Categorical exclusions are classes of actions that DOE has by regulation determined do not individually or cumulatively have a significant effect on the human environment and, therefore, normally require neither an environmental impact statement nor an environmental assessment. DOE's categorical exclusions are listed at 10 CFR part 1021, appendices A and B to subpart D.

On September 18, 2009, the United States Court of Appeals for the D.C. Circuit (“D.C. Circuit Court”) ruled that 11 CFR 100.57, 106.6(c), and 106.6(f) violated the First Amendment of the United States Constitution. See EMILY's List v. FEC, 581 F.3d 1 (D.C. Cir. 2009). The court also ruled that 11 CFR 100.57 and 106.6(f), as well as one provision of 106.6(c), exceeded the Commission's authority under the Federal Election Campaign Act (“Act”). See id. At the direction of the D.C. Circuit Court, the United States District Court for the District of Columbia ordered that these rules are vacated. See Final Order, EMILY's List v. FEC, No. 05-0049 (D.D.C. Nov. 30, 2009). The Commission now proposes to remove these rules from its regulations.

The Commission regulation at 11 CFR 100.57 went into effect on January 1, 2005. See Political Committee Status, Definition of Contribution, and Allocation for Separate Segregated Funds and Nonconnected Committees, 69 FR 68056 (Nov. 23, 2004). Under paragraph (a) of section 100.57, funds provided in response to a communication are treated as contributions if the communication indicates that any portion of the funds received would be used to support or oppose the election of a clearly identified Federal candidate. Paragraph (b)(1) of section 100.57 provides that all funds received in response to a solicitation described in section 100.57(a) that refers to both a clearly identified Federal candidate and a political party, but not to any non-Federal candidates, have to be treated as contributions. Paragraph (b)(2) states that if a solicitation described in section 100.57 refers to at least one clearly identified Federal candidate and one or more clearly identified non-Federal candidate, then at least fifty percent of the funds received in response to the solicitation has to be treated as contributions. Paragraph (c) of section 100.57 provides an exception for certain solicitations for joint fundraisers conducted between or among authorized committees of Federal candidates and the campaign organizations of non-Federal candidates.

The Commission proposes removing section 100.57 from its regulations because the D.C. Circuit Court held that this rule is unconstitutional and that it exceeded the Commission's statutory authority under the Act. See EMILY's List v. FEC, 581 F.3d 1 (D.C. Cir. 2009). Moreover, as explained above, the D.C. District Court has ordered that 11 CFR 100.57 is vacated. See Final Order, EMILY's List v. FEC, No. 05-0049 (D.D.C. Nov. 30, 2009).

At the same time that the Commission adopted 11 CFR 100.57, the Commission substantially revised its allocation rules at 11 CFR 106.6. See Political Committee Status, Definition of Contribution, and Allocation for Separate Segregated Funds and Nonconnected Committees, 69 FR 68056 (Nov. 23, 2004). The revised rule at 11 CFR 106.6(c) requires nonconnected committees and separate segregated funds (SSFs) to use at least fifty percent Federal funds to pay for administrative expenses, generic voter drives, and public communications that refer to a political party, but not to any Federal or non-Federal candidates.1 The Commission also added a new paragraph (f) to section 106.6, which specifies that nonconnected committees and SSFs must pay for public communications and voter drives that refer to both Federal and non-Federal candidates using a percentage of Federal funds proportionate to the amount of the communication that is devoted to the Federal candidates. Id.

The Commission proposes removing paragraphs (c) and (f) from section 106.6 because the DC Circuit Court held that these provisions are unconstitutional. See EMILY's List v. FEC, 581 F.3d 1 (D.C. Cir. 2009). Moreover, as explained above, the DC District Court ordered that paragraphs (c) and (f) of section 106.6 are vacated. See Final Order, EMILY's List v. FEC, No. 05-0049 (D.D.C. Nov. 30, 2009).

In an abundance of caution with respect to the notice and comment requirements under the Administrative Procedure Act, 5 U.S.C. 552 et seq., the Commission seeks public comments on how best to effectuate the courts' opinion and order in EMILY'S List. The Commission invites comment on whether the DC Circuit Court's opinion is subject to a reading that the ruling, as well as the District Court's order that the rules are vacated, is limited only to non-profit, non-connected entities.

Thus, the Commission invites public comment on whether the DC Circuit Court's decision extends to SSFs as well as to nonconnected committees. The section 106.6 allocation rules, including paragraphs (c) and (f), apply to nonconnected committees and to SSFs. EMILY's List is a non-profit non-connected political committee, not an SSF. The EMILY's List decision stated that “this case concerns the FEC's regulation of non-profit entities that are not connected to a * * * for-profit corporation.” (Emphasis in original). See EMILY's List, 581 F.3d at 8. Moreover, in footnote 7 of the decision, the court stated: “In referring to non-profit entities, we mean non-connected non-profit corporations * * * as well as unincorporated non-profit groups. `Non-connected' means that the non-profit is not a * * * committee established by a corporation or labor union.” Id., n.7. Does the EMILY's List analysis provide any basis for treating SSFs differently from the non-connected committee at issue in the EMILY's List case?

Alternatively, the Commission seeks comment on whether the DC Circuit Court's statutory analysis should be read as not depending on the type of entity involved, but rather on the nature of the expenses that the entity incurs. See e.g., EMILY's List, 581 F.3d at 21-22. Moreover, even under the constitutional analysis, could the DC Circuit Court's rationale reasonably be read to apply to SSFs as well as nonconnected committees? For example, the DC Circuit Court's opinion seems to rely more on the distinction between parties and other entities than the corporate status of those other entities.

The Commission invites comments on the merits of these two alternative readings. In short, the Commission seeks comment as to whether the allocation provisions in paragraphs (c) and (f) of section 106.6 should be removed in their entirety, or revised so as not to apply to nonconnected committees but to continue to apply to SSFs. Alternatively, is the court's order vacating 11 CFR 106.6(c) and (f) so clear that the Commission has no discretion to do anything but repeal those provisions in their entirety?

Please note that the Commission intends to initiate a separate rulemaking regarding other potential changes to its regulations, such as conforming changes to the remaining portions of 11 CFR 106.6 and other changes to 11 CFR 102.5. The Commission invites comment regarding what other changes to its regulations it should consider implementing in order to conform to the DC Circuit Court's ruling.

The Commission certifies that the attached proposed rule, if promulgated, would not have a significant economic impact on a substantial number of small entities. The basis for this certification is that few, if any, small entities would be affected by this rulemaking. The Commission is proposing to remove regulations that a Federal court ordered vacated. Accordingly, removing these regulations would not have a significant impact on a substantial number of small entities.

For the reasons set out in the preamble, subchapter A of chapter I of title 11 of the Code of Federal Regulations is proposed to be amended as follows:

In 1998, Congress passed the Credit Union Membership Access Act (“CUMAA”) and reiterated its longstanding support for credit unions, noting that they “have the specif[ic] mission of meeting the credit and savings needs of consumers, especially persons of modest means.” Public Law 105-219, § 2, 112 Stat. 913 (August 7, 1998). The Federal Credit Union Act (“FCUA”) grants the NCUA Board broad general rulemaking authority over Federal credit unions. 12 U.S.C. 1766(a). In passing CUMAA, Congress amended the FCUA and specifically delegated to the Board the authority to define by regulation the meaning of a “well-defined local community” (WDLC) and rural district for Federal credit union charters. 12 U.S.C. 1759(g).

The Board continues to recognize two important characteristics of a WDLC. First, there is geographic certainty to the community's boundaries, which must be well-defined. Second, there is sufficient social and economic activity among enough community members to assure that a viable community exists. Since CUMAA, NCUA has expressed this latter requirement as “interaction and/or shared common interests.” NCUA Chartering and Field of Membership Manual (Chartering Manual), Interpretive Ruling and Policy Statement (IRPS) 08-2, Chapter 2, V.A.1.

The Board has gained broad experience in determining what constitutes a WDLC by analyzing numerous applications for community charter conversions and expansions. In this process, the Board has exercised its regulatory judgment in determining whether, in a particular case, a WDLC exists. This involves applying its expertise to the question of whether a proposed area has a sufficient level of interaction and/or shared common interests to be considered a WDLC. The Board is aware that there is considerable uncertainty among community charter applicants regarding two important issues, particularly in connection with applications involving large multi-jurisdictional areas. The first is how an applicant can best demonstrate the requisite interaction and/or shared common interests of a WDLC. The second is how much evidence is required in a particular case. The primary purpose of this proposal is to eliminate that uncertainty and conserve the economic and human resources of applicants and NCUA. To this end, the Board proposes to define WDLC in terms of objective and quantifiable criteria that, in the Board's opinion, conclusively demonstrate interaction and/or common interests.

Using objective and easy to apply criteria will replace the current, burdensome practice of requiring an applicant to demonstrate the existence of a WDLC using a narrative approach with supporting documents. This approach will enable applicants to easily, quickly, and inexpensively determine, with certainty, if the geographic area they wish to serve is a WDLC.

Under the current proposal, as discussed more fully below, a geographic area would automatically qualify as a WDLC in the following three ways:

1. As a single political jurisdiction less than an entire State, or a defined portion of that single political jurisdiction;

2. As a statistical area limited to 2.5 million or less people, so designated by the Office of Management and Budget (OMB), if it has a single core area and the core satisfies a concentration threshold for employment and population or as a portion of that statistical area provided the smaller area independently meets the same employment and population requirements; and

3. As an existing, previously approved area “grandfathered” for use by future applicants.

Additionally, the NCUA Board proposes to define the term “rural district” for chartering purposes. The Board believes this will help extend credit union services to individuals living in rural America without adequate access to reasonably priced financial services. Finally, the Board proposes to provide community charter applicants with more detailed guidance on NCUA's expectations regarding the adequacy of an applicant's business and marketing plans required as part of the charter application.

In the single political jurisdiction context, it is easy to demonstrate that an area is a WDLC, a single, geographically well-defined local community or neighborhood where individuals have common interests and/or interact. A single political jurisdiction such as a city, county, or their political equivalent or any contiguous portion thereof automatically qualifies as a WDLC.

It is much more complicated, however, for an applicant to demonstrate that an area comprised of multiple, contiguous political jurisdictions is a WDLC. In that instance, the current rules require a credit union to submit a narrative describing how the area meets the standards for community interaction and/or common interests with supporting documentation. Supporting documentation often includes information regarding commuting patterns, employment patterns, major trade areas, shared common facilities, organizations and clubs within the requested area, newspaper penetration, festivals, and entertainment centers. Compiling this potentially voluminous amount of information can be difficult, time consuming, and expensive for the applicant and is a wasted effort in those instances where the narrative and supporting documents do not sufficiently make the case for the existence of a WDLC.

Because the nature of the supporting documentation can be subjective, it is time consuming and labor intensive for NCUA to review a narrative application. As part of the process, NCUA often requests the applicant clarify some of the information provided or supply additional information to help NCUA properly analyze the application in accordance with the requirements of the Chartering Manual. While requesting more or clarified information is often necessary for NCUA to make a decision, it increases the credit union's time and expense of preparing a community charter application.

Another problem related to NCUA determining that a multiple, contiguous political jurisdiction is a WDLC based on a narrative application is the risk of litigation. Because the narrative approach is inherently a subjective one, it is vulnerable to legal challenges. NCUA believes it would benefit all involved to eliminate the great expense, effort, and uncertainty associated with the narrative approach in favor of a simpler, more objective method.

Finally, NCUA believes the absence of a regulatory definition of “rural district” in NCUA's current chartering rules is an impediment to expanding credit union services to individuals in rural areas.

The NCUA Board issued proposed revisions to the Chartering Manual in May 2007 to clarify and amend NCUA's community chartering policies and solicited public comment on the proposed amendments. 72 FR 30988 (June 5, 2007). In that rulemaking, NCUA sought to clarify the meaning of WDLC. Specifically, the proposal identified single political jurisdictions and statistical areas as presumptive WDLCs and required a credit union seeking a local community consisting of multiple political jurisdictions, if not a presumed WDLC, to provide a narrative with documentation to support that the requested geographical area meets the standards for community interaction and/or common interests. While the May 2007 proposal embraced using more objective standards to determine whether a particular area is a WDLC, it continued to allow community charter applicants to submit narrative applications with supporting documentation in the multiple, political jurisdictions context where there was no presumed WDLC. For the reasons discussed above, that aspect of the proposal is undesirable and would perpetuate the inefficiencies of the current process.

The 2007 proposal also provided that when the narrative approach was required to support the existence of a WDLC, a public notice and comment period would be used to inform the public about the application and assist NCUA in determining if the area was a WDLC. At the time, the Board thought a 30-day public notice and comment period might assist it in its critical analysis of the evidence and provide the public with an opportunity to provide timely comments and relevant information on the proposed local community. The notice and comment provision has become moot because the NCUA Board is proposing to eliminate the continued use of the narrative application.

NCUA had not attempted to define the term “rural district” prior to the 2007 proposal, although there is statutory language authorizing credit unions to be chartered to serve a rural district. Rural districts tend to lack the traditional characteristics of interaction or shared common interests found in WDLCs. In 2007, the Board proposed a definition of rural district stating it expected a rural district would be less densely populated than WDLCs NCUA had considered in the past and noted that rural districts frequently lack any centralized urban core or cluster. The Board also stated that although a proposed rural district may include contiguous counties it believed such a district should have a relatively small, widely disbursed, population. The Board proposed to define a rural district as an area that is not in a metropolitan statistical area (MSA) or micropolitan statistical area (MicroSA), as those terms are defined below, has a population density that does not exceed 100 people per square mile, and where the total population does not exceed 100,000. That definition would have excluded the majority of the United States population that lives in and around large urban areas yet, based on census data, still include the vast majority of counties in the United States having fewer than 100,000 persons. Population density varies widely but many counties also have a density of less than 100 persons per square mile. Those requirements would have assured that an area under consideration as a rural district would have a small total population and a relatively light population density.

When developing that proposed definition, the Board considered the criteria other executive branch agencies use as a framework for defining what is rural in the United States. These agencies are the U.S. Census Bureau (Census), OMB, and the Economic Research Service (ERS) of the U.S. Department of Agriculture (USDA). The following table summarizes each agency's definition of what constitutes a rural area.

The Census Bureau, the OMB, and the ERS all provide definitions of rurality based on their analysis of 2000 census data. See 72 FR 30988, 30992 (June 5, 2007).

After a review of the comments, and upon further consideration, the Board believes the definition of rural district proposed in 2007 does not adequately reflect the unique nature of rural areas. Accordingly, the Board proposes a revised definition of rural district in the current proposal, as discussed below, that it believes is easier to apply and better reflects NCUA's goal to use a simpler, more objective approach to reviewing community charter applications.

Upon further reflection, including having considered the public comments to the May 2007 proposed rule, the NCUA Board has decided to issue this proposal as a substitute for the May 2007 proposal. As noted, some provisions of the May 2007 proposal have been brought forward into the current proposal without change, while others have been modified or eliminated. NCUA believes the current proposal is a better method for improving the community charter policies of NCUA's Chartering Manual.

NCUA believes it continues to be prudent policy to consider single political jurisdictions and statistical areas, as those terms are described more fully below, as WDLCs because they meet reasonable objective and quantifiable standards. For reasons discussed more fully below, single political jurisdictions are treated the same in the current proposal as in the May 2007 proposal. Statistical areas, however, are treated somewhat differently in the current proposal from how they were treated in the May 2007 proposal. In the current proposal, NCUA has added an additional criterion an applicant must meet to establish that a statistical area with multiple jurisdictions is a WDLC. Specifically, the additional criterion limits a multiple jurisdiction WDLC's population to 2.5 million or less people, as discussed further below.

The FCUA provides that a “community credit union” consists of “persons or organizations within a well-defined local community, neighborhood, or rural district.” 12 U.S.C. 1759(b)(3). The FCUA expressly requires the Board to apply its regulatory expertise and define what constitutes a WDLC. 12 U.S.C. 1759(g). It has done so in the Chartering Manual, Chapter 2, Section V, Community Charter Requirements. In 2003, the Board, after issuing notice and seeking comments, issued IRPS 03-1 that stated any county, city, or smaller political jurisdiction, regardless of population size, is by definition a WDLC. 68 FR 18334, 18337 (Apr. 15, 2003). An entire State is not acceptable as a WDLC. Under this definition, no documentation demonstrating that the political jurisdiction is a WDLC is required.

After more than six years of experience, the Board has reviewed this definition of WDLC and still finds it compelling. The Board finds that a single governmental unit below the State level is well-defined and local, consistent with the governmental system in the United States consisting of a local, State, and Federal government structure. A single political jurisdiction also has strong indicia of a community, including common interests and interaction among residents. Local governments by their nature generally must provide residents with common services and facilities, such as educational, police, fire, emergency, water, waste, and medical services. Further, a single political jurisdiction frequently has other indicia of a WDLC such as a major trade area, employment patterns, local organizations and/or a local newspaper. Such examples of commonalities are indicia that single political jurisdictions are WDLCs where residents have common interests and/or interact.

The Board proposes to establish a statistical definition of WDLC in cases involving multiple political jurisdictions. In that context, a geographically certain area will be considered a WDLC when the following four requirements are met: (1) The area is a recognized core based statistical area (CBSA), or in the case of a CBSA with Metropolitan Divisions, the area is a single Metropolitan Division; (2) the area contains a dominant city, county or equivalent with a majority of all jobs in the CBSA or in the metropolitan division; (3) the dominant city, county or equivalent contains at least 1/3 of the CBSA's or metropolitan division's total population; and (4) the area has a population of 2.5 million or less people.

The Board's experience has been that WDLCs can come in various population and geographic sizes. While the statutory language `local community' does imply some limit, Congress has directed NCUA to establish a regulatory definition consistent with the mission of credit unions. While single political jurisdictions below the State level meet the definition of a WDLC, nothing precludes a larger area comprised of multiple political jurisdictions from also meeting the regulatory definition. There is no statutory requirement or economic rationale that compels the Board to charter only the smallest WDLC in a particular area.

The Board's experience has been that applicants have the most difficulty in preparing applications involving larger areas with multiple political jurisdictions. This is because, as the population and the geographic area increase and multiple jurisdictions are involved, it can be more difficult to demonstrate interaction and/or shared common interests. This often causes some confusion to the applicant about what evidence is required and what criteria are considered to be most significant under such circumstances.

The current chartering manual provides examples of the types of information an applicant can provide that would normally evidence interaction and/or shared common interests. These include but are not limited to: (1) Defined political jurisdictions; (2) major trade areas; (3) shared common facilities; (4) organizations within the community area; and (5) newspapers or other periodicals about the area.

These examples are helpful but the Board's experience is that very often in situations involving multiple jurisdictions, where it has determined that a WDLC exists, interaction or common interests are evidenced by a major trade area that is an economic hub, usually a dominant city, county or equivalent, containing a significant portion of the area's employment and population. This central core often acts as a nucleus drawing a sufficiently large critical mass of area residents into the core area for employment and other social activities such as entertainment, shopping, and educational pursuits. By providing jobs to residents from outside the dominant core area, it also provides income that then generates further interaction both in the hub and in outlying areas as those individuals spend their earnings for a wide variety of purposes in outlying counties where they live. This commonality through interaction and/or shared common interests in connection with an economic hub is conducive to a credit union's success and supports a finding that such an area is a local community.

The Board views evidence that an area is anchored by a dominant trade area or economic hub as a strong indication that there is sufficient interaction and/or common interests to support a finding of a WDLC capable of sustaining a credit union. This type of geographic model greatly increases the likelihood that the residents of the community manifest a “commonality of routine interaction, shared and related work experiences, interests, or activities * * *” that are essential to support a strong healthy credit union capable of providing financial services to members throughout the area. Public Law 105-219, § 2(3), 112 Stat. 913 (August 7, 1998).

OMB publishes the geographic areas its analysis indicates exhibit these important criteria. The Board is familiar with and has utilized these statistics. In the past six years, the agency has approved in excess of 50 community charters involving MSAs, usually involving a community based around a dominant core trade area.

The Board believes that when statistics can demonstrate the existence of such relevant characteristics it is appropriate to presume that sufficient interaction and/or common interests exist to support a viable community based credit union. In such situations, the area will be considered to have met the regulatory definition of a WDLC.

Certain areas, however, do not have one dominant economic hub, but rather may contain two or more dominant hubs. These situations diminish the persuasiveness of the evidence and make it inappropriate to automatically conclude that they qualify as WDLCs.

On December 27, 2000, OMB published Standards for Defining MSAs and MicroSAs. 65 FR 82228. The following definitions established by OMB are relevant here:

CBSA—“A statistical geographic entity consisting of the county or counties associated with at least one core (urbanized area or urban cluster) of at least 10,000 population, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties with the counties containing the core. Metropolitan and Micropolitan Statistical Areas are the two categories of Core Based Statistical Areas.” 65 FR 82238 (Dec. 27, 2000).

Metropolitan Division—“A county or group of counties within a Core Based Statistical Area that contains a core with a population of at least 2.5 million.” 65 FR 82238 (Dec. 27, 2000). OMB recognizes that Metropolitan Divisions often function as distinct, social, economic, and cultural areas within a larger Metropolitan Statistical Area. See OMB Bulletin NO. 07-01, December 18, 2006.

Metropolitan Statistical Area—“A Core Based Statistical Area associated with at least one urbanized area that has a population of at least 50,000. The Metropolitan Statistical Area comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county as measured through commuting.” 65 FR 82238 (Dec. 27, 2000).

Micropolitan Statistical Area—“A Core Based Statistical Area associated with at least one urban cluster that has a population of at least 10,000, but less than 50,000. The Micropolitan Statistical Area comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county as measured through commuting.” 65 FR 82238 (Dec. 27, 2000).

Demonstrated commuting patterns supporting a high degree of social and economic integration are a very significant factor in community chartering, particularly in situations involving large areas with multiple political jurisdictions. In a community based model, significant interaction through commuting patterns into one central area or urban core strengthens the membership of a credit union and allows a community based credit union to efficiently serve the needs of the membership throughout the area. Such data demonstrates a high degree of interaction through the major life activity of working and activities associated with employment. Large numbers of residents share common interests in the various economic and social activities contained within the core economic area.

Historically, commuting has been an uncomplicated method of demonstrating functional integration. NCUA agrees with OMB's conclusion that “Commuting to work is an easily understood measure that reflects the social and economic integration of geographic areas.” 65 FR 82233 (Dec. 27, 2000). The Board also finds compelling OMB's conclusion that commuting patterns within statistical areas demonstrate a high degree of social and economic integration with the central county. OMB's threshold for qualifying a county as an outlying county eligible for inclusion in either a MSA or MicroSA is a threshold of 25% inter-county commuting. OMB also considers a multiplier effect (a standard method used in economic analysis to determine the impact of new jobs on a local economy) that each commuter would have on the economy of the county in which he or she lives and notes that a multiple of two or three generally is accepted by economic development analysts for most areas. 65 FR 82233 (Dec. 27, 2000).

“Applying such a measure in the case of a county with the minimum 25 percent commuting requirement means that the incomes of at least half of the workers residing in the outlying county are connected either directly (through commuting to jobs located in the central county) or indirectly (by providing services to local residents whose jobs are in the central county) to the economy of the central county or counties of the CBSA within which the county at issue qualifies for inclusion.” 65 FR 82233 (Dec. 27, 2000).

The Board continues to favor the establishment of a standard statistical definition of a WDLC. The Board believes that the application of strictly statistical rules for determining whether a CBSA is a WDLC has the advantage of minimizing ambiguity and making the application process less time consuming. In addition to finding evidence established in this manner compelling, the Board also believes that the reasonableness of the conclusion is further strengthened when additional factors establishing the dominance of the core area are present. These additional factors are also objective and easily measurable.

As OMB has noted, Metropolitan Divisions often function as distinct social, economic, and cultural areas. In the Board's view, this evidence detracts from the cohesiveness of a CBSA with Metropolitan Divisions. Accordingly, under the proposal, a CBSA with Metropolitan Divisions will not meet the definition of a WDLC. Individual Metropolitan Divisions within the CBSA will qualify as a WDLC if the population and employment criteria are met. Similarly, the Board believes that when multiple political jurisdictions are present, an overly large population can detract from the cohesiveness of a geographic area. For that reason, the Board believes that capping a multijurisdictional area at 2.5 million or less people in order to qualify as a WDLC is appropriate. The Board chose that population threshold because OMB generally designates a metropolitan division within a CBSA that has a core of at least 2.5 million people. The Board takes that established threshold as a logical breaking point in terms of community cohesiveness with respect to a multijurisdictional area.

Also, the Board acknowledges that not all areas of the country are the same and there may be a CBSA that does not contain a sufficiently dominant core area or contains several significant core areas. Such situations also dilute the cohesiveness of a CBSA. For these reasons, the Board proposes to require that a CBSA contain a dominant core city, county, or equivalent that contains the majority of all jobs and 1/3 of the total population contained in the CBSA in order to meet the definition of a WDLC. These additional requirements will assure that the core area dominates any other area within the CBSA with respect to jobs and population. Applicants can find information about an area's population and number of local jobs, based upon an analysis of where people who work in an area reside, at the Census' Internet site (http://www.census.gov). Information about the current definitions of CBSAs is available at OMB's Internet site (http://www.whitehouse.gov/omb). Community charter applications for part of a CBSA are acceptable provided they include the dominant core city, county, or equivalent.

Accordingly, the Board proposes to establish a statistical definition of WDLC in cases involving multiple political jurisdictions. Specifically, a geographically well defined area will be considered a WDLC in that context when the following four requirements are met:

• The area must be a recognized CBSA, or in the case of a CBSA with Metropolitan Divisions the area must be a single Metropolitan Division; and

• The area must contain a dominant city, county or equivalent with a majority of all jobs in the CBSA or metropolitan division; and

• The dominant city, county or equivalent must contain at least 1/3 of the CBSA's or metropolitan division's total population; and

• The area must have a population of 2.5 million or less people.

NCUA believes the presence of these criteria clearly demonstrate that individuals in those communities have sufficient interaction and/or common interests. As previously mentioned, NCUA believes this more objective approach will benefit all involved by making the application and review process faster, simpler, and less labor intensive, and will provide a more certain outcome. Also, using objective criteria as the basis for granting a community charter will help ensure that NCUA makes consistent and uniform decisions from regional office to regional office.

Finally, an applicant that does not wish to serve an entire single political jurisdiction or statistical area that is defined as a WDLC may apply for a portion of that area. With respect to single political jurisdictions, the existing community definition will still apply. With respect to statistical areas, for reasons discussed throughout, the definition does not automatically apply. Rather, the applicant must demonstrate that the portion of the statistical area it wishes to serve independently satisfies the criteria for establishing a statistical area is a WDLC that meets the required population and employment criteria as discussed throughout.

As mentioned previously, NCUA does not believe it is beneficial to continue the practice of permitting a community charter applicant to provide a narrative statement with documentation to support the credit union's assertion that an area containing multiple political jurisdictions meets the standards for community interaction and/or common interests to qualify as a WDLC. As noted, the narrative approach is cumbersome, difficult for credit unions to fully understand, and time consuming. Accordingly, the NCUA proposes to eliminate from the community chartering process the narrative approach and all related aspects of that procedure.

While not every area will qualify as a WDLC, NCUA believes the consistency of this objective approach will enhance its chartering policy and greatly ease the burden for any community charter applicant.

To put this in perspective, NCUA analyzed the sixty-one largest statistical areas in the United States, based on 2007 population estimates, to determine how many would qualify as WDLCs under the proposed policy changes. Eleven of those statistical areas contain metropolitan divisions. Of the sixty-one statistical areas, twenty-seven would qualify in their entirety. Of the remaining thirty-four statistical areas that would not qualify as WDLCs as a whole, NCUA found virtually all of the areas encompass smaller segments that would include a majority of the statistical area's residents by virtue of: (1) Having a large single political jurisdiction within the statistical area; (2) having been previously approved as a WDLC by the NCUA Board; or (3) containing a metropolitan division that would qualify as a WDLC on its own.

An area previously approved by NCUA as a WDLC, prior to the effective date of any amendment to the Chartering Manual, in the event the subject proposed amendments are finalized, will continue to be considered a WDLC for subsequent applicants who wish to serve that exact geographic area. After that effective date, an applicant applying for a geographic area that is not exactly the same as the previously approved WDLC must comply with the Chartering Manual's WDLC criteria then in place.

NCUA is proposing a different definition of “rural district” from that in the May 2007 proposal. For the same reasons discussed with respect to WDLCs, the NCUA Board believes the definition of a rural district should be based on quantifiable and objective criteria. The Board continues to believe that a rural district should be less densely populated and smaller in population than those areas that qualify as a WDLC.

The NCUA Board proposes to define a rural district as a contiguous area that has more than 50% of its population in census blocks that are designated as rural and the total population of the area does not exceed 100,000 persons. These requirements will ensure that a rural district has both a small total population and a majority of its population in areas classified as rural by Census. The Board believes this definition will help credit unions serve future members in areas that currently have few financial services options. In addition, the Board believes there will be minimal overlap between the definitions of “rural district” and “statistical area” but recognizes that the definitions of “rural district” and “single political jurisdiction” could overlap in some cases.

The FCUA defines an underserved area as a local community, neighborhood, or rural district that is an “investment area” as defined in Section 103(16) of the Community Development Banking and Financial Institutions Act of 1994. The Board proposes to amend the language in the Chartering Manual's underserved communities section concerning the “local community, neighborhood, or rural district” requirement to conform it with the proposed new definitions of WDLC and rural district by referring the reader to Chapter 2 for the actual text of the definitions. This change will avoid confusion and eliminate any need for future changes to the underserved communities section in the event additional changes are made to the definitions in Chapter 2.

In December 2008, NCUA adopted a final rule modifying its Chartering Manual to update and clarify four aspects of the process and criteria for approving credit union service to underserved areas. 73 FR 73392 (Dec. 2, 2008). First, the rule clarified that an underserved area must independently qualify as a WDLC. Second, it made explicit that the Community Development Financial Institution Fund's “geographic units” of measure and 85 percent population threshold, when applicable, must be used to determine whether a proposed area meets the “criteria of economic distress” incorporated by reference in the FCUA. Third, it updated the documentation requirements for demonstrating that a proposed area has “significant unmet needs” among a range of specified financial products and services. Finally, the rule adopted a “concentration of facilities” methodology to implement the statutory requirement that a proposed area must be “underserved by other depository institutions.” 73 FR 73392, 73396 (Dec. 2, 2008).

Using data supplied by NCUA, the “concentration of facilities” methodology compares the ratio of depository institution facilities to the population within a proposed area's “non-distressed” portions against the same facilities-to-population ratio in the proposed area as a whole. When that ratio in the area as a whole shows more persons per facility than does the same ratio in the “non-distressed” portions, the rule deems the area to be “underserved by other depository institutions.” Since the final rule was adopted, a perception has arisen that this methodology is an obstacle to establishing that an area which clearly meets the “economic distress criteria” also is “underserved by other depository institutions” as required for the area to qualify as underserved. For example, there could be a distressed area that contains more financial institutions than a non-distressed area, but the products and services offered by the financial institutions in the distressed area are geared to businesses and high-income individuals. In this instance, the distressed area would not qualify as underserved despite truly lacking affordable financial services for low to moderate income individuals. Accordingly, the NCUA Board invites public comment on alternative methodologies, based on publicly accessible data about both credit unions and other depository institutions, for implementing the Act's “underserved by other depository institutions” criterion.

Establishing that an area is a WDLC is only the first of two criteria an FCU must satisfy to obtain a community charter or community charter expansion. The second criterion, after establishing the existence of a WDLC, is for an FCU to demonstrate it is able to serve the WDLC. This applies to all WDLCs including single political jurisdictions, statistical areas, and grandfathered communities. Typically, an FCU can demonstrate its ability to serve an established WDLC in its marketing plan.

Under the current Chartering Manual, a credit union converting to or expanding its community charter must provide “a marketing plan that addresses how the community will be served.” The Board proposes clarifying NCUA's marketing plan requirement to provide credit unions with additional guidance on NCUA's expectations. FCUs need to be realistic in assessing their ability to serve a particular community. For example, an FCU with $150 million in assets cannot reasonably expect to be able to serve a community of 1.5 million people. NCUA believes that a meaningful marketing plan must demonstrate, in detail:

• How the credit union will implement its business plan to serve the entire community;

• The unique needs of the various demographic groups in the proposed community;

• How the credit union will market to each group, particularly underserved groups;

• Which community-based organizations the credit union will target in its outreach efforts;

• The credit union's marketing budget projections dedicating greater resources to reaching new members; and

• The credit union's timetable for implementation, not just a calendar of events.

These requirements will serve to ensure that if the community charter is granted, the credit union will be well positioned to safely serve the entire community. Additionally, the appropriate regional office will follow up with an FCU every year for three years after the FCU has been granted a new or expanded community charter, and at any other intervals NCUA believes appropriate, to determine if the FCU is satisfying the terms of its marketing and business plans. An FCU failing to satisfy those terms will be subject to supervisory action. As part of this review process, the regional office will report to the NCUA Board instances where an FCU is failing to satisfy the terms of its marketing and business plan and indicate what administrative actions the region intends to take.

NCUA recognizes that determining from a marketing plan if an FCU has the ability to serve a particular WDLC requires some degree of subjectivity, and NCUA believes its substantial experience enables it to make that determination. NCUA would prefer, however, to receive comments from interested parties on whether there are other more objective ways to measure an FCU's ability to serve a particular WDLC.

NCUA will accept community charter applications based only on grandfathered WDLCs, as discussed above, and single political jurisdictions between the issuance of this proposal on December 17, 2009 and the effective date of any final amendments the Board adopts regarding the Chartering Manual. NCUA will accept all community charter applications, based on any permitted criteria, on or after that effective date. Those applications will be considered under the revised version of NCUA's community chartering policies as amended by this proposal.

Under the emergency merger provision of section 205(h) of the Act, the NCUA Board may allow a credit union that is either insolvent or in danger of insolvency to merge with another credit union if the NCUA Board finds that an emergency requiring expeditious action exists, no other reasonable alternatives are available, and the action is in the public interest. 12 U.S.C. 1785(h). The Board may approve an emergency merger without regard to common bond or other legal constraints, such as obtaining the approval of the members of the merging credit union to the merger. The emergency merger statute addresses exigent circumstances and is intended to serve the public interest and credit union members by providing for the continuation of credit union service to members from a financially strong credit union.

NCUA must first determine that a credit union is either insolvent or in danger of insolvency before it makes the additional findings that an emergency exists, other alternatives are not reasonably available, and that the public interest would be served by the merger. The statute, however, does not define when a credit union is “in danger of insolvency” nor has NCUA previously issued a formal definition. NCUA now believes it advisable to adopt an objective standard to aid it in making the “in danger of insolvency” determination. This will provide certainty and consistency in how NCUA interprets the standard.

NCUA believes that a credit union is in danger of insolvency if it falls into one or more of the following three categories:

1. The credit union's net worth is declining at a rate that will render it insolvent within 24 months. In NCUA's experience with troubled credit unions, the trend line to zero net worth often worsens once a credit union actually approaches zero net worth. It is more difficult for NCUA to keep the costs to the National Credit Union Share Insurance Fund (NCUSIF) low when a credit union is near, or below, zero net worth. 1

2. The credit union's net worth is declining at a rate that will take it under two percent (2%) net worth within 12 months. A credit union with a net worth ratio of less than two percent (2%) falls into the PCA category of “critically undercapitalized.” 12 U.S.C. 1790d(c)(1)(E); 12 CFR 702.102(a)(5). Congress, in adding the PCA mandates to the Act, created a presumption that a critically undercapitalized credit union should be liquidated or conserved if its financial condition does not improve within a short period. 12 U.S.C. 1790d(i); 12 CFR 702.204(c). Note also that NCUA staff reviewed State credit union statutes and found that the Illinois Credit Union Act defines a credit union as “in danger of insolvency” if its net worth to asset ratio falls below two percent (2%).2 This is the same as the critically undercapitalized net worth category under NCUA's PCA provisions.

3. The credit union's net worth, as self-reported on its Call Report, is significantly undercapitalized, and NCUA determines that there is no reasonable prospect of the credit union becoming adequately capitalized in the succeeding 36 months. A credit union with a net worth ratio between two percent (2%) or more but less than four percent (4%) falls into the PCA category of “significantly undercapitalized.” 12 U.S.C. 1790d(c)(1)(D); 12 CFR 702.102(a)(4). A credit union with a net worth ratio of six percent (6%) falls into the PCA category of “adequately capitalized.” 12 U.S.C. 1709d(c)(1)(B); 12 CFR 702.102(a)(2).

Section 702.203(c) of NCUA's PCA regulation states:

12 CFR 702.203(c). An example of no reasonable prospect of becoming adequately capitalized would be a credit union's inability, after working with NCUA, to demonstrate how it would restore net worth to this level. This could include the credit union's failure, after working with NCUA, and considering both possible increases in retained earnings and decreases in assets, to develop an acceptable Net Worth Restoration Plan (NWRP). It could also include the credit union's failure, after working with NCUA, to materially comply with an approved NWRP. In either case, NCUA must document that the credit union is unable to become adequately capitalized within a 36-month timeframe.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a regulation may have on a substantial number of small credit unions, primarily those under ten million dollars in assets. The proposed amendments will not have a significant economic impact on a substantial number of small credit unions and therefore, a regulatory flexibility analysis is not required.

In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), NCUA may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid OMB control number. The OMB control number assigned to § 701.1 is 3133-0015, and to the forms included in Appendix D is 3133-0116. NCUA has determined that the proposed amendments will not increase paperwork requirements and a paperwork reduction analysis is not required.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on State and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The proposed rule would not have substantial direct effects on the States, on the connection between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that the proposed rule does not constitute a policy that has federalism implications for purposes of the executive order because it only applies to Federal credit unions.

The NCUA has determined that the proposed rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act of 1999, Public Law 105-277, 112 Stat. 2681 (1998).

For the reasons discussed above, NCUA proposes to amend 12 CFR part 701 as follows:

7. The first paragraph of Section V.D.2. of Chapter 2 of appendix B to part 701 is revised to read as follows:

8. Section III.B.1 of Chapter 3 of appendix B to part 701 is amended by removing the last sentence of that section.

9. The glossary to appendix B to part 701 is amended by adding a definition of “in danger of insolvency” to be added in alphabetical order to read as follows:

We invite interested persons to take part in this rulemaking by sending written comments, data, or views on the changes made by this special condition, which are detailed in the Discussion section of this preamble. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments.

We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel on these special conditions. You can inspect the docket before and after the comment closing date. If you wish to review the docket in person, go to the address in the ADDRESSES section of this preamble between 7:30 a.m. and 4 p.m., Monday through Friday, except Federal holidays.

We will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change these special conditions based on the comments we receive.

If you want us to acknowledge receipt of your comments on this proposal, include with your comments a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it back to you.

On November 27, 1967, Sikorsky Aircraft Corporation (Sikorsky) filed an application for type certification for its Model S-64E helicopter. This rotorcraft is the civil version of the United States Army Model CH-54A flying crane. The S-64E has a maximum weight of approximately 30,000 pounds when flying only with internal fuel loadings and personnel, and without external loads. It has a maximum weight of 42,000 pounds, of which a maximum of 20,000 pounds may be external loads. Type certificate H6EA was issued on August 21, 1969, which included special condition No. 29-6-EA-2. This special condition includes conditions for type certification for carrying Class B external loads.

On April 2, 1969, Sikorsky filed for an amendment to its type certificate to add the Model S-64F. This aircraft is the civil version of the United States Army Model CH-54B flying crane. The S-64F has a maximum weight of approximately 30,000 pounds when flying only with internal fuel loadings and personnel, and without external loads. It has a maximum weight of 47,000 pounds, of which a maximum of 25,000 pounds may be external loads. Type certificate H6EA was amended on November 25, 1970, to add the F model, including special condition No. 29-16-EA-5 and Amendment No. 1 to that special condition. This Model S-64F special condition includes requirements for type certification for carrying Class A and B external loads.

The 14 CFR part 29 regulations applicable at the time of certification required the Models S-64E and S-64F to comply with Category A regulations. However, strict adherence to those regulations was deemed inappropriate for these model aircraft and their intended operations. The special conditions created for the Model S-64E and Model S-64F combined the appropriate standards from both Category A and B, plus added safety and other requirements necessary to establish compliance with the airworthiness requirements of Subpart D of 14 CFR part 133 for Class A and B rotorcraft load combinations. Additionally, the special conditions allowed operations under 14 CFR part 91. The combination of regulations and special conditions ensured a level of safety equivalent to 14 CFR part 29 requirements at the time of certification.

Both aircraft were specifically type certificated as “industrial flying cranes,” which are used only to carry cargo and all cargo is carried as an external load. The cockpit contains only five seats, allowing for two pilots, an aft-facing hoist operator and two observers. The rotorcraft does not have a passenger compartment and is not designed to transport passengers. 14 CFR part 91 operations are allowed. The aircraft are powered by two Pratt and Whitney turbo shaft engines (Series JFTD12A); the S-64E uses the model 4A which generates 4,500 horsepower and the S-64F uses the model 5A which generates 4,800 horsepower. The engines drive a six-blade single main rotor approximately 72 feet in diameter and a four-blade tail rotor approximately 16 feet in diameter.

Since the time of original certification, 14 CFR part 29 has been modified to recognize that most transport category rotorcraft are being used in utility work, rather than in air carrier operations. The regulatory changes now enable a rotorcraft of more than 20,000 pounds and nine or less passenger seats to be certificated as Category B provided certain Category A subparts are met.

Since the S-64's certification, the regulations have been amended to better accommodate rotorcraft designed to operate under the external load provisions of 14 CFR part 133. However, no transport category rotorcraft (over 20,000 pounds) has been designed with the unique and novel features of the “skycrane.” In 1992, the type certificate for the Model S-64E and Model S-64F was transferred from Sikorsky to Erickson Air-Crane Incorporated. In 2004, the Model S-64F received a type certificate from the European Aviation Safety Agency (EASA). In 2005, the Model S-64E was certificated to carry Class A external loads under 14 CFR part 133.

The original type certification basis is as follows:

For the Model S-64E: 14 CFR part 29, 1 February 1965, including Amendments 29-1 and 29-2 except 14 CFR § 29.855(d), and Special Condition No. 29-6-EA-2. For the Model S-64F: 14 CFR part 29, dated 1 February 1965 including Amendments 29-1 and 29-2 except 14 CFR § 29.855(d), and Special Condition No. 29-16-EA-5 including Amendment No. 1.

We have found that the applicable airworthiness regulations for 14 CFR part 29 do not contain adequate or appropriate safety standards for the Erickson S-64E and S-64F rotorcraft because of novel or unusual design features. Therefore, special conditions were prescribed under the provisions of § 21.16. Special conditions, as appropriate, are defined in § 11.19 and issued per § 11.38, and become part of the type certification basis under § 21.17(a)(2).

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, the special conditions would also apply to the other model per § 21.101(a)(1).

The Erickson Air-Crane S-64 rotorcraft incorporates the following novel or unusual design features:

The aircraft was designed specifically as an industrial flying crane—

(a) With an airframe—

(1) Designed solely for external load capabilities with no passenger cabin and accommodations in the cockpit only for—

(i) One pilot,

(ii) One copilot,

(iii) One aft-stick operator, and

(iv) Two observers.

(2) Designed with two small baggage compartments in the nose.

(3) Designed with multiple “hard points” each with load ratings specifically for the carriage of external loads.

(b) With a rear-facing aft-stick operator seat, which allows for—

(1) precision placement of external loads, and

(2) limited flight operations capabilities.

(c) With neither engine equipped with a cowling.

(d) That weighs over 20,000 pounds, but is designed solely to carry cargo in external load operations.

The type certification basis for the Model S-64E helicopter contained Special Condition No. 29-6-EA-2, dated January 13, 1969. The type certification basis for the model S-64F helicopter contained Special Condition No. 29-16-EA-5, issued December 3, 1969 and Amendment 1 to that Special Condition issued November 13, 1970. The special condition for the model S-64E included requirements for type certification without external loads (including flight conditions, propulsion conditions, systems condition, and operating limitations conditions) and requirements for type certification with external loads (including general conditions, flight conditions, propulsion conditions, systems condition, and operating conditions). The special condition including Amendment 1 for the model S-64F included essentially the same requirements as those for the model S-64E, but included additional requirements for Class A load combinations.

We have reviewed Special Conditions No. 29-6-EA-2 and No. 29-16-EA-5, including Amendment No. 1. We have determined that the original special conditions applied to the model S-64 ensure a level of safety equivalent to 14 CFR part 29 requirements at the time of certification for both the E and F model rotorcraft.

At the request of Erickson Air Crane, we propose to:

(a) Consolidate the special conditions for both model helicopters into one document.

(b) Indicate whether a special condition requirement is “in lieu of” or “in addition to” a standard certification requirement and make specific reference to the certification requirement. The original Special Conditions did not delineate the novel or unusual design features of the Air-Crane, which resulted in an unclear application of the “in addition to” and “in lieu of” requirements as they pertained to the rules existing at the time of certification.

(c) Reference 14 CFR part 133 instead of the various rotorcraft load combination classes for the special condition requirements concerning placards.

(d) Modify the occupancy special condition to allow non-crewmembers who are not providing compensation to the operator, to be transported, as otherwise permitted by the regulations. Operations are currently limited to occupants that are flight crewmembers, flight crewmember trainees, or other persons performing essential functions connected with external load operations or necessary for an activity directly associated with external load operations.

(e) Remove the special condition operating limitation that required the helicopters be operated so that a suitable landing area could be reached in no more than 5 minutes, and now requiring that only when flying over a congested area must the helicopter be operated so that a suitable landing area can be reached in no more than 5 minutes.

(f) Add a requirement to comply with § 29.855(d), at Amendment level 29-3, effective February 25, 1968, which was excluded from the original special condition as indicated on the type certificate data sheet, requiring the baggage compartment in the airframe nose be sealed to contain cargo or baggage compartment fires.

Neither consolidating the requirements, specifying the “in lieu of” or “in addition to” references, nor referencing 14 CFR part 133 are intended to make any substantive changes from the requirements contained in Special Condition No. 29-6-EA-2 nor Special Condition 29-16-EA-5, as amended. However, one change that has been proposed is to the “occupant” standard.

The original special conditions only permitted flight crewmembers, flight crewmember trainees, or persons performing an essential or necessary function in connection with the external load operation to be carried on board the helicopter. This occupancy standard was taken directly from 14 CFR § 133.35, dealing with the carriage of persons during rotorcraft external-load operations. At the time of original certification, there was no intent to allow the carriage of persons other than crewmember trainees and those required in connection with the external-load operation. Flights conducted under 14 CFR part 91 regulations were only expected to occur when the helicopter was being re-positioned with two pilot-crewmembers. In addition, limitations were placed on the S-64E and S-64F helicopter designs because they were not the typical transport category helicopter because they did not meet all appropriate 14 CFR part 29 transport category helicopter requirements. In particular, the designs do not include a power-plant fire extinguishing system and the related cowlings that assist in engine fire suppression.

Since original certification, operators have stated that they would like the option to use the additional three seats, which includes the one rear-facing seat occupied by a crewmember during external-load operations, to carry support crews between operational bases and the worksites. The intended effect of removing the essential crewmember and crewmember trainee limitation recognizes that these model helicopters are not operated exclusively under 14 CFR part 133. Under this proposal, we recognize that the two observer seats and the rear-facing aft-stick operator's seat may be occupied by persons other than persons performing an essential or necessary function in connection with the external load operation during 14 CFR part 91 operations. The intent of this provision is to allow the two observer seats and the rear-facing operator's seat, when the rear-facing aft-stick operator's controls are disengaged and the collective guard is installed to prevent unintentional movement, to be occupied during other than external-load operations. As described in the FAA-approved flight manual, the aft-stick operator's controls are only to be engaged when a qualified crewmember is at the main and aft-stick operator's controls.

From an engine-fire safety standpoint, single-engine helicopters certificated to Category B requirements of 14 CFR part 29 are permitted to carry up to nine passengers. However, if an engine fails due to a fire, although the fire may be extinguished, the helicopter will still be forced to execute an auto-rotation. Depending on where the helicopter is operating, a safe autorotative landing may not be possible. In addition, helicopters certificated to 14 CFR part 27 requirements are not required to have a power-plant fire protection system, but are certificated to carry up to nine passengers. If a twin-engine model S-64E or S-64F helicopter has an engine failure due to an engine fire, these helicopters can still fly on a single engine and the certification standards require that they must be safely controlled so that the essential structure, controls, and parts can perform their essential functions for at least five minutes in order to reach a possible suitable landing area.

Although we propose to remove the “occupant” limitation, when conducting other than external-load operations, which most commonly we anticipate may be 14 CFR part 91 operations, operators would still be required to comply with the other FAA operating requirements applicable to their particular operation.1

Another current special condition operating limitation requires that the helicopters be operated at an altitude and over routes, which provide suitable landing areas that can be reached in no more than 5 minutes. We are proposing to qualify this limitation and only require this limitation when the helicopters are operated over a congested area. The 5-minute portion of the limitation complements the fire protection requirements in § 29.861, which for Category B rotorcraft requires that certain structure, controls, and other essential parts be able to perform their essential functions for at least 5 minutes under foreseeable powerplant fire conditions. Relaxing the limitation by allowing flights over other than congested areas that may not be within the 5-minute distance still exceeds the safety standard in the current § 133.33(d) provision, which allows the holder of a Rotorcraft External-Load Operator Certificate to conduct rotorcraft external-load operations under certain circumstances over congested areas notwithstanding the requirements of 14 CFR part 91. Therefore, this is consistent with that standard.

We also propose to change the current type certification basis of both model helicopters that excludes the requirement to comply with § 29.855(d). At the time of the application for type certification of the model S-64E helicopter on November 27, 1967, and before the changes to 14 CFR part 29 by Amendment level 29-3, effective February 25, 1968, § 29.855(d) required that cargo and baggage compartments be designed or have a device to ensure detection of fires by a crewmember at his station to prevent entry of harmful substances into the crew or passenger compartment. In Notice 65-42 in Proposal 22 published on December 28, 1965 (30 FR 16129, 16139), we proposed to change § 29.855(d) because experience had shown that the design requirements for cargo and baggage compartments were not specific enough for compartments that are not sealed against fire and for cargo-only compartments. Because of the novel design of this helicopter, it did not have a typical transport category rotorcraft cargo or baggage compartment, only two small baggage compartments in the nose of the rotorcraft that are inaccessible during flight. Therefore, because the model S-64E helicopter was not the type of transport category rotorcraft envisioned when the transport category requirements of 14 CFR part 29 were adopted to address rotorcraft use in air carrier service and the necessary higher degree of safety to protect common carriage passengers and the fact that the model S-64E did have a sealed cargo compartment meeting the new proposed standard in Notice 65-42, the type certification basis for the model S-64E helicopter excluded the requirements of § 29.855(d). However, when Amendment 29-3 was adopted with the amended § 29.855(d), the exclusion of § 29.855(d) from the type certification basis was not reversed. The type certification basis for the model S-64F is the same as that for the model S-64E. Therefore, we propose adding back to the type certification basis for both model helicopters the requirement to comply with § 29.855(d), at Amendment level 29-3, effective February 25, 1968.

This special condition is applicable to the Erickson Air-Crane Model S-64E and Model S-64F rotorcraft. Should Erickson Air-Crane apply later for a change to the type certificate to include another model incorporating the same novel or unusual design features, this special condition would apply to that model according to the provisions of § 21.101(a)(1).

We have reviewed the original Special Conditions No. 29-6-EA-2 and No. 29-16-EA-5, including Amendment No. 1. Based on this review, we propose to combine the two current separate special conditions for the Model S-64E and Model S-64F helicopters into a single special condition that clearly establishes the novel or unusual design feature associated with each regulatory requirement. We also propose to change the special condition that limited who, specifically non-flight crewmembers, could be carried on board the helicopter during other than external-load operations. The original special conditions also required the Model S-64E and Model S-64F to be within 5 minutes of a suitable landing area at all times. We find it sufficient to require the rotorcraft to be no more than 5 minutes from a suitable landing area when operating over congested areas.

However, we are proposing to add a requirement to comply with the cargo and baggage compartment requirements of 29.855(d) that were inadvertently omitted from the original two special conditions.

This action affects only certain novel or unusual design features on the Model S-64E and Model S-64F helicopters. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the helicopter.

The substance of the original special conditions may have been subjected to comments in prior instances. However, due to the changes described within the “Discussion” section, we feel that it is prudent to request comments to allow interested persons to submit views on these changes.

The authority citation for these special conditions is as follows:

Accordingly, the Federal Aviation Administration (FAA) proposes that Special Condition No. 29-6-EA-2, Docket No. 9351, issued January 13, 1969 for the Model S-64E and Special Condition No. 29-16-EA-5, Docket No. 10002, issued December 3, 1969 and Amendment 1 to Special Condition No. 29-16-EA-5, issued November 13, 1970 for the Model S-64F, be removed and the following special conditions be added as part of the type certification basis for Erickson Air-Crane models S-64E and S-64F helicopters. Unless otherwise noted, all regulatory references made within this proposed special condition would pertain to those 14 CFR par 29 regulations in effect at Amendment level 29-2, effective June 4, 1967 (32 FR 6908, May 5, 1967).

(a) Takeoff and Landing Distance. Because of the S-64's novel design as an industrial flying crane, the following apply:

(1) For operations without external load, the takeoff and landing distance must be determined by flight test over the ranges of weight, altitude, and temperature for which takeoff and landing data are scheduled. The flight tests must encompass the critical areas of a takeoff and landing flight path from a 50-foot hover. If the takeoff and landing distance throughout the operational range to be approved are zero, the minimum takeoff and landing area length must be one and one-half times the maximum helicopter overall length (main rotor forward tip path to tail rotor aft tip path) and the area width must be one and one-half times main rotor tip path diameter. Additionally, this information must be furnished in the performance information section of the Rotorcraft Flight Manual.

(2) For Class A rotorcraft load combination operations:

(i) Compliance must be shown with the provisions of § 29.51 (Takeoff data: general), except that in paragraph (a) of § 29.51, the references to §§ 29.53(b) (Critical decision point) and 29.59 (Takeoff path: Category A) are not applicable.

(ii) In lieu of the requirements of §§ 29.53 and 29.59, the following apply:

(A) Compliance must be shown with the provisions of § 29.63 (Takeoff: Category B),

(B) the horizontal takeoff distance to a point 50 feet above the plane of the takeoff surface must be established with both engines operating within their approved limits, and

(C) the takeoff climbout speed must be established.

(iii) Compliance must be shown with the provisions of § 29.79 (Limiting height-speed envelope).

(3) For Class B rotorcraft load combination operations:

(i) Compliance must be shown with § 29.51 (Takeoff data: general), except that in paragraph (a), the references to §§ 29.53(b) (Critical decision point), 29.59 (Takeoff path: Category A) and 29.67(a)(1) and (2) (Climb: one engine inoperative) are not applicable.

(ii) In lieu of the requirements of §§ 29.53 and 29.59, compliance must be shown with the provisions of § 29.63 (Takeoff: Category B).

(b) Climb. Because of the S-64's novel design as an industrial flying crane, the following apply:

(1) For Class A rotorcraft load combination operations, in lieu of the requirements of §§ 29.67 (Climb: one engine inoperative) and 29.71 (Helicopter angle of glide: Category B), compliance must be shown with §§ 29.65(a) (Category B climb: all engines operating) and 29.67(a)(1) and (2) (Climb: one engine inoperative).

(2) For Class B rotorcraft load combination operations, in lieu of the requirements of §§ 29.67 (Climb: one engine inoperative) and 29.71 (Helicopter angle of glide: Category B), compliance must be shown with § 29.65 (Category B climb: all engines operating).

(c) Landing. Because of the S-64's novel design as an industrial flying crane, for Class A rotorcraft load combination operations, in lieu of the requirements of §§ 29.77 (Balk landing: Category A) and 29.75 (Landing), compliance must be shown for 29.75(b)(5), and the following apply:

(1) The horizontal distance required to land and come to a complete stop, from a point 50 feet above the landing surface must be determined with a level, smooth, dry, hard surface.

(2) The approach and landing may not require exceptional piloting skill or exceptionally favorable conditions.

(3) The landing must be made without excessive vertical acceleration or tendency to bounce, nose over, or ground loop.

(4) The landing data must be determined at each weight, altitude, and temperature for which certification is sought with one engine inoperative and the remaining engine operating within approved operating limitations.

(5) The approach and landing speeds must be selected by the applicant and must be appropriate to the type rotorcraft.

(6) The approach and landing path must be established to avoid the critical areas of a limiting height-speed envelope established under § 29.79.

(d) Performance at Minimum Operating Speed. Because of the S-64's novel design as an industrial flying crane, in lieu of the requirements of § 29.73 (Performance at minimum operating speed) the following apply:

(1) For operations without external load, the hovering performance must be determined at 50 feet or more above the takeoff surface over the ranges of weight, altitude, and temperature for which takeoff data are scheduled. This must be shown with the most critical engine inoperative, the remaining engine at not more than the maximum certificated single engine rated power, and the landing gear extended.

(2) For Class A rotorcraft load combination operations, the hovering performance must be determined over the ranges of weight, altitude, and temperature for which certification is requested, and takeoff data must be scheduled—

(i) Up to takeoff power on each engine;

(ii) With landing gear extended; and

(iii) The helicopter at a height consistent with normal takeoff procedures.

(3) For Class B rotorcraft load combination operations, the hovering performance must be determined over the ranges of weight, altitude, and the temperature for which certification is requested, and takeoff data must be scheduled—

(i) Up to takeoff power on each engine;

(ii) With landing gear extended; and

(iii) The rotorcraft out of ground effect.

(e) Airspeed Indicating System. Because of the S-64's novel design as an industrial flying crane, for operations with and without external load, compliance must be shown with § 29.1323 (Airspeed indicating system) effective February 25, 1968 (Amendment 29-3), modified as follows:

(1) In addition to the flight conditions prescribed in subparagraph (b)(1), the system must be calibrated at operational rates of climb.

(2) In lieu of the speed range prescribed in subparagraph (c)(1), the airspeed error may not exceed the requirements throughout the speed range in level flight at forward airspeeds of 35 knots or more.

(f) Power Boost and Power-Operated Control System. Because of the S-64's novel design as an industrial flying crane, for operations without external load, in lieu of the requirements of § 29.695(a)(1) (Power boost and power-operated control system) as it applies to any single failure of the main rotor tandem servo housing, the following apply:

(1) It must be shown by endurance tests of the tandem servo that failure of the servo housing is extremely improbable.

(2) A tandem servo life limit must be established.

(3) A periodic inspection program for the tandem servo must be established.

(4) The hydraulic system must be provided with means to ensure that system pressure, including transient pressure and pressure from fluid volumetric changes in components which are likely to remain closed long enough for such changes to occur—

(i) are within 90 to 110 percent of pump average discharge pressure at each pump outlet or at the outlet of the pump transient pressure dampening device, if provided; and

(ii) may not exceed 135 percent of the design operating pressure, excluding pressures at the outlets specified in subparagraph (i) above. Design operating pressure is the maximum steady operating pressure.

(g) Propulsion Conditions. Because of the S-64's novel design as an industrial flying crane, its powerplant was designed without a cowling, and does not include a fire extinguishing system. Therefore, in lieu of the requirements of §§ 29.861(a) (Fire protection of structure, controls, and other parts), 29.1187(e) (Drainage and ventilation of fire zones), 29.1195 (Fire extinguishing systems), 29.1197 (Fire extinguishing agents), 29.1199 (Extinguishing agent containers), and 29.1201 (Fire extinguishing system materials), the following apply:

(1) Fire protection of structure, control and other parts. Compliance must be shown with § 29.861(b) (Fire protection of structure, controls, and other parts) so each part of the structure, controls, rotor mechanism, and other parts essential to controlled landing and flight must be protected so they can perform their essential functions for at least 5 minutes under any foreseeable powerplant fire condition.

(2) Powerplant fire protection. In addition to compliance with § 29.1183 (Lines and fittings), except for lines and fittings approved as part of the engine type certificate under 14 CFR part 33, design precautions must be taken in the powerplant compartment to safeguard against the ignition of fluids or vapors which could be caused by leakage or failure in flammable fluid systems.

(3) Exhaust system drains. In addition to compliance with § 29.1121 (Exhaust system: general), compliance must be shown with § 29.1121(h) (Exhaust system: general) effective February 25, 1968 (Amendment 29-3) in that if there are significant low spots or pockets in the engine exhaust system, the system must have drains that discharge clear of the rotorcraft, in normal ground and flight attitudes, to prevent the accumulation of fuel after the failure of an attempted engine start.

(4) Rotor drive system testing. If the engine power output to the transmission can exceed the highest engine or transmission power rating and the output is not directly controlled by the pilot under normal operating conditions (such as the control of the primary engine power control by the flight control), in addition to the endurance tests prescribed in § 29.923 (Rotor drive system and control mechanism tests), the following test must be made:

(i) With all engines operating, apply torque at least equal to the maximum torque used in meeting § 29.923 plus 10 percent for at least 220 seconds.

(ii) With each engine, in turn, inoperative, apply to the remaining transmission power inputs the maximum torque attainable under probable operating conditions, assuming that torque limiting devices are functioning properly. Each transmission input must be tested at this maximum torque for at least 5 minutes.

(5) Powerplant installation. In addition to the requirements of § 29.901 (Installation), compliance must be shown with § 29.901(b)(5) (Installation) effective February 25, 1968 (Amendment 29-3) in that the axial and radial expansion of the engines may not affect the safety of the powerplant installation.

(6) Powerplant operation characteristics. In addition to the requirements of § 29.939 (Turbine engine operating characteristics), the powerplant operating characteristics must be investigated in flight to determine that no adverse characteristics, such as stall, surge, or flameout are present to a hazardous degree during normal and emergency operation of the helicopter within the range of operating limitations of the helicopter and of the engine.

(7) Powerplant control system. In addition to the requirements of § 29.1141 (Powerplant controls: general), the powerplant control system must be investigated to ensure that no single, likely failure or malfunction in the helicopter installed components of the system can cause a hazardous condition that cannot be safely controlled in flight.

(8) Fuel pump installation. In addition to the requirements of § 29.991 (Fuel pumps), there must be provisions to maintain the fuel pressure at the inlet of the engine fuel system within the limits established for engine operation throughout the operating envelope of the helicopter.

(9) Fuel strainer. In addition to the requirements of § 29.997 (Fuel strainer or filter), compliance must be shown with § 29.997(e) (Fuel strainer or filter) effective February 25, 1968 (Amendment 29-3) in that unless there are means in the fuel system to prevent the accumulation of ice on the filter, there must be means to automatically maintain the fuel flow if ice-clogging of the filter occurs.

(10) Cooling test. In lieu of the requirements of § 29.1041(a) (Powerplant cooling: General), which includes requirements for reciprocating engines, compliance must be shown with § 29.1041(a) (Powerplant cooling: General) effective February 25, 1968 (Amendment 29-3) in that the powerplant cooling provisions must maintain the temperatures of powerplant components and engine fluids within safe values under critical surface and flight operating conditions and after normal engine shutdown.

(11) Induction system icing protection. The S-64 has two turbine engines; therefore, in lieu of § 29.1093 (Induction system icing protection), which includes requirements for reciprocating engines, compliance must be shown with § 29.1093(b) (Induction system icing protection) effective February 25, 1968 (Amendment 29-3) in that each engine must operate throughout its flight power range, without adverse effect on engine operation or serious loss of power or thrust under the icing conditions specified in Appendix C of 14 CFR part 25.

(12) Induction system duct. The S-64 has two turbine engines; therefore, in lieu of § 29.1091(d) and (e) (Air induction), which includes requirements for reciprocating engines, compliance must be shown with § 29.1091(f) (Air induction) effective February 25, 1968 (Amendment 29-3) in that:

(i) There must be means to prevent hazardous quantities of fuel leakage or overflow from drains, vents, or other components of flammable fluid systems from entering the engine intake system.

(ii) The air inlet ducts must be located or protected to minimize the ingestion of foreign matter during takeoff, landing, and taxiing.

(h) Powerplant Instruments. At the time of original certification, the S-64 had a novel design of being powered by two turbine engines; therefore, in lieu of § 29.1305 (Powerplant instruments), which includes requirements for reciprocating engines, compliance must be shown with § 29.1305 (Powerplant instruments) effective February 25, 1968 (Amendment 29-3) in that the following are required powerplant instruments:

(1) A fuel quantity indicator for each fuel tank.

(2) If an engine can be supplied with fuel from more than one tank, a warning device to indicate, for each tank, when a 5-minute usable fuel supply remains when the rotorcraft is in the most adverse fuel feed condition for that tank, regardless of whether that condition can be sustained for the 5 minutes.

(3) An oil pressure warning device for each pressure lubricated gearbox to indicate when the oil pressure falls below a safe value.

(4) An oil quantity indicator for each oil tank and each rotor drive gearbox, if lubricant is self-contained.

(5) An oil temperature indicator for each engine.

(6) An oil temperature warning device for each main rotor drive gearbox to indicate unsafe oil temperatures.

(7) A gas temperature indicator for each turbine engine.

(8) A gas producer rotor tachometer for each turbine engine.

(9) A tachometer for each engine that, if combined with the instrument required by subparagraph (10) of this paragraph, indicates rotor rpm during autorotation.

(10) A tachometer to indicate the main rotor rpm.

(11) A free power turbine tachometer for each engine.

(12) A means for each engine to indicate power for that engine.

(13) An individual oil pressure indicator for each engine, and either an independent warning device for each engine or a master warning device for the engines with means for isolating the individual warning circuit from the master warning device.

(14) An individual fuel pressure indicator or equivalent device for each engine, and either an independent warning device for each engine or a master warning device for the engines with means for isolating the individual warning circuit from the master warning device.

(15) Fire warning indicators.

(i) Cargo and baggage compartments. Since the S-64 includes an unusual design in that the baggage compartments are located in the nose of the airframe and are inaccessible during flight, in lieu of § 29.855(d), compliance must be shown with § 29.855(d) effective February 25, 1968 (Amendment 29-3) so that each cargo and baggage compartment is sealed to contain cargo or baggage compartment fires completely without endangering the safety of the rotorcraft or its occupants.

(j) Auxiliary Control Station. The S-64 includes a novel design for an optional aft-facing pilot position (auxiliary control station) which is used during precision placement rotorcraft load combination operations. There are no specific requirements in the airworthiness standards for this type of pilot position. Therefore, if the auxiliary control station is equipped with flight controls—

(1) The rotorcraft must be safely controllable by the auxiliary controls, throughout the range of the auxiliary controls.

(2) The auxiliary controls may not interfere with the safe operation of the rotorcraft by the pilot or copilot when the station is not occupied.

(3) The auxiliary control station and its associated equipment must allow the operator to perform his or her duties without unreasonable concentration or fatigue.

(4) The vibration and noise characteristics of the auxiliary control station appurtenances must not interfere with the operator's assigned duties to an extent that would make the operation unsafe.

(5) The auxiliary control station must be arranged to give the operator sufficiently extensive, clear, and undistorted view for safe operation. The station must be free of glare and reflection that could interfere with the operator's view.

(6) There must be provisions to prevent unintentional movement of the controls when the rear-facing aft-stick operator's seat is occupied by other than essential crewmembers during other than external-load operations.

(k) Quick-Release Devices. The S-64 is specifically designed for rotorcraft load combination operations with particular weight-specified hard points designed into the airframe. Because of this unusual design, when quick release devices are required under 14 CFR part 133, it must enable the pilot to release the external-load quickly during flight. The quick-release system must comply with the following:

(1) An activating control for the quick-release system must be installed on one of the pilot's primary controls and must be designed and located so it may be operated by the pilot without hazardously limiting his or her ability to control the rotorcraft during an emergency situation.

(2) An alternative independent activating control for the quick-release system must be provided and must be readily accessible to the pilot or a crewmember.

(3) The design of the quick-release system must ensure that failure, which could prevent the release of external loads, is extremely improbable.

(4) The quick-release system must be capable of functioning properly after failure of all engines.

(5) The quick-release system must function properly with external loads up to and including the maximum weight for which certification is requested.

(6) The quick-release system must include a means to check for proper operation of the system at established intervals.

(l) Maximum Weight with External Load. When establishing compliance with § 29.25, the maximum weight of the rotorcraft-load combination for operations with external loads must be established by the applicant and may not exceed the weight at which compliance with all applicable requirements has been shown.

(m) External Load Jettisoning. The external load must be jettisonable to the maximum weight for which the helicopter has been type certificated for operation without external loads or with Class A loads.

(n) Minimum Flight Crew. To meet the requirements of § 29.1523, the minimum flight crew consists of a pilot and a copilot. For pick up of the external-load and on-site maneuvering and release of the external-load, the copilot may act as the aft-facing hoist operator.

(o) Occupancy. When engaged in operations other than external-load operations under 14 CFR part 133, the carriage of passengers in the two observer seats and the rear-facing aft-stick operator's seat, when the aft-stick operator's controls are disengaged and the collective guard is installed, will be controlled by the FAA operating requirements applicable to that particular operation.

(p) Operations. The S-64 meets the Category B fire protection requirements for structures and controls in lieu of Category A requirements. Therefore, when operating over congested areas, the rotorcraft must be operated at an altitude and over routes that provide suitable landing areas that can be reached in no more than 5 minutes.

(q) Markings and Placards. For purposes of rotorcraft load combination operations, the following markings and placards must be displayed conspicuously and must be applied so they cannot be easily erased, disfigured, or obscured.

(1) A placard, plainly visible to appropriate crewmembers, referring to the helicopter flight manual limitations and restrictions for rotorcraft load combinations allowed under 14 CFR part 133.

(2) A placard, marking, or instructions (displayed next to the external-load attaching means) stating the maximum external-load prescribed as an operating limitation for rotorcraft load combinations allowed under 14 CFR part 133.

(3) A placard in the cockpit prescribing the occupancy limitation during rotorcraft load combination operations under 14 CFR part 133.

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2009-1215; Directorate Identifier 2009-NM-126-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

We have lengthened the 30-day comment period for proposed ADs that address MCAI originated by aviation authorities of other countries to provide adequate time for interested parties to submit comments. The comment period for these proposed ADs is now typically 45 days, which is consistent with the comment period for domestic transport ADs.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA Airworthiness Directive 2009-0064, dated March 12, 2009 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

Airbus has issued Mandatory Service Bulletin A330-26-3040, Revision 02, dated August 6, 2008; Mandatory Service Bulletin A340-26-4038, Revision 02, dated August 6, 2008; and Mandatory Service Bulletin A340-26-5019, Revision 03, dated May 19, 2009. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a NOTE within the proposed AD.

Based on the service information, we estimate that this proposed AD would affect about 32 products of U.S. registry. We also estimate that it would take about 13 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour. Required parts would cost about $708 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these costs. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $55,936, or $1,748 per product.

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 determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would 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 this proposed regulation:

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

2. Is not a “significant rule” under the 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 regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2009-1214; Directorate Identifier 2009-NM-091-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

We have lengthened the 30-day comment period for proposed ADs that address MCAI originated by aviation authorities of other countries to provide adequate time for interested parties to submit comments. The comment period for these proposed ADs is now typically 45 days, which is consistent with the comment period for domestic transport ADs.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2005-12R1, dated December 23, 2008 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

You may obtain further information by examining the MCAI in the AD docket.

Bombardier has issued Temporary Revision TR-39, dated March 2, 2005, to the Bombardier Challenger 300 AFM, CSP 100-1. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a NOTE within the proposed AD.

Based on the service information, we estimate that this proposed AD would affect about 162 products of U.S. registry. We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $12,960, or $80 per product.

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 determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would 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 this proposed regulation:

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

2. Is not a “significant rule” under the 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 regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2009-1221; Directorate Identifier 2008-NM-097-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

The FAA has examined the underlying safety issues involved in fuel tank explosions on several large transport airplanes, including the adequacy of existing regulations, the service history of airplanes subject to those regulations, and existing maintenance practices for fuel tank systems. As a result of those findings, we issued a regulation titled “Transport Airplane Fuel Tank System Design Review, Flammability Reduction and Maintenance and Inspection Requirements” (67 FR 23086, May 7, 2001). In addition to new airworthiness standards for transport airplanes and new maintenance requirements, this rule included Special Federal Aviation Regulation No. 88 (“SFAR 88,” Amendment 21-78, and subsequent Amendments 21-82 and 21-83).

Among other actions, SFAR 88 requires certain type design (i.e., type certificate (TC) and supplemental type certificate (STC)) holders to substantiate that their fuel tank systems can prevent ignition sources in the fuel tanks. This requirement applies to type design holders for large turbine-powered transport airplanes and for subsequent modifications to those airplanes. It requires them to perform design reviews and to develop design changes and maintenance procedures if their designs do not meet the new fuel tank safety standards. As explained in the preamble to the rule, we intended to adopt airworthiness directives to mandate any changes found necessary to address unsafe conditions identified as a result of these reviews.

In evaluating these design reviews, we have established four criteria intended to define the unsafe conditions associated with fuel tank systems that require corrective actions. The percentage of operating time during which fuel tanks are exposed to flammable conditions is one of these criteria. The other three criteria address the failure types under evaluation: single failures, single failures in combination with another latent condition(s), and in-service failure experience. For all four criteria, the evaluations included consideration of previous actions taken that may mitigate the need for further action.

We have determined that the actions identified in this AD are necessary to reduce the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane.

Boeing advised us that wiring deterioration or damage in the main tank boost pumps or center auxiliary tank override and jettison pumps can result in electrical faults. Internal electrical faults in the pump or inside the pump wire bundle conduit could cause an ignition source in the fuel tank from an overheat condition or electrical arcs. There is also a safety concern that the center auxiliary tank override and jettison pumps might continue to operate dry for an extended period due to electrical faults or a single failure in the pump switch. The extended dry operation of the pump could cause overheating, electrical arcs, or frictional sparks in the fuel tank. An ignition source in the fuel tank could result in a fire or an explosion and consequent loss of the airplane.

On May 8, 2008, we issued AD 2008-11-01, amendment 39-15523 (73 FR 29414, May 21, 2008), for certain Model 767-200, -300, -300F, and -400ER series airplanes. That AD requires revising the maintenance program to incorporate new airworthiness limitations (AWLs) for fuel tank systems to satisfy Special Federal Aviation Regulation No. 88 requirements. That AD also requires an initial inspection to phase in certain repetitive AWL inspections, and repair if necessary. That AD resulted from a design review of the fuel tank systems. We issued that AD to prevent the potential for ignition sources inside fuel tanks caused by latent failures, alterations, repairs, or maintenance actions, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane. Incorporating AWLs No. 28-AWL-27 and No. 28-AWL-28 into the maintenance program in accordance with paragraph (g)(2) of AD 2008-11-01 would terminate the action required by paragraph (h) of this proposed AD.

On July 24, 2009, we issued AD 2009-16-06, amendment 39-15989 (74 FR 38905, August 5, 2009), for all Model 767 airplanes. That AD requires installing an automatic shutoff system for the auxiliary fuel tank override/jettison fuel pumps (also referred to as center tank fuel pumps in the airplane flight manual (AFM)), revising the AFM to advise the flightcrew of certain operating restrictions for airplanes equipped with an automatic auxiliary fuel tank pump shutoff control, and, for certain airplanes, installing a placard to alert the flightcrew of certain fuel usage restrictions. That AD provides optional terminating actions for certain requirements. That AD results from a design review of the fuel tank systems. We issued that AD to prevent an overheat condition outside the center tank fuel pump explosion-resistance area that is open to the pump inlet, which could cause an ignition source for the fuel vapors in the fuel tank and result in fuel tank explosions and consequent loss of the airplane. That AD requires installing the automatic shutoff system in accordance with Boeing Service Bulletin 767-28A0083, Revision 2, dated February 12, 2009, for Model 767-200, -300, and -300F series airplanes; or Boeing Service Bulletin 767-28A0084, Revision 1, dated April 26, 2007, for Model 767-400ER series airplanes. Those service bulletins would be required to be done prior to or concurrently with the installation of the panel assemblies proposed in this NPRM.

We have reviewed Boeing Alert Service Bulletin 767-28A0085, dated January 10, 2008; and Boeing Service Bulletin 767-28A0085, Revision 1, dated June 25, 2009. Those service bulletins describe procedures for installing new P140 and P141 panel assemblies (including all applicable parts and components) in the main equipment center and removing certain relays. Applicable parts and components include, but are not limited to, support brackets and wiring supports. Removing certain relays involves removing the fuel boost pump control relays from the P33, P36, and P37 panels.

Boeing Alert Service Bulletin 767-28A0085 specifies that installing an automatic shutoff system for the auxiliary fuel tank pump specified in Boeing Service Bulletin 767-28A0083 should be done before or at the same time as installing the new P140 and P141 panel assemblies.

Boeing Service Bulletin 767-28A0085, Revision 1, dated June 25, 2009, adds Boeing Service Bulletin 767-28A0084 to the concurrent requirements described above, includes information derived from a service bulletin validation process, and corrects some part numbers and work-hour estimates provided in Boeing Alert Service Bulletin 767-28A0085, dated January 10, 2008.

We have also reviewed Section 9 (“AIRWORTHINESS LIMITATIONS (AWLs) AND CERTIFICATION MAINTENANCE REQUIREMENTS (CMRs)”) of the Boeing 767 Maintenance Planning Data (MPD) Document, D622T001-9, Revision March 2009 (hereafter referred to as “the MPD”). Subsection E of the MPD contains fuel system AWL No. 28-AWL-27 that specifies, for certain airplanes, repetitive operational testing of the main fuel tank boost pumps and all ground fault indication (GFI) control relays for the center auxiliary tank override/jettison fuel pump. Subsection E of the MPD also contains fuel system AWL No. 28-AWL-28, that specifies, for certain airplanes, repetitive functional testing of the center auxiliary fuel tank override/jettison fuel pump uncommanded-on system.

We are proposing this AD because we evaluated all relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design. This proposed AD would require the following actions:

• Installing new P140 and P141 panel assemblies and all applicable parts and components in the main equipment center and removing certain relays.

• Installing an automatic shutoff system for the center wing tank override boost pumps before or concurrently with the installation of the new P140 and P141 panel assemblies.

• Revising the maintenance program to incorporate AWL No. 28-AWL-27 that specifies, for certain airplanes, repetitive operations testing of the main fuel tank boost pumps and all GFI control relays for the center auxiliary tank override/jettison fuel pump.

• Revising the maintenance program to incorporate AWL No. 28-AWL-28, that specifies, for certain airplanes, repetitive functional testing of the uncommanded-on system for the override/jettison fuel pump of the center auxiliary fuel tank.

We estimate that this proposed AD would affect 416 airplanes of U.S. registry. The following table provides the estimated costs, at an average labor rate of $80 per work-hour, for U.S. operators to comply with this proposed AD.

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 determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would 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 this proposed regulation:

1. Is not a “significant regulatory action” under Executive Order 12866,

2. Is not a “significant rule” under the 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.

You can find our regulatory evaluation and the estimated costs of compliance in the AD Docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2009-1149/Airspace Docket No. 09-AGL-33.” The postcard will be date/time stamped and returned to the commenter.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_amendments/.

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration (FAA), Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591, or by calling 202-267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking 202-267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

This action proposes to amend Title 14, Code of Federal Regulations (14 CFR), Part 71 by adding additional Class E airspace extending upward from 700 feet above the surface for SIAPs at West Bend Municipal Airport, West Bend, WI. Controlled airspace is needed for the safety and management of IFR operations at the airport.

Class E airspace areas are published in Paragraph 6005 of FAA Order 7400.9T, dated August 27, 2009, and effective September 15, 2009, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document would be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (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) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would add additional controlled airspace at West Bend Municipal Airport, West Bend, WI.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2009-1151/Airspace Docket No. 09-ASW-30.” The postcard will be date/time stamped and returned to the commenter.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_amendments/.

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration (FAA), Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

This action proposes to amend Title 14, Code of Federal Regulations (14 CFR), Part 71 by adding additional Class E airspace extending upward from 700 feet above the surface for SIAPs operations at Moore County Airport, Dumas, TX. Adjustment to the geographic coordinates would be made in accordance with the FAA's National Aeronautical Charting Office. Controlled airspace is needed for the safety and management of IFR operations at the airport.

Class E airspace areas are published in Paragraph 6005 of FAA Order 7400.9T, dated August 27, 2009, and effective September 15, 2009, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document would be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (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) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would add additional controlled airspace at Moore County Airport, Dumas, TX.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2009-1009 and Airspace Docket No. 09-AWP-11) and be submitted in triplicate to the Docket Management System (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov.

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2009-1009 and Airspace Docket No. 09-AWP-11”. The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the Northwest Mountain Regional Office of the Federal Aviation Administration, Air Traffic Organization, Western Service Center, Operations Support Group, 1601 Lind Avenue, SW., Renton, WA 98057.

Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class E airspace at Point Mugu NAWS, Oxnard, CA. Additional controlled airspace is necessary to accommodate the vectoring of aircraft flying en route, in and out of the Los Angeles ARTCC's airspace area. This action would enhance the safety and management of aircraft operations in Los Angeles ARTCC's airspace.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.9T, signed August 27, 2009, and effective September 15, 2009, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in this Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation (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) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, section 106, describes the authority for the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace.

This regulation is within the scope of that authority as it establishes additional controlled airspace at Point Mugu NAWS, Oxnard, CA.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

FDAAA was enacted on September 27, 2007. Section 801 of FDAAA amends the Public Health Service (PHS) Act to require the Secretary of the Department of Health and Human Services (HHS), acting through the Director of NIH, to expand the clinical trial registry databank established under section 113 of the 1997 Food and Drug Administration Modernization Act (FDAMA) (Public Law 105-115, currently codified at 42 U.S.C. 282(i)) and to ensure that the databank is made publicly available through the Internet. Section 801 provides for the expansion of the registry databank through requiring investigators and sponsors to submit certain information about any applicable clinical trial to NIH/NLM for inclusion in the clinical trial registry databank. Section 801's requirements apply to applicable device clinical trials or applicable drug clinical trials, as defined in the statute. Under FDAAA, applicable drug clinical trials include clinical trials for biological products regulated under section 351 of the PHS Act (42 U.S.C. 262). Section 801 also requires the Secretary to ensure that the databank includes links to results information for those clinical investigations that form the primary basis of an efficacy claim or are conducted after the drug involved is approved or after the device involved is cleared or approved.

Section 801(b)(3)(A) of FDAAA also amends section 505(i) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 355(i)) to require that the Secretary update FDA's informed consent regulations to require that informed consent documents and processes for the clinical investigations in question include a statement that clinical trial information has been or will be submitted to this registry databank. The current informed consent regulations do not include provisions addressing the clinical trial registry databank. (See part 50 (21 CFR part 50); part 312 (21 CFR part 312); and 21 CFR 812.2(b)(1)(iii) and 812.25(g).) Specifically, section 801(b)(3)(A) of FDAAA states:

FDA has various regulations that govern the conduct of clinical investigations. The informed consent regulations provide protection to subjects in clinical investigations conducted under FDA's jurisdiction. (See part 50.) These informed consent regulations are based on ethics codes such as the Nuremberg Code (Ref. 1), the Declaration of Helsinki (Ref. 2), the National Research Act (Ref. 3), and the Belmont Report (Ref. 4); these codes embody the basic ethical principles relevant to the protection of human research subjects. (See 60 FR 49086, September 21, 1995, and 44 FR 47713, August 14, 1979, for a detailed discussion of the ethical basis for the agency's regulations governing human subject protection.) These principles identify standards to protect participants from unethical practices, allow subjects to have equal access to, opportunity to participate in, and the ability to withdraw from clinical trials voluntarily, educate participants so they make autonomous decisions, and require disclosure of the risks and benefits of participating in clinical research, with the goal of maximizing the benefit of clinical trial research and minimizing and protecting participants from harm.

Section 113 of FDAMA required the Secretary, acting through the Director of NIH, to establish, maintain, and operate a databank of information on clinical trials for experimental treatments for serious or life-threatening diseases or conditions conducted under FDA's investigational new drug (IND) regulations (42 U.S.C. 282(i)(1)(A)). This databank is known as www.ClinicalTrials.gov. Section 113 of FDAMA required that the clinical trials databank contain: (1) Information about Federally- and privately-funded clinical trials for experimental treatments (drug and biological products) for serious or life-threatening diseases and conditions, (2) a description of the purpose of each experimental drug, (3) participant eligibility criteria, (4) a description of the location of clinical trial sites, and (5) a point of contact for those wanting to enroll in the trial (42 U.S.C. 282(i)(3)(A)). FDAMA also required that information provided through the clinical trials databank be in a form that can be readily understood by the public. Id. FDAMA was a response to efforts by patient advocacy groups and others toward obtaining greater access to clinical trials.

After consulting with FDA and others, NIH, through NLM, developed the clinical trial registry databank. The first version of the registry databank was made available to the public on February 29, 2000, on the Internet. At that time, the registry databank included primarily NIH-sponsored trials. In 2002, FDA published a guidance to provide recommendations for industry on submitting protocol information to the registry databank. (See “Guidance for Industry: Information Program on Clinical Trials for Serious or Life-Threatening Diseases and Conditions,” (March 18, 2002) available at http://www.fda.gov/downloads/RegulatoryInformation/Guidances/ucm126838.pdf).

In 2004, FDA published a revised draft guidance to update the earlier version to include recommendations for sponsors who would be submitting information required by the Best Pharmaceuticals for Children Act (BPCA, Public Law 107-109). (See “Guidance for Industry: Information Program on Clinical Trials for Serious or Life-Threatening Diseases and Conditions” (January 2004) available at http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/ucm077229.pdf.) Under the BPCA, manufacturers or sponsors of clinical investigations are required to submit to the clinical trials registry databank a description of whether and through what procedure the manufacturer or sponsor will respond to requests for protocol exception for single-patient and expanded access use of investigational drugs.

In September 2004, the members of the International Committee of Medical Journal Editors published a joint editorial aimed at promoting registration of all clinical trials. (Ref. 5) In that editorial, the members declared that they would consider an article related to a clinical trial for publication only if the clinical trial had been registered, before the enrollment of the first participant, in a publicly available database. (Id.; Ref. 6) This policy applies to trials that started recruiting on or after July 1, 2005. This was another step toward fostering a transparent, comprehensive, publicly available database of clinical trials.

Although Section 113 of FDAMA required that the clinical trials databank be established, it was silent on the enforcement of that requirement. Subsequent legislative proposals addressed the shortcomings of the existing clinical trial registry databank. Versions of proposed legislation required registration of all clinical trials conducted in the United States and reporting of such details as research outcomes, basic demographic information, sources of funding, significant adverse events, and FDA approval status, and provided for strong enforcement measures such as civil money penalties. Subsequently, Title VIII of FDAAA was enacted.

With the enactment of FDAAA, the registry requirements have been expanded and broadened to include not only trials in serious and life threatening diseases and conditions but to include any “applicable clinical trial” as defined in section 402(j)(1)(A) of the PHS Act (42 U.S.C. 282(j)(1)(A)). Although not all clinical trials meet this definition, a significant portion of clinical trials involving FDA-regulated drugs, biological products, or devices meet it. For this reason, revising the general informed consent provisions in part 50 provides the most straightforward direction for clinical investigators and the most information to clinical trial participants.

The basic elements of informed consent which also can be considered the “essential” elements, are set forth in § 50.25(a) of the human subject projection regulations. These elements are required for all clinical investigations that are regulated by FDA or that support applications for research or marketing permits for products regulated by the agency. The statement required by section 801(b)(3)(A) of FDAAA that the information about the clinical investigation has been or will be submitted for inclusion in the clinical trial registry databank should be considered a basic, or essential, element of informed consent and should apply to all applicable clinical trials as defined in FDAAA. This statement is mandated by law under section 505(i) of the act; adding the requirement as a basic element of informed consent makes it clear that this requirement to inform subjects of the clinical trials registry databank is not discretionary. Furthermore, the required inclusion of clinical trial information in the registry databank is not limited to a small subset of clinical investigations; as such, it makes little sense to inform only a small subset of participants of applicable clinical trials about the registry databank and that the clinical trial information has been or will be submitted for inclusion in the registry databank. FDA thus proposes that this requirement be added as new § 50.25(a)(9) since it is a basic, or essential, element of informed consent, which will apply to applicable clinical trials as defined in FDAAA.

The text of section 801(b)(3)(A) of FDAAA amends only section 505(i) of the act, which is the statutory provision concerning INDs. The provision does not amend or refer to section 520(g) of the act (21 U.S.C. 360j(g)), which is the statutory provision concerning investigational device exemptions. However, Title VIII of FDAAA generally applies to both drug and device clinical investigations. Human subject protection applies to all clinical trials, regardless of the type of treatment being studied, and FDA can find no justification for a scheme that would result in device trials having different or lesser requirements for human subject protection and informed consent. In addition, knowledge of existence of the clinical trial registry databank and of the fact that information about a particular clinical investigation may be included in the registry databank could affect an individual's decision to participate in a clinical trial; as such, knowledge of this information is equally important for potential participants in clinical device trials as it is for potential participants in clinical drug trials. Therefore, FDA proposes to amend the regulatory language in the general informed consent regulations in § 50.25, which will apply to all applicable clinical trials as defined by FDAAA.

Requiring investigators to provide information regarding the possible inclusion of clinical trial information in the clinical trial registry databank in informed consent documents and processes for only clinical drug trials would create a disparity in FDA's policy on human subject protection and could result in confusion among those who conduct clinical trials over what is required in informed consent documents and processes. In addition, as stated previously, to the extent that knowledge of the fact that the clinical trial information could be included in the clinical trial registry databank could affect an individual's decision to participate in a clinical trial, this information is as important for potential participants in clinical device trials as it is for potential participants in clinical drug trials.

The existing informed consent basic, or essential, elements do not include a requirement to inform potential participants that a clinical trial they may be invited to participate in is registered, or will be registered, in the clinical trial registry databank. The proposed rule, if finalized, would require that investigators include a statement in their informed consent documents and processes that the clinical trial information has been or will be submitted for inclusion in the clinical trial registry databank. Under § 50.27(b)(1), the informed consent must be documented by the use of a written consent document that embodies the elements of informed consent required by § 50.25. A proposed specific statement required in informed consent documents is set forth in the codified language of this proposed rule. A specific statement will help ensure that consistent information about the clinical trial databank is provided to clinical trial participants. In addition to the required language regarding the inclusion of clinical trial information in the clinical trial registry databank, the specific statement includes a descriptive explanation of the clinical trials registry that will be useful for informing clinical trial participants of the nature and purpose of the clinical trial registry databank. Investigators and Institutional Review Boards may include other information about the clinical trial registry databank in addition to the required statement in informed consent documents. The required statement, however, must be used to satisfy the requirements of this rule, if finalized.

There are several benefits to requiring investigators to include in informed consent documents and processes for all applicable clinical trials a statement that clinical trial information has been or will be submitted for inclusion in the clinical trial registry databank. First, it would increase public awareness of the existence of the database and thereby increase transparency of clinical trials. In particular, it would enable individuals to access more detailed information about trials relevant to their medical conditions of interest. Furthermore, to the extent that information about the clinical trial registry databank would affect individuals' decisions to participate in clinical research, requiring investigators to provide such information to potential participants would foster individuals' ability to make a fully informed decision about participating in a clinical trial. Second, it would provide greater accountability and responsibility of investigators for outcomes and adverse events and improve transparency of all clinical trial outcomes information. Informing clinical trial participants and potential patients about the databank and directing them to www.ClinicalTrials.gov would become part of a system of checks and balances for the research community and a means of ensuring that researchers, investigators, and manufacturers or sponsors comply with their legal requirements under FDAAA. Third, it would increase public confidence in the validity of the research process. With the knowledge that the information generated by the clinical investigation is likely to be made public, and thus subject to additional scrutiny, participants can anticipate that the trial “results” could have more impact on other medical research and analysis. “Individuals voluntarily participate in trials expecting that the results will be used to improve medical knowledge in general, and not only to serve proprietary or commercial interests. These ethical obligations to the public good are in addition to the obligations to protect individual participants during a trial (e.g., informed consent), and they extend to all trials regardless of study design or trial population.” (Ref. 7) Finally, it would give sponsors, physicians, and patients access to more information and thus enable them to make more educated treatment decisions. In these ways, amending the basic elements of the informed consent provision to require a statement regarding the inclusion of clinical trial information in the clinical trial registry databank would lead to better promotion and protection of public health, help foster innovation to further the scientific process, and reduce duplicative research efforts.

The statute defines an “applicable clinical trial” in section 402(j)(1)(A)(i) of the PHS Act (42 U.S.C. 282(j)(1)(A)(i)) as follows:

Additional information to improve understanding of the common terminology and the applicability of the requirements used in implementing the clinical trial databank can be found at www.ClinicalTrials.gov and the database registry Web site at www.prsinfo.clinicaltrials.gov.

Section 505(i) of the act requires drug manufacturers or sponsors of investigations to ensure that experts using investigational drugs in clinical trials “inform any human beings to whom [investigational] drugs * * * are being administered * * * that such drugs are being used for investigational purposes” and obtain consent prior to administering such drugs (21 U.S.C. 355(i)). Similarly, section 520(g) of the act requires individuals applying for investigational device exemptions to ensure that informed consent will be obtained from each human subject of proposed clinical testing involving the device (21 U.S.C. 360j(g)). Sections 505(i) and 520(g) of the act also require the Secretary to issue regulations for the protection of human subjects in clinical investigations (21 U.S.C. 355(i)(4) and 360j(g)(2)). Additionally, section 701(a) of the act (21 U.S.C. 371) confers general authority on the Secretary to issue regulations for the efficient enforcement of the act.

Section 801(b)(3)(A) of FDAAA amends section 505(i)(4) of the act by adding at the end the following:

FDA created a uniform system of human subject protection when it initially amended its regulations governing human subject protection in 1981 (46 FR 8942, January 27, 1981). In revising part 50, FDA aimed to: (1) Address the informed consent provision included in the device amendments; (2) create a uniform set of agency-wide informed consent standards for more effective administration of the agency's bioresearch monitoring program; (3) implement recommendations of the National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research; and (4) harmonize FDA's rules with those of HHS (then the Department of Health, Education, and Welfare). Indeed, the preamble expressed the agency's intent to adopt a single standard that reflected the most current congressional thinking on informed consent and the important ethical principles and social policies underlying the doctrine of informed consent (46 FR 8942 at 8943).

Requiring a statement regarding the clinical trial registry databank in informed consent documents and process for only clinical investigations for drugs but not devices would create a disparity in FDA's policy on human subject protection and could result in confusion among those who conduct clinical trials over what is required in informed consent documents and processes, especially in the cases of trials involving both a drug and device or for investigators conducting trials of both types of regulated products. Furthermore, knowledge of the existence of the clinical trial registry databank and of the fact that information about a particular clinical investigation has been or will be submitted for inclusion in the registry databank could affect an individual's decision to participate in a clinical trial; as such, this knowledge is equally important for potential participants of clinical device trials as it is for potential participants of clinical drug trials.

Thus, although section 801(b)(3)(A) of FDAAA requires the statement regarding the clinical trial registry databank for informed consent documents and processes only for clinical investigations conducted under section 505(i) of the act, under its general authority, FDA proposes to require that all applicable clinical trials, including applicable medical device trials, include this new statement. This proposed rule requiring that a statement regarding the inclusion of clinical trial information in the clinical trial registry databank be included in the informed consent documents and processes for all applicable clinical trials is the most efficient method of implementing the statutory mandate. To prevent confusion that might result from different requirements for informed consent for drug and device research, FDA is proposing, by this rule, to apply the same standards regarding elements of informed consent to drug and device research. As such, FDA is proposing to amend § 50.25 to require a statement about the registry databank in informed consent documents and processes for all applicable clinical trials under section 801 of FDAAA.

The agency has determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

FDA has examined the impacts of the proposed rule under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes that this proposed rule is not a significant regulatory action as defined by the Executive order.

The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the rule is likely to impose costs of less than $1 per clinical trial participant, the agency proposes to certify that the final rule will not have a significant economic impact on a substantial number of small entities.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $133 million, using the most current (2008) Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this proposed rule to result in any 1-year expenditure that would meet or exceed this amount.

This rule would require that the informed consent documents and processes for applicable clinical drug trials and applicable clinical device trials as defined by section 801 of FDAAA include a statement that clinical trial information has been or will be submitted to NIH/NLM for inclusion in the clinical trial registry databank. As it pertains to applicable clinical drug trials, the rule would implement a requirement of FDAAA. As discussed previously in this preamble, FDA is also proposing to require that the same statement be included in the informed consent documents for applicable clinical device trials.

FDAAA section 801(b)(3)(A) amends section 505(i) of the act to require that the Secretary update regulations for informed consent documents and process to require inclusion of a statement that clinical trial information has been or will be submitted to NIH/NLM for inclusion in the clinical trial registry databank. FDA has determined that revising the general informed consent provision is the most appropriate course by which to fulfill the requirements of the statute, in a way that will provide the pertinent information to and protection for clinical trial participants.

As discussed in this preamble, this proposed rule would provide several benefits to clinical trial participants. The rule would increase the transparency of clinical trials by increasing participant and patient awareness of the existence of the clinical trials databank and those trials that are registered in the databank. The rule would also provide greater accountability of clinical trial investigators for outcomes and adverse events by helping to create a system of checks and balances through which participants, patients and healthcare providers are encouraged to check whether information about a trial of interest is registered in the databank. Furthermore, the rule would increase public confidence in the validity of the research process. Last of all, it would encourage physicians and patients to obtain more information in order to make more educated treatment decisions. FDA has not attempted to quantify these benefits; however, the agency believes that the overall effect of the rule on public health will be positive.

The costs of the proposed rule derive from complying with the requirement to add another statement to the informed consent documents and the additional time that medical professionals and clinical trial participants spend reading and discussing this statement.

FDA estimates that it receives about 7,000 clinical trial protocol submissions annually for applicable clinical trials that would be subject to this proposed rule, with the vast majority of the submissions going to the FDA's Center for Drug Evaluation and Research. FDA estimates of average numbers of participants per clinical trial vary greatly across FDA Centers, from single-patient INDs to vaccine trials with over twenty-five thousand participants. Published data on average number of participants per trial, therapeutic area, suggests that the average number of participants in phase 1, 2, and 3 clinical trials of pharmaceuticals, biotechnology, and medical device products may range from about 200 to 360.1 FDA uses this estimated range for the average number of participants per clinical trial, and invites public comment on the estimated average number of participants per clinical trial.

Compliance with the rule would require that investigators include in informed consent documents and processes the required statement concerning the submission of clinical trial information for inclusion in the clinical trial registry databank and provide for any additional discussion concerning this statement between participants and the medical professional administering the documents. FDA does not expect that this statement will provoke any controversy. It is expected that in most cases, after reading the proposed statement, the clinical trial participant will not choose to discuss it with the investigator. In some cases, however, it is possible that a short discussion will occur. FDA estimates that, on average, a clinical trial participant would require an additional 30 seconds to 1 minute to read and, if necessary, discuss the added statement with the medical professional administering the informed consent documents.

Registered nurses or other medical professionals with a similar level of training often administer and discuss the informed consent forms with trial participants. The average compensation for a registered nurse in 2008 was $40.54 per hour, including a 35 percent increase to account for benefits. The increased labor cost for administering the informed consent procedures for these medical professionals in applicable clinical trials for all participants ranges from $473,000 to $1,704,000 (see Table 1 of this document). This estimate is the result of $42.27 per hour, times 30 to 60 seconds per participant, times 200 to 360 participants per trial times 7,000 protocols per year. The cost to the sponsor per prospective participant would range from $0.34 to $0.68 and the cost per trial protocol would range from $68 to $243.

Whether or not clinical trial participants receive compensation for their participation in clinical trials, the additional time spent by all participants to read and discuss the new informed consent statement represents a social cost of the rule. Using the median U.S. wage rate of $15.57 per hour, a clinical trial participant would be expected to incur a cost ranging from $0.13 to $0.26 to read and, if necessary, discuss the proposed informed consent statement concerning the inclusion of clinical trial information in the clinical trial registry databank. On an annual basis, this would amount to about $182,000 to $654,000 for 7,000 clinical trials.

The cost of writing the new statement into the informed consent documents is expected to be very small. The new statement would only need to be written once per protocol and is estimated to take about 5 minutes. Using the same wage rate as shown previously, $40.54 per hour, the additional annual costs to write the statement for the 7,000 annual protocols would total about $24,000.

The capital cost of adding the new informed consent statement would only consist of the additional paper. At a cost of about $0.02 per page and about one-third of a page per participant, the total paper costs for this rule are estimated to range from $9,000 to $17,000 annually.

The total costs of the proposed rule to both industry and the clinical trial participant population are estimated to range from $688,000 to $2,398,000 annually. This equates to $98 to $342 per trial protocol, or about $0.48 to $0.96 per clinical trial participant.

The costs to government for oversight of this rule would be extremely low as a review of a sample of informed consent documents for each trial would only be increased, at most, by a few minutes per clinical trial due to the additional informed consent statement. FDA believes this cost would not be significant.

FDAAA specifically requires that the regulations concerning informed consent documents include the statement that clinical trial information has been or will be submitted for inclusion in the clinical trial registry databank. It does not give FDA discretion concerning the inclusion of this language in informed consent documents and processes for applicable clinical drug trials. For the reasons stated previously in this preamble, FDA has decided to require the language be included in the informed consent documents and processes for applicable clinical medical device trials as well. If the proposed rule did not include the new informed consent statement for applicable medical device clinical trials, the annual costs of the rule would be reduced by $36,000 to $124,000 per year.

The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because of the small costs that would be incurred by an individual sponsor of a product undergoing a clinical trial, the agency believes that the final rule is not likely to have a significant economic impact on a substantial number of small entities.

The companies that would be affected are classified in seven separate North American Industrial Classification System (NAICS) categories by the Census Bureau. The affected industries are NAICS 325412—Pharmaceutical Preparation; NAICS 325414—Biological Products (except diagnostic); NAICS 334510—Electromedical and Electrotherapeutic Apparatus; NAICS 339112—Surgical and Medical Instrument; NAICS 339113—Surgical Appliance and Supplies; NAICS 339114—Dental Equipment and Supplies; NAICS 339115—Opthalmic Goods. The Small Business Administration (SBA) size standards for all these industries define small entities as those companies with less than 500 employees, except for pharmaceutical preparation, for which it defines a small entity as one with less than 750 employees. The most recent Census of Manufacturers data that offers the level of detail for establishments at or near the employee size limits as defined by SBA is from 2002. In each of these establishment size categories, large majorities of the establishments meet the criteria as small entities. Even taking into account that many of these establishments are parts of multi-establishment corporations, significant numbers of companies would still qualify as small entities. Preliminary Census data from 2007, though less detailed, shows that significant numbers of establishments continue to have less than 100 employees across all of these categories. While FDA expects that most companies sponsoring applicable clinical trials would be larger than the average-sized company in their industry, FDA concludes that a substantial number of companies would still qualify as small entities.

The cost analysis concluded that the compliance cost of the proposed rule per trial protocol would range from $98 to $342. Some firms will direct multiple applicable clinical trials in the same year. For large firms that would administer the informed consent documents for 10 separate trials, the cost would range from $980 to $3,420 per year. Using 2002 Census data, the average value of shipments for establishments in these industries with one to four employees ranged from $244,000 to $824,000 according to the Census of Manufacturers. Assuming that such small operations had one applicable clinical trial administered each year, the costs of the proposed rule would represent, at most, 0.14% of the annual value of shipments. For establishments with 50 or more employees, the compliance costs would represent 0.04% or less of the value of shipments even with 10 applicable clinical trials administered annually. For establishments with 100 or more employees, the compliance costs would represent 0.08% or less of the value of shipments even with 50 applicable clinical trials administered annually. FDA concludes that this proposed rule would not have a significant economic impact on a substantial number of small entities.

FDA concludes that the informed consent requirement proposed in this document is not subject to review by the Office of Management and Budget because it does not constitute a “collection of information” under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Rather, the proposed requirement to include a statement in informed consent documents regarding submission of clinical trial information to the clinical trial registry databank is a “public disclosure of information originally supplied by the Federal government to the recipient for the purpose of disclosure to the public” (5 CFR 1320.3(c)(2)).

Interested persons may submit to the Division of Dockets Management (see ADDRESSES) written or electronic comments regarding this document. Submit a single copy of electronic comments or two paper copies of any mailed comments, except that individuals may submit one paper copy. Comments are to be identified with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

FDA has analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the proposed rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the agency has concluded that the proposed rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.

The following references have been placed on display in the Division of Dockets Management (see ADDRESSES), and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday. (FDA has verified the Web site addresses, but we are not responsible for any subsequent changes to the Web sites after the document publishes in the Federal Register.)

Therefore, under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR part 50 be amended as follows:

1. The authority citation for 21 CFR part 50 continues to read as follows:

2. Section 50.25 is amended by adding paragraph (a)(9) to read as follows:

(a) * * *

(9) For applicable clinical trials, as defined in 42 U.S.C. 282(j)(1)(A), the following statement, notifying the subject that clinical trial information has been or will be submitted for inclusion in the clinical trial registry databank under paragraph (j) of section 402 of the Public Health Service Act: Information, that does not include personally identifiable information, concerning this clinical trial has been or will be submitted, at the appropriate and required time, to the government-operated clinical trial registry data bank, which contains registration, results, and other information about registered clinical trials. This data bank can be accessed by you and the general public at www.ClinicalTrials.gov. Federal law requires clinical trial information for certain clinical trials to be submitted to the data bank.

On December 23, 2009 the State Department published a final rule at 74 FR, Number 245. The rule was intended to revise existing regulations to provide greater specificity and clarity to sponsors of the Secondary School Student category with respect to the execution of sponsor oversight responsibilities under the exchange visitor program.

This rule is being withdrawn because it was submitted prior to OMB completing review. The proposed rule is withdrawn in its entirety. Accordingly, the Department withdraws the rule “Exchange Visitor Program—Secondary School Students”, RIN 1400-AC56. This Proposed Rule was submitted on Friday, 18 December and was published Wednesday, 23 December, 2009 in Volume 74, Number 245 on pages 68200-68208.

Withdrawal of the rule does not preclude the Department from issuing another rule on the subject matter in the future or committing the agency to any future course of action.

On September 30, 2009, OSHA published a proposed rule to revise the Hazard Communication Standard (HCS) to conform with the United Nations' (UN) Globally Harmonized System of Classification and Labelling of Chemicals (GHS) (74 FR 50280). OSHA published a correction notice for the NPRM on November 5, 2009 (74 FR 57278). The deadline for submitting written comments and hearing requests is December 29, 2009. OSHA anticipates receiving several hearing requests and is scheduling hearings to begin on March 2, 2010, in Washington, DC; March 31, 2010, in Pittsburgh, PA; and April 13, 2010, in Los Angeles, CA. This document describes the procedures the public must use to participate in the hearings.

Informal public hearings—purpose, rules and procedures. OSHA invites interested persons to participate in this rulemaking by providing oral testimony and documentary evidence at the informal public hearing. In particular, OSHA invites interested persons who have knowledge of or experience with hazard communication and the issues the proposed rule raises to participate in the hearings. OSHA also welcomes presentation of data and documentary evidence that will provide the Agency with the best available evidence to use in developing the final rule.

Pursuant to section 6(b)(3) of the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 655(b)(3)), members of the public have an opportunity at the informal public hearing to provide oral testimony and evidence on issues raised by the proposal. An administrative law judge (ALJ) will preside over the hearing and will resolve any procedural matters relating to the hearing.

The legislative history of section 6 of the OSH Act, as well as OSHA's regulation governing public hearings (29 CFR 1911.15), establish the purpose and procedures of informal public hearings. Although the presiding officer of the hearing is an ALJ and questioning of witnesses is allowed on crucial issues, the proceeding is largely informal and essentially legislative in purpose. Therefore, the hearing provides interested persons with an opportunity to make oral presentations in the absence of procedural restraints or rigid procedures that could impede or protract the rulemaking process. The hearing is not an adjudicative proceeding subject to the technical rules of evidence. Instead, it is an informal administrative proceeding convened for the purpose of gathering and clarifying information. The regulations that govern the hearings and the prehearing guidelines issued for the hearing will ensure that participants are treated fairly and provided due process. This approach will facilitate the development of a clear, accurate, and complete record. Accordingly, application of these rules and guidelines will be such that questions of relevance, procedure, and participation generally will be resolved in favor of developing a clear, accurate, and complete record.

Conduct of the hearing will conform to 29 CFR 1911.15. In addition, the Assistant Secretary may, on reasonable notice, issue additional or alternative procedures to expedite the proceedings, to provide greater procedural protections to interested persons or to further any other good cause consistent with applicable law (29 CFR 1911.4). Although the ALJ presiding over the hearing makes no decision or recommendation on the merits of the proposal, the ALJ has the responsibility and authority necessary to ensure that the hearing progresses at a reasonable pace and in an orderly manner. To ensure that interested persons receive a full and fair hearing, the ALJ has the power to regulate the course of the proceedings; dispose of procedural requests, objections, and comparable matters; confine presentations to matters pertinent to the issues the proposed rule raises; use appropriate means to regulate the conduct of persons present at the hearing; question witnesses and permit others to do so; limit the time for such questioning; and leave the record open for a reasonable time after the hearing for the submission of additional data, evidence, comments and arguments (29 CFR 1911.16).

At the close of the hearing the ALJ will establish a post-hearing comment period for interested persons who filed a timely notice of intention to appear at the hearing. During the first part of the post-hearing period, those persons may submit additional data and information to OSHA. During the second part they may submit final briefs, arguments, and summations.

Notice of intention to appear at the hearing. Interested persons who intend to participate in and provide oral testimony or documentary evidence at the hearing must file a written notice of intention to appear prior to the hearing. To testify or question witnesses at one of the hearing locations, interested persons must submit (transmit, send, postmark, deliver) their notice by January 18, 2010. The notice must provide the following information:

• Name, address, e-mail address, and telephone number of each individual who will give oral testimony;

• Name of the establishment or organization each individual represents, if any;

• Occupational title and position of each individual testifying;

• Hearing location at which each individual wishes to appear and testify and/or question witnesses;

• Approximate amount of time required for each individual's testimony;

• A brief statement of the position each individual will take with respect to the issues raised by the proposed rule; and

• A brief summary of documentary evidence each individual intends to present.

Participants who need projectors and other special equipment for their testimony must contact Ms. Veneta Chatmon at OSHA's Office of Communications, telephone (202) 693-1999, no later than a week before the hearing begins.

OSHA emphasizes that the hearings are open to the public; however, only individuals who file a notice of intention to appear may question witnesses and participate fully at the hearing. If time permits, and at the discretion of the ALJ, an individual who did not file a notice of intention to appear may be allowed to testify at the hearing, but for no more than 10 minutes.

Hearing testimony and documentary evidence. Individuals who request more than 10 minutes to present their oral testimony at the hearing or who will submit documentary evidence at the hearing must submit (transmit, send, postmark, deliver) the full text of their testimony and all documentary evidence no later than February 1, 2010.

The Agency will review each submission and determine if the information it contains warrants the amount of time the individual requested for the presentation. If OSHA believes the requested time is excessive, the Agency will allocate an appropriate amount of time for the presentation. The Agency also may limit to 10 minutes the presentation of any participant who fails to comply substantially with these procedural requirements, and may request that the participant return for questioning at a later time. Before the hearing, OSHA will notify participants of the time the Agency will allow for their presentation and, if less than requested, the reasons for its decision. In addition, before the hearing OSHA will provide the pre-hearing guidelines and hearing schedule to each participant.

Certification of the hearing record and Agency final determination. Following the close of the hearing and the post-hearing comment periods, the ALJ will certify the record to the Assistant Secretary of Labor for Occupational Safety and Health. The record will consist of all of the written comments, oral testimony and documentary evidence received during the proceeding. The ALJ, however, will not make or recommend any decisions as to the content of the final standard. Following certification of the record, OSHA will review all the evidence received into the record and will issue the final rule based on the record as a whole.

David Michaels, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice under the authority granted by section 6(b) of the Occupational Safety and Health Act of 1970 (29 U.S.C. 655(b)), Secretary of Labor's Order 5-2007 (72 FR 31160), and 29 CFR part 1911.

In the final rules section of the Federal Register, EPA is approving the state's SIP revision with the exception of the reference in section (1)(I), to the open burning rule in 10 CSR 10-6.045, as a direct final rule without prior proposal because the Agency views this is a noncontroversial revision amendment and anticipates no relevant adverse comments to this action. A detailed rationale for the approval is set forth in the direct final rule. If no relevant adverse comments are received in response to this action, no further activity is contemplated in relation to this action. If EPA receives relevant adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed action. EPA will not institute a second comment period on this action. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on part of this rule and if that part can be severed from the remainder of the rule, EPA may adopt as final those parts of the rule that are not the subject of an adverse comment. For additional information, see the direct final rule which is located in the rules section of this Federal Register.

Throughout this document, “we,” “us” and “our” refer to EPA.

Table 1 lists the rules addressed by this proposal with the dates that they were adopted by the local air agency and submitted by the California Air Resources Board.

On April 20, 2009, the submittal for VCAPCD Rule 74.18 was found to meet the completeness criteria in 40 CFR Part 51, Appendix V, which must be met before formal EPA review. On May 13, 2009, the submittal for SCAQMD Rule 1151 was found to meet the completeness criteria.

We approved an earlier version of Rule 74.18 into the SIP on April 19, 2001 (66 FR 20086). The VCAPCD adopted revisions to the SIP-approved version on November 11, 2008 and CARB submitted it to us on March 17, 2009. We approved an earlier version of Rule 1151 into the SIP on May 26, 2000 (65 FR 34101). The SCAQMD adopted revisions to the SIP-approved version on December 2, 2005 and CARB submitted it to us on April 6, 2009.

VOCs help produce ground-level ozone and smog, which harm human health and the environment. Section 110(a) of the CAA requires States to submit regulations that control VOC emissions. SCAQMD and VCAPCD revised their rules to comply with CARB's Suggested Control Measure for Automotive Coatings. EPA's technical support documents (TSD) have more information about these rules.

Guidance and policy documents that we use to evaluate enforceability and other requirements consistently include the following:

1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook).

2. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).

3. “Suggested Control Measure for Automotive Coatings,” California Air Resources Board, October 2005.

SCAQMD Rule 1151 and VCAPCD Rule 74.18 improve the SIP by establishing more stringent emission limits and by clarifying monitoring, reporting and recordkeeping provisions. The rules are largely consistent with the relevant policy and guidance regarding enforceability, rule stringency and SIP relaxations. Rule provisions which do not meet the evaluation criteria are summarized below and discussed further in the TSD.

SCAQMD Rule 1151(b)(51) and VCAPCD Rule 74.18(G)(16) exempt tertiary butyl acetate (TBAc) as a VOC. These exemptions do not fully comply with EPA's definition of a VOC which requires TBAc to be regarded as a VOC for the purposes of recordkeeping, emissions reporting, photochemical dispersion modeling and inventory requirements.

The TSDs describe additional rule revisions that we recommend for the next time the local agencies modify the rules.

As authorized in sections 110(k)(3) and 301(a) of the Act, EPA is proposing a limited approval of the submitted rules to improve the SIP. If finalized, this action would incorporate the submitted rules into the SIP, including those provisions identified as deficient. This approach is limited because EPA is simultaneously proposing a limited disapproval of the rules under sections 110(k)(3) and 301(a), but is not proposing to impose sanctions or a FIP as a consequence of this limited disapproval as explained in the following paragraph.

As noted above, we are simultaneously proposing a limited disapproval of the submitted rules, because they do not comply with our requirement to retain TBAc as a VOC for the purposes of recordkeeping, emissions reporting, photochemical dispersion modeling and inventory requirements. See 69 FR 69298 (November 29, 2004) and 40 CFR 51.100(s)(5). While we recognize the connection between these rule deficiencies and future ozone attainment plans in the South Coast and Ventura County, we are proposing not to impose sanctions or a FIP under CAA sections 179 and 110(c), because TBAc has negligible photochemical reactivity, and thus, the connection between the rule deficiencies and CAA nonattainment planning requirements is too remote to impose sanctions or a FIP. We note, however, that we may find approval of future ozone attainment demonstrations for these two areas problematic if they do not account for TBAc. We invite comment on this issue as well as all other aspects of our proposed action.

In the event that TBAc is exempted from the recordkeeping, emissions reporting, photochemical dispersion modeling and inventory requirements, and final action has not yet been taken on the submitted rules, EPA will finalize action on SCAQMD Rule 1151 and VCAPCD Rule 74.18 as a full approval as opposed to a limited approval/limited disapproval. Note that the submitted rules have been adopted by the SCAQMD and VCAPCD, and EPA's final limited disapproval would not prevent the local agency from enforcing them.

We will accept comment from the public on the proposed limited approval and limited disapproval for the next 30 days.

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

This proposed action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Burden is defined at 5 CFR 1320.3(b).

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

This proposed rule will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.

Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of State action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

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

EPA has determined that the proposed action does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or Tribal governments in the aggregate, or to the private sector. This Federal action proposes to approve pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or Tribal governments, or to the private sector, result from this action.

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

This proposed rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely proposes to approve a State rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by Tribal officials in the development of regulatory policies that have Tribal implications.” This proposed rule does not have Tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on Tribal governments, 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. Thus, Executive Order 13175 does not apply to this rule.

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045, because it proposes to approve a State rule implementing a Federal standard.

This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866.

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

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

In the final rules section of the Federal Register, EPA is approving the state's revision as a direct final rule without prior proposal because the Agency views this as a noncontroversial revision amendment and anticipates no relevant adverse comments to this action. A detailed rationale for the approval is set forth in the direct final rule. If no relevant adverse comments are received in response to this action, no further activity is contemplated in relation to this action. If EPA receives relevant adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed action. EPA will not institute a second comment period on this action. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on part of this rule and if that part can be severed from the remainder of the rule, EPA may adopt as final those parts of the rule that are not the subject of an adverse comment. For additional information, see the direct final rule which is located in the rules section of this Federal Register.

Submitting Comments: We welcome comments from the public on recommendations for developing new or revised safe harbors and Special Fraud Alerts. Please assist us by referencing the file code OIG-114-N.

Inspection of Public Comments: All comments received before the end of the comment period are available for viewing by the public. All comments will be posted on http://www.regulations.gov as soon as possible after they have been received. Comments received timely will also be available for public inspection as they are received at Office of Inspector General, Department of Health and Human Services, Cohen Building, 330 Independence Avenue, SW., Washington, DC 20201, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone (202) 401-2206.

Section 1128B(b) of the Social Security Act (the Act) (42 U.S.C. 1320a-7b(b)) provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward business reimbursable under the Federal health care programs. The offense is classified as a felony and is punishable by fines of up to $25,000 and imprisonment for up to 5 years. OIG may also impose civil money penalties, in accordance with section 1128A(a)(7) of the Act (42 U.S.C. 1320a-7a(a)(7)), or exclusion from the Federal health care programs, in accordance with section 1128(b)(7) of the Act (42 U.S.C. 1320a-7(b)(7)).

Since the statute on its face is so broad, concern has been expressed for many years that some relatively innocuous commercial arrangements may be subject to criminal prosecution or administrative sanction. In response to the above concern, the Medicare and Medicaid Patient and Program Protection Act of 1987, section 14 of Public Law 100-93, specifically required the development and promulgation of regulations, the so-called “safe harbor” provisions, specifying various payment and business practices which, although potentially capable of inducing referrals of business reimbursable under the Federal health care programs, would not be treated as criminal offenses under the anti-kickback statute and would not serve as a basis for administrative sanctions. OIG safe harbor provisions have been developed “to limit the reach of the statute somewhat by permitting certain non-abusive arrangements, while encouraging beneficial and innocuous arrangements” (56 FR 35952, July 29, 1991). Health care providers and others may voluntarily seek to comply with these provisions so that they have the assurance that their business practices will not be subject to liability under the anti-kickback statute or related administrative authorities.

Existing OIG safe harbors describing those practices that are sheltered from liability are codified in 42 CFR part 1001.

OIG has also periodically issued Special Fraud Alerts to give continuing guidance to health care providers with respect to practices OIG finds potentially fraudulent or abusive. The Special Fraud Alerts encourage industry compliance by giving providers guidance that can be applied to their own practices. OIG Special Fraud Alerts are intended for extensive distribution directly to the health care provider community, as well as to those charged with administering the Federal health care programs.

In developing these Special Fraud Alerts, OIG has relied on a number of sources and has consulted directly with experts in the subject field, including those within OIG, other agencies of the Department, other Federal and State agencies, and those in the health care industry.

Section 205 of Public Law 104-191 requires the Department to develop and publish an annual notice in the Federal Register formally soliciting proposals for modifying existing safe harbors to the anti-kickback statute and for developing new safe harbors and Special Fraud Alerts.

In developing safe harbors for a criminal statute, OIG is required to engage in a thorough review of the range of factual circumstances that may fall within the proposed safe harbor subject area so as to uncover potential opportunities for fraud and abuse. Only then can OIG determine, in consultation with the Department of Justice, whether it can effectively develop regulatory limitations and controls that will permit beneficial and innocuous arrangements within a subject area while, at the same time, protecting the Federal health care programs and their beneficiaries from abusive practices.

In accordance with the requirements of section 205 of Public Law 104-191, OIG last published a Federal Register solicitation notice for developing new safe harbors and Special Fraud Alerts on December 17, 2008 (73 FR 76575). As required under section 205, a status report of the public comments received in response to that notice is set forth in Appendix D to the OIG's Semiannual Report covering the period April 1, 2009, through September 30, 2009.1 OIG is not seeking additional public comment on the proposals listed in Appendix D at this time. Rather, this notice seeks additional recommendations regarding the development of proposed or modified safe harbor regulations and new Special Fraud Alerts beyond those summarized in Appendix D to the OIG Semiannual Report referenced above.

In accordance with section 205 of HIPAA, we will consider a number of factors in reviewing proposals for new or modified safe harbor provisions, such as the extent to which the proposals would affect an increase or decrease in—

• Access to health care services,

• The quality of services,

• Patient freedom of choice among health care providers,

• Competition among health care providers,

• The cost to Federal health care programs,

• The potential overutilization of the health care services, and

• The ability of health care facilities to provide services in medically underserved areas or to medically underserved populations.

In addition, we will also take into consideration other factors, including, for example, the existence (or nonexistence) of any potential financial benefit to health care professionals or providers that may take into account their decisions whether to (1) order a health care item or service or (2) arrange for a referral of health care items or services to a particular practitioner or provider.

In determining whether to issue additional Special Fraud Alerts, we will also consider whether, and to what extent, the practices that would be identified in a new Special Fraud Alert may result in any of the consequences set forth above, as well as the volume and frequency of the conduct that would be identified in the Special Fraud Alert.

A detailed explanation of justifications for, or empirical data supporting, a suggestion for a safe harbor or Special Fraud Alert would be helpful and should, if possible, be included in any response to this solicitation.

This is a synopsis of the Commission's Further Notice of Proposed Rulemaking (FNPRM) in WC Docket No. 05-337, CC Docket No. 96-45, FCC 09-112, adopted December 15, 2009, and released December 15, 2009.

Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments on or before January 28, 2010 and reply comments on or before February 12, 2010. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

■ Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: http://www.regulations.gov.

■ Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

■ Effective December 28, 2009, all hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325, Washington, DC 20554. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Please Note: Through December 24, 2009, the Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. This filing location will be permanently closed after December 24, 2009. The filing hours at both locations are 8 a.m. to 7 p.m.

■ Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

■ U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW., Washington DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

Filings and comments are also available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. They may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone: (202) 488-5300, fax: (202) 488-5563, or via e-mail http://www.bcpiweb.com.

The FNPRM discusses potential new or revised information collection requirements. The reporting requirements, if any, that might be adopted pursuant to this FNPRM are too speculative at this time to request comment from the OMB or interested parties under section 3507(d) of the Paperwork Reduction Act, 44 U.S.C. 3507(d). Therefore, if the Commission determines that reporting is required, it will seek comment from the OMB and interested parties prior to any such requirements taking effect. Nevertheless, interested parties are encouraged to comment on whether any new or revised information collection is necessary, and if so, how the Commission might minimize the burden of any such collection. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, we will seek specific comment on how we might “further reduce the information collection burden for small business concerns with fewer than 25 employees.” Nevertheless, interested parties are encouraged to comment on whether any new or revised information collection is necessary, and if so, how the Commission might minimize the burden of any such collection.

1. In this FNPRM, the Commission responds to the decision of the United States Court of Appeals for the Tenth Circuit (Tenth Circuit) in Qwest Communications International, Inc. v. FCC, in which the court remanded the Commission's rules for providing high-cost universal service support to non-rural carriers. As discussed below, while the Commission has long recognized the need for comprehensive reform, we are also cognizant that, under the American Recovery and Reinvestment Act of 2009 (the Recovery Act), the Commission must send a National Broadband Plan to Congress by February 17, 2010. We anticipate that changes to universal service policies are likely to be recommended as part of that plan, and that the Commission will undertake comprehensive universal service reform when it implements those recommendations. It will not be feasible for the Commission to consider, evaluate, and implement these universal service recommendations between February 17, 2010, and April 16, 2010, the date by which the Commission committed to respond to the Tenth Circuit's remand. We tentatively conclude, therefore, that the Commission should not attempt wholesale reform of the non-rural high-cost mechanism at this time, but we seek comment on certain interim changes to address the court's concerns and changes in the marketplace.

2. The interim changes on which we seek comment today are designed to respond to the court's concerns, while also taking into account the considerable changes in technology, the telecommunications marketplace, and consumer buying patterns that have occurred since we last modified our non-rural high-cost universal service support rules. We seek comment on what changes should be made to the Commission's rules regarding the rate comparability review and certification process. Specifically, we seek comment on whether the Commission should define “reasonably comparable” rural and urban rates in terms of rates for bundled local and long distance services. In addition, we seek comment on whether the Commission should require carriers to certify that they offer bundled local and long distance services at reasonably comparable rural and urban rates.

3. Finally, we tentatively conclude that while the Commission considers comprehensive universal service reform consistent with both the Communications Act of 1934, as amended (the Communications Act), and the Recovery Act, the current non-rural high-cost mechanism is an appropriate interim mechanism for determining high-cost support to non-rural carriers. We tentatively find that the mechanism as currently structured comports with the requirements of section 254 of the Communications Act, and it is therefore appropriate to maintain this mechanism on an interim basis until the Commission enacts comprehensive reform.

4. A major objective of high-cost universal service support always has been to help ensure that consumers have access to telecommunications services in areas where the cost of providing such services would otherwise be prohibitively high. In section 254 of the Communications Act, Congress directed the Commission to preserve and advance universal service by ensuring, among other things, that consumers in rural, insular, and high-cost areas have access to telecommunications services at rates that are “reasonably comparable to rates charged for similar services in urban areas.” In addition, section 254(e) provides that Federal universal service support “should be explicit and sufficient to achieve the purposes of this section.”

5. Currently, the Commission's rules provide Federal high-cost support to non-rural and rural carriers under different support mechanisms. While rural carriers receive support based on their embedded costs, the current rules calculate support to non-rural carriers based on the forward-looking economic cost of constructing and operating the network facilities and functions used to provide the supported services in the areas served by non-rural carriers, as determined by the Commission's cost model. Non-rural carriers receive support based on the model's cost estimates only in States where the statewide average forward-looking cost per line for non-rural carriers exceeds a national cost benchmark, which currently is set at two standard deviations above the national average cost per line.

6. To induce States to achieve the reasonably comparable rates that are required by the statute, the Commission requires States to review annually their residential local rates in rural areas served by non-rural carriers and certify that those rural rates are reasonably comparable to urban rates nationwide, or explain why they are not. The Commission defined the statutory term “reasonably comparable” in terms of a national rate benchmark, which serves as a “safe harbor” in the rate review and certification process. States with rural rates below the benchmark may presume that their rural rates are reasonably comparable to urban rates nationwide without providing additional information; if the rural rates are above the benchmark, they can rebut the presumption by demonstrating that factors other than basic service rates affect the comparability of rates. The national rate benchmark currently is set at two standard deviations above the average urban rate as reported in the most recent annual rate survey published by the Wireline Competition Bureau.

7. In Qwest II, the court held that the Commission relied on an erroneous, or incomplete, construction of section 254 of the Communications Act in defining statutory terms and crafting the funding mechanism for non-rural high-cost support. The court directed the Commission on remand to articulate a definition of “sufficient” that appropriately considers the range of principles in section 254 of the Communications Act and to define “reasonably comparable” in a manner that comports with the requirement to preserve and advance universal service. The court found that, “[b]y designating a comparability benchmark at the national urban average plus two standard deviations, the FCC has ensured that significant variance between rural and urban rates will continue unabated.” The court also found that the Commission ignored its obligation to “advance” universal service, “a concept that certainly could include a narrowing of the existing gap between urban and rural rates.” Because the non-rural high-cost support mechanism rested on the application of the definition of “reasonably comparable” rates invalidated by the court, the court also deemed the support mechanism invalid. The court further noted that the Commission based the two standard deviations cost benchmark on a finding that rates were reasonably comparable, without empirically demonstrating in the record a relationship between costs and rates.

8. In December 2005, the Commission issued a notice of proposed rulemaking seeking comment on issues raised by section 254 and the Tenth Circuit in Qwest II. Since the Commission issued the Remand NPRM, it has sought comment on various proposals for comprehensive reform of the high-cost support mechanisms for both rural and non-rural carriers. In addition, the Commission issued a further notice of proposed rulemaking seeking comment on comprehensive universal service and intercarrier compensation reform on November 5, 2008.

9. On January 14, 2009, Qwest Corporation, the Maine Public Utilities Commission, the Vermont Public Service Board, and the Wyoming Public Service Commission filed a petition for writ of mandamus with the Tenth Circuit in the Qwest II proceeding. Shortly after that petition was filed, the Commission and the petitioners negotiated an agreement under which the Commission would release a notice of inquiry no later than April 8, 2009; issue a further notice of proposed rulemaking no later than December 15, 2009; and release a final order that responds to the court's remand no later than April 16, 2010. On April 8, 2009, the Commission issued a notice of inquiry to refresh the record regarding the issues raised by the court in this remand proceeding. The Commission sought comment on several specific proposals, and sought comment generally on how any changes to the Commission's non-rural high-cost support mechanism should relate to more comprehensive high-cost universal service reform and the Commission's initiatives regarding broadband deployment.

10. The Commission has previously recognized the need for comprehensive universal service reform, and has sought comment on various proposals for comprehensive reform of the high-cost support mechanisms, rural as well as non-rural. Since the Commission originally adopted the non-rural high-cost mechanism in 1999, the telecommunications marketplace has undergone significant changes. For example, while in 1996 the majority of consumers subscribed to separate local and long distance providers, today the majority of consumers subscribe to local/long distance bundles offered by a single provider. In addition, the vast majority of subscribers have wireless phones as well as wireline phones, and an increasing percentage of consumers are dropping their circuit-switched phones in favor of wireless or broadband-based (voice over Internet protocol) phone services. Finally, an increasing percentage of carriers are converting their networks from circuit-switched to Internet protocol (IP) technology.

11. In the Remand NOI, the Commission sought comment on the relationship between the Commission's resolution of the issues in this remand proceeding and more comprehensive reform of the high-cost universal service support system and the development of a comprehensive National Broadband Plan. Many commenters argued that the Commission should use this remand proceeding to begin transitioning high-cost funding from support for voice services to support for broadband in light of the changes in technology and the marketplace.

12. On the same day that the Commission issued the Remand NOI, it began the process of developing a National Broadband Plan that will “seek to ensure that all people of the United States have access to broadband capability,” as required by the Recovery Act. Since then, the Commission staff has undertaken an intensive and data-driven effort to develop a plan to ensure that our country has a broadband infrastructure appropriate to the challenges and opportunities of the 21st century. Work on the National Broadband Plan, which is due to Congress by February 17, 2010, is not complete. We anticipate that the National Broadband Plan will address the need to reform universal service funding to further the deployment and adoption of broadband throughout the nation. As a consequence, we tentatively conclude that fundamental reform limited to only the non-rural high-cost support mechanism should not be proposed at this time. After the National Broadband Plan is released in February, we will be in a better position to determine the modifications that would be consistent with our broadband policies. In response to the mandamus petition in the Tenth Circuit, the Commission has committed to issue an order responding to the court's remand by April 16, 2010. We believe that we will have insufficient time, between release of the National Broadband Plan in February and our deadline for responding to the court in April, to implement reforms to the high-cost universal service mechanisms consistent with the overall recommendations in the National Broadband Plan. While we are committed to addressing the remand by April 16, we anticipate that our efforts to revise and improve high cost support will be advanced further through proceedings that follow from the National Broadband Plan. Accordingly, we tentatively conclude that we should neither propose fundamental reform of the non-rural high-cost support mechanism in advance of the forthcoming National Broadband Plan, nor attempt to set the stage for implementation of (as yet unknown) plan recommendations in this further notice of proposed rulemaking. As discussed below, we also tentatively conclude that no fundamental reform is required since the program as currently structured is consistent with our statutory obligations under section 254 of the Communications Act. We seek comment on these tentative conclusions.

13. We also are reluctant at this time to propose adopting any changes to the non-rural support mechanism that would increase significantly the amount of support non-rural carriers would receive. We caution that any rules adopted in this proceeding are likely to be interim rules and in effect only until comprehensive universal service reform is adopted in the aftermath of the National Broadband Plan. Any substantial increases in non-rural high-cost support disbursements, moreover, would increase the contribution factor above its current high level. “Because universal service is funded by a general pool subsidized by all telecommunications providers—and thus indirectly by the customers—excess subsidization in some cases may undermine universal service by raising rates unnecessarily, thereby pricing some consumers out of the market.” If carriers were to receive significant additional high-cost support on an interim basis as a result of this proceeding, it likely would be more difficult to transition that support to focus on areas unserved or underserved by broadband, if called for in future proceedings. Given these concerns, we tentatively conclude that any changes to the non-rural high-cost support mechanism adopted at this time should be interim in nature and should not increase the overall amount of non-rural high-cost support significantly above current levels, provided that goal can be accomplished consistent with our mandate under section 254. We seek comment on this tentative conclusion and, to the extent commenters advocate changes to the existing mechanism, we ask commenters to address how any such changes will constrain growth in the amount of support.

14. We tentatively conclude that we should continue requiring the States to review annually their residential local rates in rural areas served by non-rural carriers and certify that their rural rates are reasonably comparable to urban rates nationwide, or explain why they are not. We seek comment on this tentative conclusion.

15. We also seek comment, however, on whether we should change the rates we require the States to compare in light of the considerable changes in technology, the telecommunications marketplace, and consumer buying patterns that have occurred since we adopted a national average urban rate benchmark based on local rates. Specifically, we seek comment on whether the Commission should define “reasonably comparable” rural and urban rates in terms of rates for bundled telecommunications services. Given the changes in consumer buying patterns, the competitive marketplace, and the variety of pricing plans offered by carriers today, stand-alone local telephone rates may no longer be the most relevant measure of whether rural and urban consumers have access to reasonably comparable telecommunications services at reasonably comparable rates.

16. In particular, when the Commission adopted the non-rural high-cost support mechanism, none of the Bell Operating Companies, which served the majority of non-rural carrier customers, were permitted to offer combined local and interstate long distance services to their customers. At that time, most customers of non-rural carriers took local service from the incumbent local exchange carrier and subscribed to a separate interexchange carrier for long distance service. When the Commission originally adopted the non-rural high-cost support mechanism, it was “designed to achieve reasonable comparability of intrastate rates among States.” Given the different combinations of carriers a customer could choose from, and differing amounts of usage based on per-minute charges, it would have been difficult at that time to identify a typical package of local and long distance services. In the Order on Remand, the Commission explicitly defined “reasonable comparability” in terms of the national average urban rate for local telephone service. The telecommunications marketplace has changed considerably since that time, however.

17. When the Commission issued the Remand NPRM in 2005, it noted that most consumers no longer purchase stand-alone local telephone service, but instead purchase bundles of telecommunications services from one or more providers, and it sought comment on whether the Commission should continue defining reasonably comparable rates in terms of local rates only. The Commission also sought comment on whether defining reasonably comparable rural and urban rates in terms of consumers' total telephone bills would be more consistent with its obligation to preserve and advance universal service than focusing only on local rates. In the Remand NOI, the Commission noted that consumers increasingly are purchasing packages of services that include not only unlimited nationwide calling, but also broadband Internet access and video services, and it sought comment on whether the Commission should consider a broader range of rates in determining whether rates are affordable and reasonably comparable. We now seek additional comment on these issues.

18. As the Commission previously noted, most rural consumers typically have smaller calling areas for local telephone service than urban consumers and, therefore, may purchase more long distance services than urban consumers. We seek comment on whether a comparison of local rates only is appropriate if rural consumers incur substantial charges for long distance services and pay more for combined local and long distance telephone services than urban consumers. Although only local telephone service is supported by the high-cost universal service mechanism at this time, section 254(b)(3) of the Act provides that consumers in all regions of the nation should have access to telecommunications and information services, including advanced services and interexchange services, at reasonably comparable rural and urban rates. In light of the fact that most consumers subscribe to both local and long distance services from the same provider, would it be more consistent with the statute, and the Commission's obligation to advance universal service, to define reasonably comparable rates for purposes of the non-rural mechanism in terms of combined local and long distance rates?

19. If the Commission determines that a more meaningful measure of rural and urban rate comparability should include rates for long distance services as well as local rates, how should the Commission define a typical package of services on which to base the comparison? Several commenters point to the widespread availability of national calling plans from competing intermodal providers, including wireless, cable, and VoIP providers, and argue that rates should be considered reasonably comparable in rural areas where such service options are available. Currently, the Commission defines reasonably comparable rates in terms of incumbent local exchange carrier rates only. Given the increasing number of consumers subscribing to voice services from alternative providers, should the Commission look at the bundled rates of all types of providers? In addition, many providers offer “all distance” or unlimited nationwide calling plans. In determining whether rates and services are reasonably comparable in rural and urban areas, should the Commission consider service bundles that include unlimited long distance calling? These popular service bundles provide predictability and cost savings to high-volume users, but may not address the needs of consumers who make few long distance calls. Should the Commission also consider service bundles that include per minute rates or various “buckets” of minutes that may be popular with lower-volume users? We invite commenters to submit data on the rates and availability of bundled service offerings, identify sources of such data, and propose methods of analyzing such data.

20. We also seek comment on whether the Commission should require carriers to certify that they offer bundled local and long distance services at reasonably comparable rural and urban rates. We note in this regard that if we define reasonably comparable rates in terms of bundled local and long distance services some (or none) of the components of those bundles will be regulated by the States. Would requiring carriers to provide such data assist the Commission in monitoring these rates over time so that the Commission can adjust its definition of reasonably comparable rates as the marketplace changes?

21. Because we believe that any proposed reforms to the non-rural high-cost support mechanism should be interim in nature, pending adoption and implementation of the National Broadband Plan, we tentatively conclude that the current non-rural funding mechanism should remain in place at this time, and seek comment on this tentative conclusion. We tentatively conclude that it is appropriate to distribute universal service support in high-cost areas based on estimated forward-looking economic cost rather than on retail rates, primarily because costs necessarily are a major factor affecting retail rates.

22. As the Commission has previously discussed, there are numerous reasons to believe that cost represents a reasonable proxy for the ability of carriers and State regulators to ensure that rural rates remain reasonably comparable. In contrast, it makes little sense to base support on current retail rates, which are not independently determined but rather are the result of the interplay of underlying costs and other factors that are unrelated to whether an area is high-cost. Retail rates in many States remain regulated, and State regulators differ in their treatment of regulated carriers' recovery of their intrastate regulated costs. For example, some States still require carriers to charge business customers higher rates to create implicit subsidies for residential customers, while other regulators have eliminated such implicit subsidies in the face of increasing competition for business customers. Similarly, State regulators vary in the extent to which they have rebalanced rates by reducing intrastate access charges and increasing local rates. In addition, some States have ceased regulating local retail rates. Moreover, basing support on retail rates would create perverse incentives for State commissions and carriers to the extent that rate levels dictated the amount of Federal universal service support available in a State. State commissions or carriers would have an incentive to set local rates well above cost simply to increase their States' carriers' Federal universal service support. Similarly, where States have deregulated retail rates, carriers facing competition may have an incentive to raise certain local rates to increase their support rather than to cut rates to meet competition. We seek comment on the relative advantages and disadvantages of basing support on costs versus retail rates.

23. In the Remand NOI, the Commission acknowledged that many of the inputs in the forward-looking economic cost model have not been updated since they were adopted a decade ago, and sought comment on the extent to which the Commission should continue to use its model in determining high-cost support without updating, changing, or replacing the model. Virtually all commenters that addressed this issue argued that the model should be updated. We agree that the model should be updated or replaced if a forward-looking cost model continues to be used to compute non-rural high-cost support for the long term. Not only are the model inputs out-of-date, but also the technology assumed by the model no longer reflects “the least-cost, most-efficient, and reasonable technology for providing the supported services that is currently being deployed.” The Commission's cost model essentially estimates the costs of a narrowband, circuit-switched network that provides plain old telephone service (POTS), whereas today's most efficient providers are constructing fixed or mobile networks that are capable of providing broadband as well as voice services.

24. We acknowledge that much progress has been made in developing computer cost models that estimate the cost of constructing a broadband network, such as the CostQuest model, and we note that Commission staff has been working to develop an economic cost model to estimate the cost of providing broadband services for purposes of the National Broadband Plan. Nevertheless, we do not believe that we could adequately evaluate any existing cost model or develop a new cost model in time to meet our commitment to respond to the Tenth Circuit's remand decision by April 16, 2010. As the Commission noted in the Remand NOI, the Commission's current model was developed over a multi-year period involving dozens of public workshops, and we expect that it would take a similar period to evaluate or develop a new cost model and to establish new input values. Moreover, we do not believe that it would be a productive use of Commission resources to attempt to update a model that estimates the cost of a legacy, circuit-switched, voice-only network, if the Commission ultimately decides to use a forward-looking cost model to estimate the cost of providing broadband over a modern multiservice network. Accordingly, we tentatively conclude that we should continue to use the existing model to estimate non-rural support while these interim rules remain in place, pending the development of an updated and more advanced model or some other means of determining high-cost support for the long term. We seek comment on this tentative conclusion.

25. We also tentatively conclude that we should continue to determine non-rural support by comparing the statewide average cost of non-rural carriers to a nationwide cost benchmark set at two standard deviations above the national average cost per line on an interim basis. As discussed above, we tentatively conclude that any changes to the non-rural high-cost support mechanism should not result in substantial additional support. Following from this tentative conclusion, we further tentatively conclude that we should not adopt the proposal of Vermont and Maine that the Commission use a cost benchmark of no more than 125 percent of cost, because this would increase significantly the overall amount of high-cost support for non-rural carriers.

26. We also tentatively conclude that we should not modify our current mechanism to base support on average wire center costs per line. First, some of those proposing a shift to wire center costs, such as Qwest, would set thresholds in a manner that would result in a significant increase in the size of the fund. Second, as previously discussed, the Commission's existing model estimates the costs of a narrowband, circuit-switched network that essentially provides only POTS, rather than the costs of the multi-service networks that providers are deploying today. If the Commission were to decide to calculate support on the basis of the per-line costs for a narrower geographic area (such as wire centers), we tentatively find that the Commission should do so based on an updated model, similar to the one being developed for purposes of the National Broadband Plan, that incorporates the least-cost, most efficient technologies currently being deployed.

27. While we believe that there may be considerable merit in an approach that distributes high-cost support on a more disaggregated basis rather than on the basis of statewide average costs, we do not believe that the current version of the Commission's model is an appropriate tool to implement such an approach. Accordingly, we tentatively conclude that, until the Commission adopts an updated cost model, the non-rural high-cost support should continue to be based on statewide average costs. We seek comment on these tentative conclusions. Although we tentatively conclude that the proposals to change the non-rural mechanism should not be adopted in their entirety at this time, we seek comment on whether it might be feasible to adopt some elements of these or other proposals. We also seek comment on whether there are other interim adjustments that we should make to the non-rural mechanism that could be implemented quickly, through an order issued no later than April 16, 2010.

28. As discussed above, we tentatively conclude that we should maintain the existing non-rural high-cost funding mechanism on an interim basis given the relationship between universal service support and the Commission's mandate under the Recovery Act to develop a plan for providing broadband throughout the nation. While the Commission is developing that plan and coordinating its requirements under both the Recovery and the Communications Act, we tentatively conclude that the program as currently constructed is consistent with the requirements in section 254 of the Communications Act. We seek comment on this tentative conclusion.

29. Section 254(e) of the Communications Act provides that Federal universal service support “should be explicit and sufficient to achieve the purposes of [section 254].” The Tenth Circuit held that the Commission did not adequately demonstrate how its non-rural universal service support mechanism was “sufficient” within the meaning of section 254(e). In the non-rural context, the Commission previously had defined “sufficient” as “enough Federal support to enable States to achieve reasonable comparability of rural and urban rates in high-cost areas served by non-rural carriers.” In Qwest II, the court noted, however, that “reasonable comparability” was just one of several principles that Congress directed the Commission to consider when crafting policies to preserve and advance universal service. The court was “troubled by the Commission's seeming suggestion that other principles, including affordability, do not underlie Federal non-rural support mechanisms.” “On remand,” the court concluded, “the FCC must articulate a definition of `sufficient' that appropriately considers the range of principles identified in the text of the statute.”

30. Section 254(b) sets forth a number of principles upon which the Federal-State Joint Board on Universal Service (Joint Board) and the Commission should base universal service policies. These include: (1) “[Q]uality service should be available at just, reasonable, and affordable rates;” (2) “access to advanced telecommunications and information services should be provided in all regions of the Nation;” (3) “low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications services and information services * * * that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged * * * in urban areas;” (4) “[a]ll providers of telecommunications services should make an equitable and nondiscriminatory contribution to the preservation and advancement of universal service;” (5) “[t]here should be specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service;” and (6) “[e]lementary and secondary schools and classrooms, health care providers, and libraries should have access to advanced telecommunications services.” In addition, section 254(b) permits the Joint Board and the Commission to adopt “[s]uch other principles as the Joint Board and the Commission determine are necessary and appropriate for the protection of the public interest * * *”

31. In implementing section 254, the Commission, consistent with the recommendations of the Joint Board, created a number of different universal service support mechanisms that were targeted to address specific principles enumerated in section 254(b). Thus, for example, the Commission created a separate E-rate program to provide support to schools and libraries, and a rural health care mechanism to provide support for health care providers, and it expanded and modified the existing Lifeline and Link-up programs to assist low-income consumers. The non-rural high-cost support mechanism, thus, is just one relatively small segment of the Commission's comprehensive scheme to preserve and advance universal service. In implementing section 254, the Commission did not attempt to address and advance each and every section 254(b) universal service principle in a single support mechanism, nor is there any indication that Congress intended the provisions to be implemented in this manner. Instead, the Commission crafted a variety of mechanisms that—collectively—address the section 254(b) principles. These mechanisms, taken together, advance all of the section 254(b) principles enumerated by Congress. For example, the Commission addressed the section 254(b)(6) principle that schools, libraries, and health care providers “should have access to advanced telecommunications services,” by creating the E-rate program and the rural health care support mechanism. The Commission, therefore, did not need to address this principle in designing the various high-cost support mechanisms. In particular, the non-rural high-cost support mechanism was meant to ensure that consumers in rural, insular, and high-cost areas have access to telecommunications services at rates that are reasonably comparable to rates in urban areas. Thus, the Commission believes that a fair assessment of whether the Commission has reasonably implemented the section 254 principles, and whether support is “sufficient,” must encompass the entirety of universal service support mechanisms; no single program is intended to accomplish the myriad of statutory purposes. Moreover, the competing purposes of section 254 impose practical limits on the fund as a whole: If the fund grows too large, it will jeopardize other statutory mandates, such as ensuring affordable rates in all parts of the country, and requiring fair and equitable contributions from carriers. We seek comment on the foregoing analysis. We also seek comment on the principles the Commission should consider in designing the non-rural high-cost mechanism and in determining whether the level of support is “sufficient.”

32. In Qwest II, the Tenth Circuit expressed specific concern that the Commission's non-rural mechanism may not be “sufficient” to advance the principle of affordability. We seek comment on how we should assess whether the current non-rural high-cost mechanism advances this principle, particularly when considered in conjunction with the other universal service mechanisms (e.g., the low-income mechanism). We note that the Commission's most recent report on telephone subscribership (released in December 2009) found that, as of July 2009, the telephone subscribership penetration rate in the United States was 95.7 percent—the highest reported penetration rate since the Census Bureau began collecting such data in November 1983. Does the current high penetration rate demonstrate that our universal service programs are sufficient to ensure that rates are affordable? If not, what other data might the Commission consider in determining whether rates are affordable? Should it consider data on the percentage of income that consumers spend on local telephone service or other telecommunications services? Should it compare consumer expenditures on telephone or telecommunications services with consumer expenditures on other services, such as cable television service? Do such data confirm that rates are affordable?

33. As the Tenth Circuit has recognized, the Commission must sometimes “exercise its discretion to balance the principles” of section 254(b) “against one another when they conflict.” If the high-cost fund for non-rural carriers were to increase substantially, there emerges a tension between the principles of reasonable comparability and affordability. If the Commission dramatically increased the size of the non-rural fund to reduce rural rates to make them more comparable to the lowest urban rates, carriers serving other areas of the country would likely increase their rates to pay for the spike in their non-rural support contributions, making rates in those service areas less affordable. The court recognized the need for the Commission to balance the competing principles of comparability and affordability in the non-rural high-cost context. The court held, however, that “the FCC has failed to demonstrate that its balancing calculus takes into account the full range of principles Congress dictated to guide the Commission in its actions.” For the reasons discussed above, we tentatively conclude that in designing its non-rural high-cost mechanism the Commission should principally balance the statutory principles of reasonable comparability and affordability of rates in areas served by non-rural carriers on the one hand with affordability of rates in other areas where customers are net contributors to universal service funding on the other. As the United States Court of Appeals for the District of Columbia Circuit (DC Circuit) recently found when it upheld the Commission's interim cap on competitive eligible telecommunications carriers' support, the concept of “sufficiency” can reasonably encompass “not just affordability for those benefited, but fairness for those burdened.” We also tentatively conclude that a proper balancing inquiry must take into account our generally applicable responsibility to be a prudent guardian of the public's resources. We seek comment on these tentative conclusions.

34. The Tenth Circuit acknowledged that “excessive subsidization arguably may affect the affordability of telecommunications services, thus violating the principle in section 254(b)(1).” The Commission made a determination of necessary, but not excessive, support in crafting the interim universal service support rules that the Fifth Circuit upheld in Alenco Communications, Inc. v. FCC. More recently, in upholding an interim cap on certain universal service funding, the DC Circuit stated that the Commission, in assessing whether universal service subsidies are excessive, “must consider not only the possibility of pricing some customers out of the market altogether, but the need to limit the burden on customers who continue to maintain telephone service.” Given the unprecedented level of telephone subscribership, we tentatively conclude that current subsidy levels are at least sufficient (and may be more than enough) to ensure reasonably comparable and affordable rates that permit widespread access to basic telephone service. We seek comment on this tentative conclusion.

35. We further tentatively conclude that the Commission's non-rural support mechanism is also consistent with the statutory principle that “[t]here should be specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service.” The Commission's cost-based formula provides a specific and predictable methodology for determining when non-rural carriers qualify for high-cost support. We seek comment on this tentative conclusion.

36. Finally, we note that the non-rural high-cost mechanism currently does not directly address the principle that “[a]ccess to advanced telecommunications and information services should be provided in all regions of the Nation.” The Commission, however, is currently considering whether to extend universal service support to broadband services. Such an expansion of the universal service program would help advance the goal of widespread access to advanced services in accordance with section 254(b)(2). We tentatively conclude that it would be premature to expand existing universal service programs at this time, before the National Broadband Plan has been issued. We seek comment on this tentative conclusion.

37. Section 254(b)(3) provides: “Consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas.” In 2003, the Commission determined that rural rates were “reasonably comparable” if they fell within two standard deviations of the national average urban rate contained in the Wireline Competition Bureau's annual rate survey. In adopting this definition of “reasonably comparable,” the Commission presumed that Congress believed that rural and urban rates were already “reasonably comparable” at the time the 1996 Telecommunications Act was passed, and that the Commission's task under section 254(b)(3) was to preserve existing levels of rate comparability.

38. In Qwest II, the Tenth Circuit rejected the Commission's definition of “reasonably comparable.” The court noted that section 254(b) referred to “policies for the preservation and advancement of universal service.” In the court's view, the statute's charge to “advance” universal service suggests that the Commission must do more than maintain existing rate differences. In particular, in the context of rate comparability, the court concluded that “the Commission erred in premising its consideration of the term `preserve' on the disparity of rates existing in 1996 while ignoring its concurrent obligation to advance universal service, a concept that certainly could include a narrowing of the existing gap between urban and rural rates.” The court seemed concerned that, unless the Commission took action to reduce the existing variance in rates between rural and urban areas, rural rates would be too high to ensure universal access to basic service. “Rates cannot be divorced from a consideration of universal service,” the court said, “nor can the variance between rates paid in rural and urban areas. If rates are too high, the essential telecommunications services encompassed by universal service may indeed prove unavailable.”

39. The Tenth Circuit noted that under the Commission's 2002 data, “rural rates falling just below the comparability benchmark may exceed the lowest urban rates by over 100%.” We tentatively conclude, however, that the statute does not require the Commission to make rural rates comparable to the “lowest urban rate,” particularly when urban rates themselves vary considerably. Indeed, as the Tenth Circuit recognized, the Commission set its previous comparability benchmark at the national urban average plus two standard deviations because that benchmark “approaches the outer perimeter of the variance in urban rates.” Under the Commission's benchmark approach, rural rates receive “closer scrutiny” as they “approach the level of the highest urban rate.” The Tenth Circuit acknowledged that “there is a certain logic to this approach”; but it ultimately concluded that “the benchmark is rendered untenable because of the impermissible statutory construction on which it rests.”

40. We seek comment on how we should respond to the Tenth Circuit's concerns about reasonable comparability of rates. How should we evaluate whether the current non-rural high-cost mechanism is “advancing” universal service in satisfaction of section 254(b)(5)? Does the fact that telephone penetration rates have increased since we started our universal service programs demonstrate that “rates are” not “too high” under that program, since “essential telecommunications services encompassed by universal service” have not “prove[d] unavailable” but have in fact become more available? Section 254(b)(3) requires that rates in rural, insular, and high cost areas be “reasonably comparable to those . . . in urban areas.” Given the variance in urban rates, does it make sense to interpret this statutory principle as requiring that all rural rates be no higher than the lowest urban rate? Would such an interpretation effectively result in the preemption of State rate-making authority? In addition, would such an interpretation of the statute result in a significant increase in the size of the fund that would unreasonably burden those contributing to the fund? In interpreting this statutory provision, should we instead compare the variance in rural rates to the variance in urban rates? Are there other ways to assess rate comparability?

41. The court's criticism of the Commission's statutory construction appeared to stem from a concern that the Commission's non-rural mechanism was not doing enough to satisfy the statutory mandate to “advance” universal service. Is it reasonable to interpret the statute's directive to “advance universal service” as satisfied if the Commission extends universal service to new services and new technologies, such as broadband Internet access service? As discussed above, section 6001(k) of the Recovery Act directs the Commission to submit to Congress a National Broadband Plan. The Recovery Act further requires that the plan “shall seek to ensure that all people of the United States have access to broadband capability,” and that the plan include, inter alia, a “detailed strategy for achieving affordability of such [broadband] service and maximum utilization of broadband infrastructure and service by the public.” Do these provisions of the Recovery Act support such an interpretation?

42. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

• Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: http://www.regulations.gov.

• Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission..

• Effective December 28, 2009, all hand-delivered or messenger delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St., SW., Room TW-A325, Washington, DC 20554. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Please Note: Through December 24, 2009, the Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. This filing location will be permanently closed after December 24, 2009. The filing hours at both locations are 8 a.m. to 7 p.m.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW., Washington DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

43. These matters shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. 47 CFR 1.1200-1.1216. Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentations and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. 47 CFR 1.1206(b)(2). Other requirements pertaining to oral and written presentations are set forth in § 1.1206(b) of the Commission's rules. 47 CFR 1.1206(b).

44. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities from the policies and rules proposed in this Further Notice of Proposed Rulemaking (FNPRM). The Commission requests written public comment on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the FNPRM provided on the first page of the FNPRM. The Commission will send a copy of the FNPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the FNPRM and IRFA (or summaries thereof) will be published in the Federal Register.

45. In section 254 of the Communications Act of 1934, as amended, Congress directed the Commission to preserve and advance universal service by ensuring, among other things, that consumers in rural, insular, and high-cost areas have access to telecommunications services at rates that are “reasonably comparable to rates charged for similar services in urban areas.” In addition, section 254(e) provides that Federal universal service support “should be explicit and sufficient to achieve the purposes of this section.”

46. Currently, the Commission's rules provide Federal high-cost universal service support to non-rural and rural carriers under different support mechanisms. Non-rural carriers receive support in States where the statewide average forward-looking cost per line for non-rural carriers exceeds a national cost benchmark. To induce States to achieve the reasonably comparable rates that are required by the statute, the Commission requires States to review annually their residential local rates in rural areas served by non-rural carriers and certify that those rural rates are reasonably comparable to urban rates nationwide, or explain why they are not. The Commission defined the statutory term “reasonably comparable” in terms of a national rate benchmark, which serves as a “safe harbor” in the rate review and certification process. The national rate benchmark currently is set at two standard deviations above the average urban rate as reported in the most recent annual survey of local telephone rates published by the Wireline Competition Bureau.

47. In Qwest II, the court held that the Commission relied on an erroneous, or incomplete, construction of section 254 of the Communications Act in defining statutory terms and crafting the funding mechanism for non-rural high-cost support. The court directed the Commission on remand to articulate a definition of “sufficient” that appropriately considers the range of principles in section 254 of the Communications Act and to define “reasonably comparable” in a manner that comports with the requirement to preserve and advance universal service.

48. In the FNPRM, the Commission seeks comment on revising the non-rural high-cost universal service rules regarding the rate comparability review and certification process. Such action is necessary to respond to the decision of the United States Court of Appeals for the Tenth Circuit (Tenth Circuit) in Qwest II, in which the court remanded the Commission's rules for providing high-cost universal service support to non-rural carriers. Specifically, the Commission seeks comment on whether it should define “reasonably comparable” rural and urban rates in terms of rates for bundled local and long distance services, rather than in terms of local rates only. In addition, the Commission seeks comment on whether it should require carriers to certify that they offer bundled local and long distance services at reasonably comparable rural and urban rates.

49. The legal basis for any action that may be taken pursuant to the Notice is contained in sections 1, 2, 4(i), 201-205, 214, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201-205, 214, 254, 403 and section 1.411of the Commission's rules, 47 CFR 1.411.

50. The RFA directs agencies to provide a description of, and, where feasible, an estimate of, the number of small entities that may be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).

51. The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer employees. According to Census Bureau data for 2002, there were 2,432 firms in this category, total, that operated for the entire year. Of this total, 2,395 firms had employment of 999 or fewer employees, and an additional 37 firms had employment of 1,000 employees or more. Thus, under this size standard, the majority of firms can be considered small.

52. Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to local exchange services. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 1,311 carriers reported that they were incumbent local exchange service providers. Of these 1,311 carriers, an estimated 1,024 have 1,500 or fewer employees and 287 have more than 1,500 employees. Consequently, the Commission estimates that most providers of local exchange services are small entities that may be affected by our action.

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

54. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 1,005 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,005 carriers, an estimated 918 have 1,500 or fewer employees and 87 have more than 1,500 employees. In addition, 16 carriers have reported that they are Shared-Tenant Service Providers, and all 16 are estimated to have 1,500 or fewer employees. In addition, 89 carriers have reported that they are Other Local Service Providers. Of the 89, all 89 have 1,500 or fewer employees and none has more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities that may be affected by our action.

55. Since 2007, the SBA has recognized wireless firms within this new, broad, economic census category. Prior to that time, the SBA had developed a small business size standard for wireless firms within the now-superseded census categories of Paging and Cellular and Other Wireless Telecommunications. Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees. Because Census Bureau data are not yet available for the new category, we will estimate small business prevalence using the prior categories and associated data. For the first category of Paging, data for 2002 show that there were 807 firms that operated for the entire year. Of this total, 804 firms had employment of 999 or fewer employees, and three firms had employment of 1,000 employees or more. For the second category of Cellular and Other Wireless Telecommunications, data for 2002 show that there were 1,397 firms that operated for the entire year. Of this total, 1,378 firms had employment of 999 or fewer employees, and 19 firms had employment of 1,000 employees or more. Thus, using the prior categories and the available data, we estimate that the majority of wireless firms can be considered small. Also, according to Commission data, 434 carriers reported that they were engaged in the provision of cellular service, Personal Communications Service (PCS), or Specialized Mobile Radio (SMR) Telephony services, which are placed together in the data. We have estimated that 222 of these are small, under the SBA small business size standard. Thus, under this category and size standard, approximately half of firms can be considered small.

56. The broadband personal communications service (PCS) spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission defined “small entity” for Blocks C and F as an entity that has average gross revenues of $40 million or less in the three previous calendar years. For Block F, an additional classification for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These standards defining “small entity” in the context of broadband PCS auctions have been approved by the SBA. No small businesses, within the SBA-approved small business size standards bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified as small entities in the Block C auctions. A total of 93 small and very small business bidders won approximately 40 percent of the 1,479 licenses for Blocks D, E, and F. On March 23, 1999, the Commission re-auctioned 347 C, D, E, and F Block licenses. There were 48 small business winning bidders. On January 26, 2001, the Commission completed the auction of 422 C and F Broadband PCS licenses in Auction No. 35. Of the 35 winning bidders in that auction, 29 qualified as “small” or “very small” businesses. Subsequent events, concerning Auction 35, including judicial and agency determinations, resulted in a total of 163 C and F Block licenses being available for grant.

57. To date, two auctions of narrowband PCS licenses have been conducted. For purposes of the two auctions that have been held, “small businesses” were entities with average gross revenues for the prior three calendar years of $40 million or less. Through these auctions, the Commission has awarded a total of 41 licenses, out of which 11 were obtained by small businesses. To ensure meaningful participation of small business entities in future auctions, the Commission has adopted a two-tiered small business size standard in the Narrowband PCS Second Report and Order. A “small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million. A “very small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million. The SBA has approved these small business size standards. In the future, the Commission will auction 459 licenses to serve Metropolitan Trading Areas (MTAs) and 408 response channel licenses. There is also one megahertz of narrowband PCS spectrum that has been held in reserve and that the Commission has not yet decided to release for licensing. The Commission cannot predict accurately the number of licenses that will be awarded to small entities in future actions. However, four of the 16 winning bidders in the two previous narrowband PCS auctions were small businesses, as that term was defined under the Commission's rules. The Commission assumes, for purposes of this analysis, that a large portion of the remaining narrowband PCS licenses will be awarded to small entities. The Commission also assumes that at least some small businesses will acquire narrowband PCS licenses by means of the Commission's partitioning and disaggregation rules.

58. Wireless telephony includes cellular, PCS, and specialized mobile radio (SMR) telephony carriers. As noted earlier, the SBA has developed a small business size standard for wireless services. Under that SBA small business size standard, a business is small if it has 1,500 or fewer employees. According to Commission data, 434 carriers reported that they were engaged in the provision of wireless telephony. We have estimated that 222 of these are small under the SBA small business size standard.

59. The Commission awards “small entity” and “very small entity” bidding credits in auctions for Specialized Mobile Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz bands to firms that had revenues of no more than $15 million in each of the three previous calendar years, or that had revenues of no more than $3 million in each of the previous calendar years, respectively. These bidding credits apply to SMR providers in the 800 MHz and 900 MHz bands that either hold geographic area licenses or have obtained extended implementation authorizations. The Commission does not know how many firms provide 800 MHz or 900 MHz geographic area SMR service pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of no more than $15 million. One firm has over $15 million in revenues. The Commission assumes, for purposes here, that all of the remaining existing extended implementation authorizations are held by small entities, as that term is defined by the SBA. The Commission has held auctions for geographic area licenses in the 800 MHz and 900 MHz SMR bands. There were 60 winning bidders that qualified as small or very small entities in the 900 MHz SMR auctions. Of the 1,020 licenses won in the 900 MHz auction, bidders qualifying as small or very small entities won 263 licenses. In the 800 MHz auction, 38 of the 524 licenses won were won by small and very small entities.

60. The Commission has not adopted a size standard for small businesses specific to the Rural Radiotelephone Service. A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio System (BETRS). As noted, the SBA has determined a small business size standard applicable to wireless entities, i.e., an entity employing no more than 1,500 persons. There are approximately 1,000 licensees in the Rural Radiotelephone Service, and the Commission estimates that there are 1,000 or fewer small entity licensees in the Rural Radiotelephone Service that may be affected by the rules and policies adopted herein.

61. As discussed above, the FNPRM seeks comment on whether it should define “reasonably comparable” rural and urban rates in terms of rates for bundled local and long distance services, and on whether the Commission should require carriers to certify that they offer bundled local and long distance services at reasonably comparable rural and urban rates. Under the Commission's current rules, States are required to review annually their residential local rates in rural areas served by non-rural carriers and certify that those rural rates are reasonably comparable to urban rates nationwide, or explain why they are not. If the Commission were to define reasonably comparable rates in terms of bundled local and long distance services, the States would not have jurisdiction over some (or all) of the components of those bundles. Accordingly, the FNPRM seeks comment on whether the Commission's rate review and certification rules also should apply to non-rural carriers, and whether such data would assist the Commission in monitoring these rates over time so that the Commission can adjust its definition of reasonably comparable rates over time. We do not have an estimate of potential compliance burdens, but anticipate that commenters will provide the Commission with reliable information on any costs and burdens on small entities.

62. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance and reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or part thereof, for small entities.

63. As discussed above, the FNPRM seeks comment on whether the Commission should amend its rate review and certification rules to require non-rural carriers to certify that they offer bundled local and long distance services at reasonably comparable rural and urban rates, which, if adopted, may impose a reporting, record keeping, or other compliance burden on some small entities. We anticipate that the record will reflect whether the overall benefits of such a requirement would outweigh the burdens on small entities, and if so, suggest alternative ways in which the Commission could lessen the overall burdens on small entities. We encourage small entity comment.

64. None.

65. Accordingly, it is ordered that, pursuant to the authority contained in sections 1, 2, 4(i), 201-205, 214, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201-205, 214, 254, and 403, and section 1.411 of the Commission's rules, 47 CFR 1.411, this further notice of proposed rulemaking is adopted.

66. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

TSA invites interested persons to participate in this action by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from this action. See ADDRESSES above for information on where to submit comments.

With each comment, please identify the docket number at the beginning of your comments. TSA encourages commenters to provide their names and addresses. The most helpful comments reference a specific portion of the document, explain the reason for any recommended change, and include supporting data. You may submit comments and material electronically, in person, by mail, or by fax as provided under ADDRESSES, but please submit your comments and material by only one means. If you submit comments by mail or delivery, submit them in an unbound format, no larger than 8.5 by 11 inches, suitable for copying and electronic filing.

If you would like TSA to acknowledge receipt of comments submitted by mail, include with your comments a self-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you.

TSA will file all comments to our docket address, as well as items sent to the address or e-mail under FOR FURTHER INFORMATION CONTACT, in the public docket, except for comments containing confidential information and sensitive security information (SSI) 1 . Should you wish your personally identifiable information be redacted prior to filing in the docket, please so state. TSA will consider all comments that are in the docket on or before the closing date for comments and will consider comments filed late to the extent practicable. The docket is available for public inspection before and after the comment closing date.

Do not submit comments that include trade secrets, confidential commercial or financial information, or SSI to the public regulatory docket. Please submit such comments separately from other comments on the action. Comments containing this type of information should be appropriately marked as containing such information and submitted by mail to the address listed in FOR FURTHER INFORMATION CONTACT section.

TSA will not place comments containing SSI in the public docket and will handle them in accordance with applicable safeguards and restrictions on access. TSA will hold documents containing SSI, confidential business information, or trade secrets in a separate file to which the public does not have access, and place a note in the public docket explaining that commenter's have submitted such documents. TSA may include a redacted version of the comment in the public docket. If an individual requests to examine or copy information that is not in the public docket, TSA will treat it as any other request under the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the Department of Homeland Security's (DHS') FOIA regulation found in 6 CFR part 5.

Please be aware that anyone is able to search the electronic form of all comments in any of our dockets by the name of the individual who submitted the comment (or signed the comment, if an association, business, labor union, etc., submitted the comment). You may review the applicable Privacy Act Statement published in the Federal Register on April 11, 2000 (65 FR 19477) and modified on January 17, 2008 (73 FR 3316).

You may review TSA's electronic public docket on the Internet at http://www.regulations.gov. In addition, DOT's Docket Management Facility provides a physical facility, staff, equipment, and assistance to the public. To obtain assistance or to review comments in TSA's public docket, you may visit this facility between 9 a.m. to 5 p.m., Monday through Friday, excluding legal holidays, or call (202) 366-9826. This docket operations facility is located in the West Building Ground Floor, Room W12-140 at 1200 New Jersey Avenue, SE., Washington, DC 20590.

You can get an electronic copy using the Internet by—

(1) Searching the electronic Federal Docket Management System (FDMS) Web page at http://www.regulations.gov;

(2) Accessing the Government Printing Office's Web page at http://www.gpoaccess.gov/fr/index.html; or

(3) Visiting TSA's Security Regulations Web page at http://www.tsa.gov and accessing the link for “Research Center” at the top of the page.

In addition, copies are available by writing or calling the individual in the FOR FURTHER INFORMATION CONTACT section. Make sure to identify the docket number of this rulemaking.

On November 18, 2009 (74 FR 59874), TSA published an NPRM on the Aircraft Repair Station Security Program. The NPRM has a 60-day comment period that would have ended on January 19, 2010. In two separate requests, one dated November 20, 2009, from the Professional Aviation Maintenance Association (PAMA) and the other dated November 23, 2009, from the International Air Transport Association (IATA), both organizations requested that the deadline for filing comments on the Aircraft Repair Station Security NPRM be extended for an additional 60 days from January 19, 2010, to March 19, 2010. See Docket Item Nos. TSA-2004-17131-0034 (PAMA); TSA-2004-17131-0043 and TSA-2004-17131-0066 (IATA). PAMA and IATA believe that the original 60-day comment period is insufficient time to provide TSA with substantive comments. PAMA requests additional time for its membership to read and respond to the NPRM due to the holiday season being the airlines busiest time of the year. IATA believes that due to the complexity and scope of the rule, there is insufficient time for careful consideration by stakeholders. IATA also believes that further time is required for translation and review of the NPRM by foreign repair station operators abroad.

TSA has decided to grant, in part, PAMA and IATA's requests for an extension and will extend the comment period for thirty (30) days. TSA believes that public awareness of the proposed Aircraft Repair Station Security rulemaking, which began in February 2004 with a public meeting and comment period, has allowed sufficient time for industry consideration. The comment period will now be a total of 90 days and will end on February 19, 2010. This extension will allow the aviation industry and other interested entities and individuals additional time to complete their comments on the NPRM and will enable TSA to continue its efforts to implement final regulations as mandated by 49 U.S.C. 44924.