HCV, unless an indeterminate RIBA 3.0 supplemental test result was obtained or a negative EIA 3.0 or negative RIBA 3.0 test result was subsequently obtained; (4) who tested repeatedly reactive for evidence of HCV infection on a multiantigen screening test with no record of further testing; or (5) who tested repeatedly reactive for evidence of HCV infection on a single antigen screening test and repeatedly reactive on a subsequent multiantigen screening test, unless a negative supplemental test result or an indeterminate RIBA 3.0 supplemental test result was obtained. (See proposed § 482.27(b)(2).)

Our regulations currently require a hospital that regularly uses the services of an outside BCE to have an agreement with the BCE that requires the establishment to notify the hospital if the establishment has supplied the hospital with potentially HIV infected blood. We proposed to amend that provision to also require notification in the case of potentially HCV infected blood. (See proposed § 482.27(b)(3).) In addition, we proposed to revise our regulations to include HCV-relevant testing required by FDA. (See proposed § 482.27(b)(3)(ii).)

We also proposed conforming changes to the HIV requirement at § 482.27(b)(3)(i) by removing the word “promptly” and instead require that a blood bank notify a hospital of potentially infected blood within 3 calendar days after testing. Also, hospitals would have been required to make at least three attempts to notify the patient, or to notify the attending physician who ordered the blood or blood components.

We proposed additional conforming changes that would have required a hospital's agreement with a BCE to require the BCE to notify the hospital within 3 calendar days of testing if blood tested repeatedly reactive for HCV antibodies. This change provides further clarity of the notification requirement.

The FDA proposed a change to the maximum time permitted for a BCE to notify hospitals of the results of the further testing, from 30 to 45 days, in order to create consistency between the HIV and HCV lookback provisions. Although FDA has stated that further testing for HIV and HCV could be completed within 30 days, additional time was needed to notify hospitals following completion of the further testing. We proposed the appropriate changes to § 482.27(b)(3)(ii) to include the change from 30 to 45 days in the agreement a hospital had with a BCE.

In § 482.27(c)(3)(i) and (ii) regarding follow-up testing, we proposed deleting the words in § 482.27(b)(1)(ii) to reflect that the additional follow-up testing was an FDA requirement and not a recommendation.

As a new provision, we proposed that hospitals be required to include in agreements with BCEs a provision requiring the BCE to notify the hospital of lookback results under FDA's proposed 21 CFR 610.48(h)(3)(i) and (h)(3)(ii), and (i)(3)(i) and (i)(3)(ii). FDA proposed that hospitals perform a lookback of blood or blood components collected from a donor extending back indefinitely for computerized electronic records and to January 1, 1988 for other retrievable records, or to the date 12 months before the donor's most recent negative multiantigen screening test for the antibody to HCV, whichever is the later date.

We also proposed to revise our regulations to apply the provisions regarding the quarantine of potentially HIV infectious blood and blood components currently set forth at § 482.27(c)(3) to potentially HCV infected blood and blood components. (See proposed § 482.27(b)(4).) In addition, we proposed requiring hospitals to destroy or re-label previous collections of blood or blood components held in quarantine if the results of the testing were indeterminate. We proposed that hospitals re-label previous collections of blood or blood components held in quarantine if the results of the testing were indeterminate, in accordance with the FDA regulations at 21 CFR 606.121 and the HCV Lookback Guidance Documents.

We proposed a change to § 482.27(b)(4) by adding a parenthetical phrase “(either internal or under an agreement).” We proposed this change to clarify that a blood collecting establishment has a responsibility to notify the hospital of HIV or HCV screening results even when located at a hospital site.

Hospitals are currently required to maintain clinical records on all patients for 5 years. We proposed adding a new provision requiring hospitals to maintain adequate records of the source and disposition of all units of blood and blood components for at least 10 years after the date of disposition. The FDA also proposed to increase record retention requirements for blood establishments from 5 years to 10 years. Hospitals would be required to increase the record retention period yearly until 10 years of records from the date of disposition had accrued. (For example, the first year after the effective date of this regulation, hospitals would have had 6 years of records, the second year after the effective date, 7 years, and so on until 10 years had been reached.) Hospitals would then have been able and expected to maintain 10 years of patient records. (See proposed § 482.27(b)(5).) We believed this would be necessary to increase opportunities for disease prevention or treatment years after a recipient had been exposed to a donor later determined to be at risk of transmitting the disease through transfusion. We proposed, as is currently required at § 482.24(b)(2), that hospitals maintain the clinical records in such a manner that would permit prompt retrieval. We also had proposed that hospitals ensure that medical records would be transferred to another hospital or other entity if the former hospital ceased operation for any reason. (See proposed § 482.27(b)(5)(iii).)

The FDA had proposed changes in its requirement for patient notification to allow transfusion services to make three attempts to either notify patients directly or notify the attending physician or the physician who ordered the blood. We proposed that hospitals follow the same notification procedures with regard to potentially HIV and HCV infectious blood and blood components. For consistency, we also proposed that the HIV lookback requirements be changed to conform to the requirements for HCV lookback.

We had proposed adding a new paragraph (c) requiring hospitals to comply with FDA regulations pertaining to the appropriate testing and quarantining of infectious blood and blood components and to the notification and counseling of recipients who may receive any infectious blood and blood components that are identified after the publication of this rule.

Note that our Medicaid regulations at § 441.17 (“Laboratory services”) provide that the State plan must pay for laboratory services furnished by a hospital-based laboratory meeting the requirements for Medicare participation set forth in § 482.27. Therefore, the provisions of this interim final rule with comment period will also affect the Medicaid program. That is, in order for the laboratory services furnished by a hospital-based laboratory under Medicaid to be covered under the State plan, the hospital will have to meet the new requirements set forth in this rule.

While we are not issuing a new proposed rule as would otherwise be required under section 1871(a)(3)(B) of the Act, we are considering comments we received on the proposed rule published on November 16, 2000 in this interim final rule with comment period. See section VI below for a more detailed discussion of our decision to publish this matter as an interim final rule with comment period.

Six types of organizations, including blood banks, blood centers, the blood industry trade association, and hospitals, submitted comments raising several issues with the proposed rule. The main concerns were with the proposed requirement to make three attempts to notify affected transfusion recipients and the requirement to notify the deceased's relative of possible HCV infection.

Both CMS and the FDA received comments related to the complex and prescriptive language in their respective proposed rules. As we stated in section II of this rule, we also reviewed the comments and responses that the FDA received, and we have coordinated our responses with the FDA.

Comment: One commenter disagreed with adding specific language about the test method in the interim final rule with comment period, stating that the methodology could be obsolete in a few years.

Response: We agree with the commenter that including specific testing methods in this interim final rule with comment period is too restrictive. We have changed the regulation at § 482.27(b)(2) to reference 21 CFR 610.47, which describes blood and blood components subject to HCV lookback.

Comment: Several commenters disagreed with our proposal to require a hospital to notify a patient's legal guardian or relative of possible HCV exposure after a patient had already died (of any cause). They noted that there are no clear indications of risk to household contacts of patients with HCV. They request that § 482.27(b)(10) be deleted.

Response: We agree with respect to HCV. As previously discussed in both the FDA and CMS's rules, direct percutaneous exposure to infected blood, particularly in the setting of drug abuse, accounts for the majority of HCV infections acquired in the United States. Secondary transmission of HCV to sexual partners, care providers, or others with close contact is very unlikely. The proposed rule implies that notification efforts should be continued for HCV transmissions if the recipient is deceased. We will clarify that if the patient is deceased, the requirement to notify the legal guardian or relative of possible exposure applies only to HIV infection and not HCV infection. We have changed § 482.27(b)(10) to reflect the clarification.

Comment: One commenter stated that since the FDA requires that all blood donors and donated transfusions are screened, the risks of transmission through blood transfusions are currently very low. The commenter stated that there does not appear to be a need to increase the regulatory burden on hospitals because the problem of HCV transmission in hospitals by blood transfusion and tissue transplant has been effectively solved. The commenter stated that the proposed regulation should be withdrawn.

Response: We understand that due to advanced screening techniques and the fact that hospitals are currently following the FDA's industry guidelines on HCV testing and quarantining of blood and blood components that test reactive for evidence of HCV infection, the risk of transmitting HCV through blood transfusions or administration has been greatly reduced. In addition to reducing the risk of current and future HCV transmission, this rule will ensure that hospitals appropriately notify those Americans who may have been infected with HCV as a result of transfusion of blood components before the broad availability of donor screening tests in 1990. It is important that these individuals are notified of the need for HCV testing and counseling. HCV infection is usually asymptomatic for about 20 years, but may cause serious liver injury that is thought to be a leading cause of end stage liver disease among adults in the United States. HCV is also thought to play a role in the development of liver cancer. Between 8,000 and 12,000 deaths annually result from HCV-related chronic liver disease.

This interim final rule with comment period also increases the medical record retention period from 5 to 10 years. The FDA has recommended that the records retention period be increased because advances in medical diagnosis and therapy have created opportunities for disease prevention or treatment many years after recipient exposure to a donor later determined to be at increased risk of transfusion transmitted disease.

Comment: One commenter stated that the burden of 16 hours for a hospital to develop the required procedures and establish the contract with the BCE is underestimated. They also stated that the estimated cost of $52,653,004 for recipient notification is very low.

Response: As stated in the proposed rule, we currently require hospitals that receive blood from an outside BCE to have an agreement with the BCE that governs the procurement, transfer, and availability of blood and blood components for HIV. We do not envision that hospitals need a separate or different agreement for HCV. Hospitals will only need to modify their current agreement to include potentially HCV infected blood and blood components. Also, hospitals currently have procedures in place to conduct HIV lookback activities. We think that 16 hours, as stated in the proposed rule, will provide adequate time to incorporate similar procedures for conducting HCV lookback activities.

We agree with the commenter regarding the cost for recipient notification. Based on the recent Bureau of Labor Statistics estimates, we have increased the cost for recipient notification. We have increased the hourly wage for a staff medical technologist performing the review from $25.67 to $33.84. Each hospital will incur a one-time cost of $541.44, or about $2.7 million for the entire industry to develop HCV lookback procedures. Thus, the total one-time cost to hospitals for conducting the historical (retrospective) lookback efforts is estimated to be $41.6 million ($2.7 million to develop procedures and $38.9 million for recipient notification). The calculations are based on the latest data available related to hospitals and number of recipients that may need notification. There are approximately 4,980 Medicare- and Medicaid-participating hospitals, excluding 1,041 hospitals that operate blood collection centers, because they are counted among the collection establishments. The CDC estimated in 2000 that 212,000 recipients may need to be notified due to the historical review.

Comment: One commenter stated that there is no reason for blood records to be kept for 10 years, stating that there is no reason for such records to be kept on a different basis than any other medical records. Having special rules for this narrow class of records will only lead to confusion. Several commenters agreed with requiring hospitals to maintain adequate records of the source and disposition of all units of blood and blood components for at least 10 years from the date of disposition, but recommended that the retention period be phased in.

Response: We maintain that increasing the record retention period from 5 to 10 years will increase opportunities for disease prevention or treatment years after a recipient has been exposed to a donor that is later determined to be at risk of transmitting a disease through transfusion. In addition, advanced technology has improved the hospital's ability to maintain, store, and retrieve records.

The record retention period will be phased in as described above in Section II, “Provisions of the Proposed Regulation.” Hospitals will be required to increase the record retention period yearly until 10 years of records from the date of disposition have accrued.

Comment: Several commenters agree that the hospital should directly notify the patient, the attending physician, or the physician who ordered the blood and blood component of HCV infection. However, they disagree with requiring, at a minimum, three attempts to notify the patient. They stated that only one notification attempt should be made using a traceable method such as certified mail or return receipt. A returned letter should be proof that notification was attempted and was unsuccessful, and that further attempts would be unsuccessful as well. However, one commenter disagrees with requiring just one notification attempt by certified mail. The commenter stated that there are individuals who will not claim a certified letter.

Response: We agree that some individuals are reluctant to take possession of a certified letter. We have clarified in the interim final rule with comment period at 482.27(b)(6)(i) and (b)(7) that the hospital must make reasonable attempts to perform the notification within 12 weeks after being notified by the BCE that it has received potentially HIV or HCV infectious blood and blood components. The hospital will be required to notify the recipient, recipient's physician of record, or a legal representative or relative if the recipient is a minor or adjudged incompetent by a State court.

Comment: Several commenters stated that it is important for both CMS' and FDA's requirements for HCV and HIV lookbacks to be identical in order to ensure that the targeted lookbacks are carried out in a uniform manner throughout the United States.

Response: We appreciate the comments supporting a unified targeted lookback effort. It is important to have consistent industry standards for maintaining the safety of the nation's blood supply. As previously stated, we have collaborated with the FDA in developing and responding to the comments received on the proposed rule.

Comment: A commenter stated that the time-frame for non-computerized retrievable records should be from January 1, 1988 instead of January 1, 1998.

Response: After the effective date of this rule, whenever a hospital or other BCE receives a blood donation that tests infectious for HCV, it must perform a lookback as far back as the period described above (that is, 1988 or to the extent of electronic records), to determine if that donor had previously given blood. If the donor's most recent previous donation (before the current infectious donation) tested non-reactive (that is, uninfected), or tested reactive on a viral detection test (for instance, the nucleic acid test) but non-reactive on the associated antibody screening test on that previous occasion, the hospital and/or BCE must review the record for the 12 months previous to the earlier donation test, to determine if there were any donations during that 12-month period, and to determine if those blood products are still available for use. If so, all such blood products still available for consignment/use 12 months and less before that previous donation must be quarantined retested, and the consignees of the blood products notified.

For the most part, this interim final rule with comment period incorporates the provisions of the November, 2000 proposed rule. As discussed in section III, “Analysis of and Responses to Public Comments,” we have made minor changes to the proposed rule at § 482.27(b)(2), (6), (7), and (10). We have added § 482.27(b)(11) to establish a cut-off date for retrospective HCV lookback.

In § 482.27(b)(2), we removed language that we determined, based on public comment, to be too restrictive. That language was replaced with a reference to FDA's regulations in 21 CFR 610.47.

In § 482.27(b)(3)(i) through (iii), we made changes to the regulation citations to conform to the FDA rule.

In § 482.27(b)(6) and (7), we changed the proposed requirement that the hospital make three attempts to notify the patient or physician of record that potentially infectious blood was transfused to the patient. Instead, we are requiring the hospital to make reasonable attempts to notify the recipient or the physician of record. We emphasize that a hospital should continue attempting its notification efforts until it is clear that further attempts would not be successful.

In § 482.27(b)(10), we have revised the language to clarify that if a patient is deceased, the requirement to notify a legal guardian or relative of possible exposure applies only to HIV infection and not to HCV infection.

We have made changes to the interim final rule with comment period in § 482.27(b)(11) to conform with the FDA's rule at § 610.48 whereby a cut-off date has been established for the retrospective lookback. As such, we have established a cut-off date in this rule for the retrospective (historical) HCV lookback. The requirement under § 482.27(b) will remain in effect for 8 years after the date of publication in the Federal Register .

We clarified the regulation at § 482.27(c) by stating that the lookback activities discussed in this section are related only to new blood safety issues that are identified after the publication of this rule. Hospitals should comply with the FDA regulations pertaining to the appropriate testing and quarantining of infectious blood and blood components, and to the notification and counseling of recipients who may receive any infectious blood and blood components.

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

Section 1871(a)(3) of the Act (as added by section 902 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)) provides that, effective December 8, 2003, the Secretary, in consultation with the Director of the Office of Management and Budget (OMB), shall establish and publish a regular timeline for the publication of Medicare final regulations based on the previous publication of a proposed regulation or an interim final regulation. Section 1871(a)(3)(B) of the Act further provides that such timelines may vary among different regulations, but shall not be longer than 3 years except under exceptional circumstances. As noted above, CMS published a proposed rule regarding Hepatitis C Virus and blood collecting establishments on November 16, 2000. On December 30, 2004, we published a notice in the Federal Register implementing section 1871(a)(3) of the Act (68 FR 78442). In that notice, we interpreted the effect of that section as generally rendering legally inoperative Medicare proposed rules that were over 3 years old on the MMA's effective date. Therefore, since 3 years had already elapsed since publication of the November, 2000 NPRM on December 8, 2003, we believe that the 2000 NPRM became legally ineffective as of that date. Accordingly, even though we sought and received extensive comments on this interim final rule with comment period in response to the 2000 proposed rule, we are not publishing this rule as a final rule.

Under such circumstances, we ordinarily would publish a new proposed rule in the Federal Register and invite public comment on the proposed rule. The proposed rule would include a reference to the legal authority under which the rule was proposed, and the terms and substance of the proposed rule or a description of the subjects and issues involved. This procedure can be waived, however, if an agency finds good cause that a notice and comment procedure is impracticable, unnecessary, or contrary to the public interest, and incorporates a statement of the finding and its reasons in the rule issued.

We are waiving publishing a proposed rule, and instead publishing this rule as an interim final rule with comment period. We are specifically going forward because of the importance of keeping this document coordinated with the FDA's lookback rule covering blood establishments, and the present danger to lives and health of individuals that arise from unknown contaminants in the nation's blood supply. Section 1871(a)(3) of the Act does not prohibit us from issuing an interim final rule with comment period based on the expired proposed rule, as long as we issue a final rule no later than 3 years after the interim final rule's publication date (or publish in the Federal Register a notice extending the period).

The FDA's final rule and CMS's interim final rule on blood safety are very closely related and dependent upon each other. However, the FDA is not restricted by this section of the MMA (which applies only to Medicare rules) and therefore is also issuing its final rule in this issue of the Federal Register . We believe that it would not be in the best interest of the public for the FDA to publish a final rule requiring blood establishments to notify hospitals of infectious blood and blood products and CMS not to require hospitals to perform the necessary lookback activities of notifying transfusion recipients of the need for HCV testing and counseling.

For the FDA's rule to be effective practically, it is therefore necessary that we issue a companion interim final rule with comment period that covers transfusion services and further supports the notification of recipients of blood and blood components that are at increased risk of infection and transmission of HCV.

Therefore, we find good cause to waive the publication of a proposed rule and to issue this interim final rule with comment period. We are providing a 60-day public comment period.

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

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

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

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

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

We are soliciting public comment on each of these issues for the following sections of this document that contain information collection requirements (ICRs):

Section 482.27(b)(3) requires a hospital that regularly uses the services of an outside BCE to establish and maintain a written agreement with the BCE that governs the procurement, transfer, and availability of blood and blood components. This section also requires the BCE to notify the hospital within 3 calendar days after the date on which the donor tested reactive for evidence of HCV infection or after the date on which the blood establishment was made aware of other test results indicating evidence of HCV infection, as outlined in (b)(3)(i) through (iii).

Section 482.27(b)(5) requires a hospital to maintain, in a manner that permits prompt retrieval, adequate records of the source and disposition of all units of blood and blood components for at least 10 years from the date of disposition. In addition, this section requires a hospital to maintain a fully funded and documented plan that will allow the hospital to transfer these records to another hospital or other entity if such hospital ceases operation for any reason.

Section 482.27(b)(6) requires a hospital that has administered potentially HIV or HCV infectious blood or blood components (either directly through its own BCE or under an agreement), or released the blood or blood components to another entity or individual, to make reasonable attempts to notify the patient, or to notify the attending physician or the physician who ordered the blood or blood component and ask the physician to notify the patient, that potentially HIV or HCV infectious blood or blood components were transfused to the patient. Time frame and notification requirements are outlined in § 482.27(b)(6), (b)(7), and (b)(8).

Section 482.27(b)(9) requires a hospital to maintain policies and procedures for notification and documentation that conform to Federal, State, and local laws, including requirements for the confidentiality of medical records.

Section 482.27(b)(10) requires a physician or hospital, if the patient has been adjudged incompetent by a State court, to notify a legal representative designated in accordance with State law. If the patient is competent, but State law permits a legal representative or relative to receive the information on the patient's behalf, the physician or hospital must notify the patient or his or her legal representative or relative. If the patient is deceased, the physician or hospital must continue the notification process for HIV infection and inform the deceased patient's legal representative or relative. If the patient is a minor, the legal guardian must be notified.

While all of the information collection requirements referenced above are subject to the Paperwork Reduction Act, the burden associated with these requirements is captured and discussed in the FDA's final regulation titled “Current Good Manufacturing Practice for Blood and Blood Components: Notification of Consignees and Transfusion Recipients Receiving Blood and Blood Components at Increased Risk of Transmitting HCV Infection” published elsewhere in today's Federal Register . Therefore, we are assigning 1 token hour of burden to these requirements.

The FDA's rule assigns a one-time burden of 16 hours for hospitals to develop procedures to conduct lookback activities. We also require hospitals that currently receive blood from an outside BCE to have an agreement with the BCE that governs the procurement, transfer, and availability of blood and blood components for HIV. Our rule requires hospitals to modify their current agreements to include HCV. Although the FDA does not require hospitals to have an agreement with a BCE, we believe that the time necessary to perform this task will be minimal and is already captured in the 16 hours allotted in the FDA rule.

We received a comment that the burden of 16 hours for a hospital to develop the required procedures and establish the contract with the BCE is underestimated. This interim final rule with comment period will require a hospital to make minor modifications to the current agreement they have with the BCE for HIV. Therefore, we disagree with the comment that the 16 hours is not adequate to develop procedures to conduct lookback activities and modify their agreement with the BCE.

We have submitted a copy of this interim final rule with comment period to OMB for its review of the information collection requirements. These requirements are not effective until they have been approved by OMB. A notice will be published in the Federal Register when we receive approval.

If you comment on any of these information collection and record keeping requirements, please mail copies directly to the following: Centers for Medicare and Medicaid Services, Office of Strategic Operations and Regulatory Affairs, Regulations Development Group, Attn: Melissa Musotto, CMS-3014-IFC, Room C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850; and Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503, Attn: Carolyn Lovett, CMS Desk Officer, CMS-3014-IFC, carolyn_lovett@omb.eop.gov. Fax (202) 395-6974.

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

Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more annually). Because the projected cost of this rule falls below the threshold for a major rule, we have determined that this rule is not a major rule.

The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $31.5 million in any 1 year. For purposes of the RFA, a majority of hospitals are considered small entities due to their non-profit status. The agency has examined the impact on small entities and has determined that this rule will not have a significant economic impact on a substantial number of small entities. Individuals and States are not included in the definition of a small entity.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area (superseded by “core-based statistical areas” (CBSAs)) and has fewer than 100 beds. Because of the lack of information to characterize the number and volume of affected blood and blood components in small rural hospitals, we have prepared an analysis that is consistent with section 604 of the RFA.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold level is currently approximately $122 million. We believe that this interim final rule with comment period is not an economically significant rule as described in the Executive Order, or a significant action as defined in the Unfunded Mandates Reform Act. Aggregate impacts of the rule, and aggregate expenditures caused by the rule will not reach $120 million for either the public or the private sector. As discussed in the following paragraphs, because of the lack of information to characterize the number and volumes of affected blood and blood components in hospitals that might qualify as small entities, the impact on small entities is uncertain.

It is clear that a number of hospitals that provide blood transfusions will be affected by the implementation of this interim final rule with comment period and that a substantial number of those entities will be required to make changes in their operations. For these reasons, we have prepared the following analysis. This analysis, in combination with the rest of the preamble, is consistent with the analysis set forth by the RFA.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. We have determined that the rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we have concluded that the rule does not contain policies that have federalism implications as defined in the Executive Order 13132 and, consequently, a federalism summary impact statement is not required.

This interim final rule with comment period requires hospitals that transfuse blood and blood components to (1) prepare and follow written procedures for appropriate action when it is determined that blood and blood components the hospitals received and transfused are at increased risk for transmitting HCV; (2) quarantine prior collections in inventory from a donor who is at increased risk for transmitting HCV infection; (3) notify transfusion recipients (and, where required, legal representatives or relatives), as appropriate, of the need for HCV testing and counseling; and (4) extend the records retention period to 10 years.

This interim final rule with comment period will affect hospitals that transfuse blood and blood components. There are approximately 4,980 Medicare- and Medicaid-participating hospitals, excluding 1,041 hospitals that operate blood collection centers, because they are counted among the collection establishments. The CDC estimated in 2000 that 212,000 recipients may need to be notified due to the historical review.

Fixed Cost—Standard Operating Procedures and Record Review. This interim final rule with comment period is expected to generate one-time costs and some additional annual costs for hospitals. One-time costs include the development of procedures and policies for recipient notification and the agreement a hospital should have if it uses the services of an outside BCE. We assume that these tasks will involve a review of current procedures and policies (for example, for HIV lookback) and the adaptation or modification of current procedures and policies to address the provisions of this rule. We estimate, in consultation with the FDA, that the tasks will require an average of 16 hours per facility.

In the proposed rule, we estimated, based on the 1997 Bureau of Labor Statistics (BLS) estimates, that the total hourly compensation for a staff medical technologist is $25.67. We have revised the estimates to increase the hourly compensation to $33.84 to reflect the most recent BLS data. Each hospital will incur a one-time cost of $541.44 ($33.84 × 16 hours = $541.44). The total cost is about $2.7 million ($541.44 × 4980 establishments = $2,696,371.) (See the table in this section.) The proposed rule would have required hospitals to make at least three attempts to notify the transfusion recipient. Several commenters expressed concern that it would be unnecessary to continue notification attempts if the hospital had proof that notification was attempted and was unsuccessful and that further attempts would most likely be unsuccessful. Therefore, we have changed the prescriptive language about the number of attempts. However, hospitals must make a reasonable attempt to contact any affected transfusion recipient within a maximum of 12 weeks from the time they receive from the blood establishment the results of a donor's supplemental positive test for HCV.

We did not receive comments on the initial estimate that it would cost $165 to comply with all of the lookback provisions for each affected component. However, based on a recent report the FDA received from Los Angeles County, a vendor was paid $118 per patient to abstract health records, locate and notify transfusion recipients, and to give pretest counseling. Therefore, the FDA has revised the cost for lookback activities. The FDA estimates that the product quarantine accounts for about 40 percent of the unit cost (that is, $66), and the recipient notification accounts for the other 60 percent of the unit cost (that is, $99). [EB2] Without other data from both the prospective and retrospective lookbacks, the FDA continues to use the $66 as the cost of product quarantine, but increased the cost of recipient notification from $99 to $118 based on the experience of Los Angeles County.

Prospective HCV lookback. The FDA estimates (based on prevalence levels reported by the American Red Cross for 2000) about 2,400 discrete components could trigger recipient notification (780 donations from HCV-infected donors × 3.1 components per donation). The CDC survey found that on average about 85 percent of the at-risk components sent to hospitals were transfused. For the analysis of the proposed rule, FDA assumed that no patient would receive more than one affected component. This assumption suggests that hospitals will quarantine about 2,400 components and attempt about 2,050 recipient notifications (780 HCV positive donors × 3.1 components per donor × 85 percent transfused). Because CMS inspected hospitals account for about 65 percent to 75 percent of the number of transfusions, the annual costs for consignees to conduct the prospective lookback actions range from $260,000 to $300,000 (65 percent by CMS-inspected establishments × 2,400 components annually triggering recipient notification × $66 per component quarantine plus 2050 components annually triggering recipient notification × $118 per recipient notification to 75 percent by CMS-inspected establishments × 2,400 components annually triggering quarantine × $66 per component quarantine plus 2,050 components annually triggering recipient notification × $118 per recipient notification. (See the table in this section. The numbers in the table are rounded).

Retrospective HCV lookback. For notifications resulting from donors tested before February 20, 2008 under 21 CFR 610.48(c), the hospital must complete the notification effort within 1 year from the time it receives notification from the blood establishment. The recipient notification provided by the hospital must include a basic explanation to the recipient, referral for counseling and further testing, and documentation of the notification or attempts to notify the attending physician or recipient. The estimated one-time cost of recipient notification associated with the review of historical testing records is $41.6 million. This is based on the FDA estimate of blood components of about 212,000 recipients identified for notification produced from donations, and the average cost of $184 ($66 + $118) for staff time per component for recipient notification. Thus, the total one-time cost to hospitals for conducting the historical (retrospective) lookback effort is estimated to be $38.9 million for recipient notification). (See the table in this section.)

This interim final rule with comment period requires hospitals to increase the time they keep records from 5 to 10 years. Although we did not include the annual cost of keeping records for a longer period of time in the analysis for the proposed rule, we are including the cost in this interim final rule with comment period. The FDA has estimated in its final rule that it may take 40 hours for a computer programmer to perform routine maintenance of these additional records. At a wage of $34 per hour, including benefits, a hospital would spend an additional $1,360 annually to conform to this provision of the rule. However, according to the AABB (formerly knows as the American Association of Blood Banks), 80 percent of the establishments that transfuse blood are accredited by the AABB and already comply with their standards, including retaining records for 10 years. Taking AABB compliance into account, this analysis includes additional compliance costs for 20 percent of the transfusion facilities at a total annual cost of $1.4 million ($34.00 per hour × 40 hours × 4,980 hospitals × 20 percent). The following table shows the estimated compliance cost of this interim final rule. We believe that hospitals will incur up to $1.7 million in annual compliance costs for the prospective lookback provisions and to retain records for 10 years, and up to $42 million in one-time costs for SOPs and the retrospective lookback based on historical review of records. The annualized costs of this interim final rule over 10 years at 3 and 7 percent interest rates will be $6.5 and $7.6 million.

This rule involves the fees to be set for the Unified Carrier Registration Agreement established by 49 U.S.C. 14504a, enacted by section 4305(b) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (119 Stat. 1144, 1764 (2005)). Section 14504a states that the “Unified Carrier Registration Plan * * * mean[s] the organization * * * responsible for developing, implementing, and administering the unified carrier registration agreement” (49 U.S.C. 14504a(a)(9)) (UCR Plan). The Unified Carrier Registration Agreement (UCR Agreement) developed by the UCR Plan is the “interstate agreement governing the collection and distribution of registration and financial responsibility information provided and fees paid by motor carriers, motor private carriers, brokers, freight forwarders and leasing companies * * *” (49 U.S.C. 14504a(a)(8)).

Congress also repealed the statutory provisions of 49 U.S.C. 14504 governing the Single State Registration System (SSRS) (SAFETEA-LU section 4305(a)). 1 The legislative history indicates that the purpose of the UCR Plan and Agreement is both to “replace the existing outdated system [SSRS]” for registration of interstate motor carrier entities with the States and to “ensure that States don't lose current revenues derived from SSRS” (S. Rep. 109-120, at 2 (2005)). 2

The statute provides for a 15-member Board of Directors for the UCR Plan and Agreement (Board) appointed by the Secretary of Transportation. The statute specified that the Board should consist of one individual (either the FMCSA Deputy Administrator or another Presidential appointee) from the Department of Transportation; four directors, including one from each of the four FMCSA service areas, selected from among the chief administrative officers of the State agencies responsible for administering the UCR Agreement; five directors from among the professional staffs of State agencies responsible for administering the UCR Agreement, to be nominated by the National Conference of State Transportation Specialists (NCSTS); and five directors representing the motor carrier industry, of whom at least one must be from a national trade association representing the general motor carrier of property industry and one from a motor carrier that falls within the smallest fleet fee bracket. The establishment of the Board was announced in the Federal Register on May 12, 2006 (71 FR 27777).

Among its responsibilities, the Board was required to submit to the Secretary of Transportation  3 a recommendation for the initial annual fees to be assessed on motor carriers, motor private carriers, freight forwarders, brokers and leasing companies under the UCR Agreement (49 U.S.C. 14504a(d)(7)(A)). The FMCSA then was directed to set the fees within 90 days after receiving the Board's recommendation and after notice and opportunity for public comment (49 U.S.C. 14504a(d)(7)(B)).

The statute specifies several relevant factors that must be considered by the Board and FMCSA in setting the fees (see 49 U.S.C. 14504a(d)(7)(A), (f)(1) and (g)). It specifies that fees are to be determined by FMCSA based upon the recommendation of the Board. The FMCSA described the statutory requirements in detail in a Notice of Proposed Rulemaking (NPRM) published on May 29, 2007 (72 FR 29472).

Section 14504a(f)(1) also stipulates that for the purpose of charging fees the Board shall develop no less than 4 and no more than 6 brackets of carriers based on the size of the fleet, i.e. the number of commercial motor vehicles owned or operated. Finally, the fee scale is required to be progressive in the amount of the fee.

Overall, the fees assessed under the UCR Agreement must produce a level of revenues established by the statute. Section 14504a(g) establishes the revenue entitlements for States that choose to participate in the UCR Plan. That section provides that a participating State, which participated in the SSRS in the registration year prior to the enactment of the Unified Carrier Registration Act of 2005 (i.e., the 2004 registration year), is entitled to receive revenues under the UCR Agreement equivalent to the revenues it received in 2004. Participating States that collected intrastate registration fees from interstate motor carrier entities (whether or not they participated in SSRS) are entitled to receive revenues of this type under the UCR Agreement equivalent to the amount received in the 2004 registration year. The section also requires that States which did not participate in SSRS in 2004, but which choose to participate in the UCR Plan, will receive revenues not to exceed $500,000 per year.

Following receipt by FMCSA of the Board's fee recommendation, a copy of which is included in the docket for this rulemaking, FMCSA conducted a review of the recommendation and prepared a detailed Regulatory Evaluation, also included in the docket. The FMCSA described the results of that review in the NPRM. The FMCSA carefully examined the Board's entire fee recommendation, including the methodology and specific findings of the Board. The FMCSA also independently considered the factors specified in section 14504a, and verified and utilized the data and analysis provided by the Board in its fee recommendation. In the NPRM, FMCSA provided a detailed description of its examination of the Board's recommendation and announced its conclusion that the Board's recommendation was reasonable and that the Board considered all required factors. The FMCSA also described the basis for its conclusion that the Board had satisfied the requirements for establishing the fees to be charged under the Unified Carrier Registration Agreement. The Board has provided an adequate opportunity for all States to participate in the UCR Plan and Agreement for registration year 2007 and the Board had adequately calculated the total revenue to be collected under the UCR.

In a correction of the NPRM published on June 5, 2007 (72 FR 31048), FMCSA explained that the comment period for the proposed rulemaking was limited to fifteen days because of the very short time period set by section 14504a(d)(7)(B) for completion of the rulemaking. The FMCSA also provided corrections to its May 29, 2007, NPRM, none of which materially affected the proposed rule, and provided notice concerning the new address for the Department of Transportation.

FMCSA received 17 comments, including comments from commercial motor carriers, the Commercial Vehicle Safety Alliance (CVSA), the California Trucking Association (CTA), the National School Transportation Association (NSTA), the Transportation Intermediaries Association (TIA), an attorney representing an interstate transportation carrier, an interstate property and household goods broker, private individuals, the North Dakota Department of Transportation (NDDOT), and three State public service commissions. After reviewing and evaluating the comments, as described below, FMCSA has concluded that no revisions are necessary to the annual fees and bracket structure for the Unified Carrier Registration Agreement that were specified in the NPRM. The FMCSA, therefore, is adopting those annual fees and the bracket structure in this Final Rule.

Two of the public service commissions (Alabama and Michigan), TIA, and CVSA supported the proposed fee structure and urged FMCSA to expedite promulgation of the final rule. The other commenters suggested changes to the fees or bracket structure or made other recommendations regarding UCR.

CTA, the attorney to the interstate carrier, and four private individuals questioned the fairness of the fee structure, calling attention to disparities between smaller and larger carriers. Their recommendations for addressing the issue included adding another bracket to the fee structure to divide carriers with more than 20 and less than 50 vehicles and assessing the fee on a per-truck basis. One commenter argued that the last bracket represents too significant an increase in fees for carriers operating just over 1,000 units when compared to carriers operating 1,000 units. Another stated that the fee schedules penalized carriers with fewer than 100 vehicles for being small because they were required to pay “substantially more” than large carriers. NDDOT believes the Board needs the flexibility to be able to make reasonable adjustments to the fees if the revenue goals cannot be reached, without going through the rulemaking amendment process every year. NDDOT argues the Board should be allowed to adjust the fee schedule for the first three years with a modified rule amendment process so as not to hinder the timeliness of states' keeping the program operating efficiently. However, the statutory requirements for the UCR fee structure, the statutory limitation of the number of brackets to a maximum of six in 49 U.S.C. 14504a(f)(1), and the statutory process for adjusting the amount of the fees in subsequent years preclude FMCSA from adopting the actions these commenters advocate. The statute does not grant either the Board or FMCSA the latitude to set fees on a per-vehicle basis, to add more brackets, or to adjust the fee schedule without complying with section 14504a(d)(7)(B) and the Administrative Procedure Act (5 U.S.C. 551 et seq.).

FMCSA has ensured that the fee scale is progressive across the brackets, in that the fees per carrier increase as the size of the carrier increases. The statute only requires that the “fee scale shall be progressive in the amount of the fee.” 49 U.S.C. 14504a(f)(1)(D). The fee scale is clearly “progressive” in this sense, because the fee scale increases with each bracket containing a larger range of commercial motor vehicles for the motor carrier entities included. Moreover, the statute also requires that the fees be applied uniformly to entities in each bracket “based on the size of the fleet.” 49 U.S.C. 14504a(f)(1)(C). For particular entities, the fee may or may not be progressive as compared to a carrier in another bracket that is close in size, or that has almost the same number of commercial motor vehicles in its fleet, but that is an expected result of a fee scale based on applying uniform fees to entities with a range of fleet sizes.

Another commenter, TIA, expressed agreement with the findings of the Board concerning the size of the industry and supported the adoption of the maximum number of fee levels and the proposed breakdown within each level. TIA found the proposed fee levels “fair, equitable, and proportional.” TIA did, however, request clarification on two fee-related topics. It asked, first, that freight forwarders that are not part of a trucking company pay at the same level as brokers and leasing companies. It also noted what it considered a conflict between the definition of freight forwarder in section 14504a and the definition in 49 U.S.C. 13102(8), and urged that freight forwarders that are not part of trucking companies should register in the same category as brokers and leasing companies. The FMCSA has determined there is no conflict. Freight forwarders that operate commercial motor vehicles in line-haul service to transport consolidated shipments in interstate commerce are required to register as motor carriers, and are treated as such under the UCR Plan. 49 U.S.C. 13903(b). Freight forwarders that operate motor vehicles providing transfer, collection and delivery service are required to file proof of financial responsibility with FMCSA by 49 U.S.C. 13906(c)(1). Freight forwarders operating commercial motor vehicles in such local service “shall be subject to the provisions of [section 14504a] as if the freight forwarder is a motor carrier.” 49 U.S.C. 14504a(b). Therefore, all freight forwarders that operate commercial motor vehicles are subject to fees under the UCR Plan and Agreement in accordance with the number of such vehicles operated. If a freight forwarder operates no such vehicles, it is subject to the fee set for the lowest bracket. See also 49 U.S.C. 14504a(f)(1)(A)(i). This is the interpretation of the statute utilized by the Board and FMCSA in determining the fees, because any freight forwarder that also had a USDOT number (only issued to operators of commercial motor vehicles) was treated as a motor carrier.

TIA also requested a clarification on whether fees are cumulative or a company should pay only once at the highest applicable rate, noting that a company could have motor carrier authority, broker authority, and freight forwarder authority. TIA recommended adoption of the highest applicable fee approach rather than the cumulative fee approach. FMCSA and the Board both adopted the highest applicable fee approach in their analyses.

The FMCSA notes that the commenters, in discussing the brackets and fee structure, consistently referred to trucks, vehicles, and/or power units rather than to commercial motor vehicles, the term used in the proposed and final rules. The statute defines “commercial motor vehicle,” in general, as including both self-propelled and towed vehicles (49 U.S.C. 14504a(a)(1)(A) and 31101(1)). Both self-propelled and towed vehicles should be considered in deciding the appropriate bracket for determining the fee to be paid by a motor carrier, motor private carrier, or freight forwarder.

A commercial carrier argued that the proposed fee structure ignored the fact that some motor carriers do not have traffic in every participating State and that vehicles without extensive interstate operations are included in determining brackets and fees. An individual commenter also asserted that the Board's calculation of fees had included commercial motor vehicles that operate only in intrastate commerce. If such vehicles did leave the State, according to this commenter, they would be required to purchase a Trip Permit, and thus would be charged out-of-State fees twice. The FMCSA notes, however, that section 14504a does not allow either the Board or FMCSA to adjust the fees to account for the extent of interstate operations. The statute requires that interstate carriers of the same size be assessed the same fees regardless of the number of States in which they operate. After considering these comments in light of the statute, FMCSA determined that the proposed fee structure adequately accounts for equity concerns within the statute's constraints.

The NSTA noted what it perceived to be a conflict between the possibility under the UCR Plan that private interstate school bus carriers that register with DOT and obtain a USDOT number will be required to pay the UCR fees in spite of the provisions of 49 U.S.C. 13506(a)(1) from the ICC Termination Act of 1995 (Pub. L. 104-88, title I, Sec. 103, Dec. 29, 1995, 109 Stat. 861) that exempt such carriers from registration requirements for school bus carriers under the proposed Unified Registration System (URS). One individual asked for clarification on whether farmers and ranchers are considered private carriers under UCR. For the purpose of the UCR agreement, the statutory definition of “motor carrier,” as modified by 49 U.S.C. 14504a(a)(5) includes for-hire carriers that are otherwise exempt such as farmers, ranchers and school bus operators because they are now subject to the fees in connection with the filing of proof of financial responsibility under the UCR agreement. In addition, motor private carriers that meet the applicable statutory definition in 49 U.S.C. 13102(15) are subject to the fees in connection with the filing of proof of financial responsibility under the UCR agreement. This is the interpretation of section 14504a followed by the Board and FMCSA in recommending and setting the fees.

Some commenters addressed implementation of the UCR fee system. TIA argued that an unreasonable burden could be placed on small businesses and on interstate commerce if companies are required to register in person at their base State. Instead, TIA asked for the creation of a national registration interface through which companies could pay by credit card. Another suggested that the fees should be collected along with the heavy-duty vehicle tax. TIA and the NDDOT expressed support for the Board's decision to set aside funds to pay various administrative costs, including development of a web-based registration and payment system, communications, credit card processing fees, operation of a depository, and Board travel and expenses and staffing of a help desk, as well as a set-aside to cover the risk of under collection of revenue. TIA noted that additional amounts could be needed for information technology and communications. TIA also noted that the Board may not have the necessary funds to pay administrative costs until fees are collected. NDDOT suggested that rule language be added stipulating that administrative costs can only be paid after participating States are made whole. Because section 14504a assigned implementation of the UCR Agreement to the Board, FMCSA has concluded that the comments pertaining to the method adopted for registration, and the mechanisms for fee collection and distribution are outside the scope of this rulemaking and should be directed to the Board. FMCSA will provide the Board with a copy of all comments received. In addition, FMCSA will place a document outlining the UCR Board's mechanisms for fee collection and distribution in docket FMCSA-2007-27871. This document will be updated as information becomes available from the UCR Board. The public may consult the Board or the docket for up to date information about the mechanisms for fee collection and distribution.

The FMCSA reviewed the estimated administrative costs as part of the analysis described in the May 29, 2007, NPRM and concluded that they were reasonable. As TIA points out, however, once the new system has developed a “proven track record,” estimates of the amounts needed for administration may change.

The NDDOT commented that it is not concerned about the number of leasing companies in calculating the affected population or the revenues from the leasing companies. NDDOT estimates the number is less than 2,600 and the revenues will be about $101,000. NDDOT believes this amount is less than one tenth of one percent of the total UCR revenues. FMCSA agrees with NDDOT.

The Michigan Public Service Commission (MPSC) suggested that if for some reason the program cannot be implemented in 2007, FMCSA should allow States to collect both 2007 and 2008 revenue simultaneously. In addition to being outside the scope of this rulemaking, FMCSA believes that this approach would be contrary to the terms of section 14504a. MPSC also recommended that credit card fees for revenue collected on line should not be deducted from the total due to States. The revenue target for 2007 is composed of State revenue entitlement, administrative expenses, and revenue reserve. The credit card operating expense is a component of the administrative cost and is separate from the State revenue entitlement. Thus, including credit card expenses in the revenue target does not affect the State revenue entitlement, (see 49 U.S.C. 14504a(h)) and FMCSA has concluded that the MPSC concern is unwarranted. CVSA encouraged FMCSA to consider making a loan to the Board to support the development of the infrastructure necessary to register the carriers and collect and to deposit the fees in an efficient manner. Although FMCSA takes note of the suggestion, it has concluded that the comment is outside the scope of this rulemaking. CVSA also encouraged FMCSA to use the opportunity presented through UCR to consolidate the regulations, requirements, and information systems relative to operation authority, registration, and licensing/insurance. The FMCSA has concluded this comment is outside the scope of this rulemaking.

TIA asked that the UCR should not become a new system to regulate brokers and freight forwarders by the States, noting that section 14504a(f)(1)(A) refers to UCR fees charged “in connection with the filing of proof of financial responsibility under the UCR Agreement.” TIA requested FMCSA to limit specifically any reporting or enforcement of proof of financial responsibility by brokers and freight forwarders to their required filings with the Department of Transportation. However, as discussed above under “II. Statutory Requirements for UCR Fees,” the fees charged to the various entities are required to be in connection with the requirement in 49 U.S.C. 14504a(f)(1)(A). Not all of the entities included in the five categories are currently required to file financial responsibility information with FMCSA. The Board has authority to issue rules and regulations to govern the UCR Agreement, and to require annual submission of a set of information required of a motor carrier, motor private carrier, leasing company, broker, or freight forwarder (49 U.S.C. 14504a(d)(2)(A)(i)). FMCSA expects that the Board will establish requirements for filing of financial responsibility information as necessary to subject all entities in all five categories to the UCR fees, and to ensure that the required revenue levels will be achieved.

Similarly, FMCSA notes TIA's request that DOT and the Board work together to ensure that participating States provide usable safety and enforcement data to DOT's reporting systems, but finds the comment outside the scope of this rule.

One commenter recommended that the State revenue requirements increase over time to reflect growing needs. Another commenter noted that impacts on small entities could become a problem if fees increase over time. Capping UCR revenues at 2004 levels, according to the commenter, is not viable in the long term. The FMCSA notes in response that section 14504a provides that fees under UCR are to be established on a yearly basis. Therefore, fees for future years will be the subject of subsequent rulemaking, if and when the Board asks for an adjustment in the fees in accordance with section 14504a(f)(1)(E). On the other hand, the revenues to be derived from the fees were fixed by Congress as of 2004 by section 14504a(g). The only variation would occur because of changes in the participating States under section 14504a(e) or Congressional action.

The Pennsylvania Public Utility Commission (PaPUC), contends that Pennsylvania, which did not participate in SSRS, may be prohibited from collecting assessments from intra-state revenues of motor carriers to support its motor carrier safety enforcement program. PaPUC interprets 49 U.S.C. 14504a(c) of the UCR Act as potentially preempting such assessments. The FMCSA believes that this issue involves a legal interpretation of the preemption provisions of section 14504a(c); and, therefore, is outside the scope of this rulemaking. PaPUC, supported by CVSA, then requests that the UCR program fee schedule provide a mechanism to make it whole. However, Pennsylvania has not complied with 49 U.S.C. 14504a(e), is therefore not a participating State in the UCR agreement, and is not entitled to any revenues under 49 U.S.C. 14504a(g)(2) and (3).

An interstate property and household goods broker noted that some States currently do not recognize the Federal broker license issued by FMCSA and do not issue intrastate broker licenses. This commenter asked FMCSA to preempt State law and to secure agreements from States participating in the UCR that they will acknowledge broker's rights to arrange for transportation without the need for intrastate motor carrier authority. The FMCSA has concluded that this comment requests actions that are outside the scope of this rulemaking.

The FMCSA is adopting the proposed rule as final without any changes. In addition, the FMCSA has verified that the Board has accurately reflected in its recommendations the revenue entitlements certified by each State for 2007. In accordance with 49 U.S.C. 14504a(g)(4), FMCSA proposed in the NPRM to approve the amount of revenue under the UCR Agreement to which each State participating in 2007 is entitled. FMCSA received no comment on this aspect of the proposal. FMCSA, is, therefore, approving the amount of revenue under the UCR Agreement to which each State participating in 2007 is entitled, as specified in the following table 1.

The Administrative Procedure Act's rulemaking provision in subsection (d)(3) of 5 U.S.C. 553 allows FMCSA to make a final rule effective on its publication date for good cause. Congress expected the Board to make recommendations and the Agency to set the fees through this final rule well before January 1, 2007. The Board experienced delays Congress had not envisioned in promulgating 49 U.S.C. 14504a. Making this final rule effective on the date of publication will not cause harm to any person or regulated entity. No commenter opposed the proposal and the fees are required by statute. Due to the exhaustive efforts of the Board in developing the recommendations and the amount of time needed, the States participating in the UCR have been losing current revenues they would have been deriving from SSRS to offset expenses involved in administering their enforcement and compliance of State motor carrier laws and regulations. Michigan and Alabama authorities made these points in their comments in the docket. These States and the others in the UCR may have to lay off State employees and curtail enforcement and compliance efforts if the States cannot collect 2007 revenue. Congress intends section 14504a to “ensure that States don't lose current revenues derived from SSRS” (S. Rep. 109-120, at 2 (2005)). This intent remains unfulfilled as long as this final rule setting the fees is not effective. FMCSA finds that it is necessary to make this final rule effective immediately upon publication to reduce the serious dislocation of State government programs and reduce or avoid imminent harm to State employees and the traveling public in the UCR States that may have to, or have had to, curtail their compliance and enforcement efforts.

The FMCSA has determined that this action is a significant regulatory action within the meaning of Executive Order 12866 due to its subject matter and the impact on the participating States.

However, this rule is not economically significant based on the size of the fees to be collected under the UCR. The costs of the rule are required pursuant to an explicit Congressional mandate in section 14504a. Because a majority of the fees under the rule will replace fees motor carriers paid under the SSRS system, the total cost of the rule will be substantially less than $100 million per year. New entities paying fees under UCR that did not pay under SSRS are estimated to account for slightly less than half the fees, or about $50 million in new costs per year. The Agency has prepared a regulatory analysis analyzing the rule. A copy of the regulatory analysis document is included in the docket referenced at the beginning of this notice. The Office of Management and Budget (OMB) has reviewed this document.

In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-612), FMCSA considered the effects of this regulatory action on small entities and determined that this rule will affect a substantial number of small entities, as defined by the U.S. Small Business Administration's Office of Size Standards. Accordingly, FMCSA has considered the economic impacts of the requirements on small entities and determines that this rule will not have a significant economic impact on a substantial number of small entities. The fees adopted in this rule would affect large numbers of small entities because the rule sets fees for hundreds of thousands of carriers, brokers, and freight forwarders of all sizes, and small entities are defined to include all entities that are not dominant in their industries. In previous rulemakings, FMCSA identified for-hire carriers with fewer than 145 power units (i.e., trucks or tractors) as small. The FMCSA estimates that carrier size to be equivalent to a carrier operating about 300 commercial motor vehicles. Thus, all of the for-hire carriers in Brackets 1 through 4 would be considered small, as would many of those in Bracket 5.

After careful consideration, however, FMCSA has determined that the UCR fee will, in every case involving a viable small entity, be well below the threshold level of one percent of revenues used for determining significant impacts. This conclusion is based on the observation that the maximum fee per vehicle is $39, which is less than one percent of the annual salary of even a single employee working 40 hours per week for 50 weeks per year and earning the current Federal minimum wage of $5.85. Because an entity without sufficient revenues to pay even one employee per vehicle or per broker or freight-forwarder operation would not be viable, it is clear that the UCR fees will not reach the threshold of one percent of revenues. Additionally, more than 50 percent of the fees collected under the new UCR system were already being paid by many of these entities under the SSRS system, meaning the UCR fees will simply serve as substitutes for the SSRS fees these firms were previously being assessed. Thus, the FMCSA Administrator certifies that the rule will not have a significant economic impact on a substantial number of small entities.

This rulemaking will not impose an unfunded Federal mandate, as defined by the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532, et seq. ), that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $128.1 million or more in any one year.

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

The FMCSA analyzed this action under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. We determined that this rulemaking would not concern an environmental risk to health or safety that may disproportionately affect children.

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

The FMCSA analyzed this rule in accordance with the principles and criteria contained in Executive Order 13132. FMCSA has determined that this rulemaking will not have a substantial direct effect on States, nor will it limit the policy-making discretion of the States. Nothing in this document will preempt any State law or regulation. The FMCSA has therefore determined this rule does not have sufficient federalism implications to warrant the preparation of a federalism assessment.

The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this program.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that FMCSA consider the impact of paperwork and other information collection burdens imposed on the public. We have determined that there are no new information collection requirements associated with this final rule.

The FMCSA analyzed this final rule for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and determined under our environmental procedures Order 5610.1, issued March 1, 2004 (69 FR 9680), that this action is categorically excluded (CE) under Appendix 2, paragraph 6.h of the Order from further environmental documentation. In addition, the Agency believes that this action includes no extraordinary circumstances that will have any effect on the quality of the environment. Thus, the action does not require an environmental assessment or an environmental impact statement.

The FMCSA also analyzed this rule under the Clean Air Act, as amended (CAA), section 176(c) (42 U.S.C. 7401 et seq. ), and implementing regulations promulgated by the Environmental Protection Agency. Approval of this action is exempt from the CAA's general conformity requirement since it involves policy development.

The FMCSA analyzed this action under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We determined that it is not a “significant energy action” under that Executive Order because it will not be likely to have a significant adverse effect on the supply, distribution, or use.