Public Comments: MSHA will post all comments on the Internet without change, including any personal information provided. Access comments electronically at http://www.msha.gov/regsinfo.htm. Review comments in person at the Office of Standards, Regulations, and Variances, 1100 Wilson Boulevard, Room 2350, Arlington, Virginia. Sign in at the receptionist's desk on the 21st floor.

E-mail notification: MSHA maintains a list that enables subscribers to receive e-mail notification when the Agency publishes rulemaking documents in the Federal Register . To subscribe, go to http://www.msha.gov/subscriptions/subscribe.aspx.

Information Collection Supporting Statement: A copy of the information collection package can be obtained from the Department of Labor by electronic mail request to Michel Smyth at smyth.michel@dol.gov or by phone request to 202-693-4129.

In enacting the Mine Act, Congress included the pattern of violations (POV) provision in section 104(e) to provide MSHA with an additional enforcement tool to protect miners when the operator demonstrated a disregard for the safety and health of miners. The need for such a provision was forcefully demonstrated during the investigation of the Scotia Mine disaster, which occurred in 1976 in Eastern Kentucky. (S. Rep. No. 181, 95th Cong., 1st Sess. at 32.) As a result of explosions on March 9 and 11, 1976, caused by dangerous accumulations of methane, 23 miners and three mine inspectors lost their lives. The Scotia Mine had a chronic history of persistent, serious violations that were cited over and over by MSHA. After abating the violations, the operator would permit the same violations to recur, repeatedly exposing miners to the same hazards. The accident investigation showed that MSHA's then-existing enforcement program was unable to address the Scotia Mine's history of recurring violations.

The Mine Act places the ultimate responsibility for ensuring the safety and health of miners on mine operators. The legislative history of the Mine Act emphasizes that Congress reserved the POV provision for mine operators with a record of repeated S&S violations. Congress intended the POV sanction to attain remedial action from operators “who have not responded to the Agency's other enforcement efforts.” (55 FR 31129) The legislative history states that Congress believed that the existence of a pattern would signal to both the mine operator and the Secretary that “there is a need to restore the mine to effective safe and healthful conditions and that the mere abatement of violations as they are cited is insufficient.” (S. Rep. No. 181, supra at 33.)

The Mine Act does not define “pattern of violations,” but section 104(e)(4) authorizes the Secretary to establish criteria for determining when a pattern of violations of mandatory safety or health standards exists. Congress provided the Secretary with broad discretion in establishing pattern criteria, recognizing that MSHA may need to modify the criteria as experience dictates.

MSHA first proposed a POV regulation in 1980 (45 FR 54656). That proposal included: Purpose and scope, initial screening, pattern criteria, issuance of notice, and termination of notice. Commenters were generally opposed to the 1980 proposal. They stated that the proposal was complex, too statistically oriented, overbroad, and vague. In addition, they stated that the rulemaking was untimely because of litigation then pending before the Federal Mine Safety and Health Review Commission (Commission) concerning MSHA's interpretation of the S&S provisions of the Mine Act. Commenters also stated that review of the Agency's then pending regulation for assessment of civil penalties could affect the POV proposal.

On February 8, 1985 (50 FR 5470), MSHA announced its withdrawal of the 1980 proposed rule and issued an advance notice of proposed rulemaking (ANPRM) that addressed many of the concerns expressed about the 1980 proposal. In the 1985 ANPRM, MSHA stated that it intended to focus on the safety and health record of each mine rather than on a strictly quantitative comparison of mines to industry-wide norms. In the ANPRM, MSHA stated that the Agency envisioned simplified criteria, focusing on two principal areas:

(1) Were S&S violations common to a particular hazard or did S&S violations throughout the mine represent an underlying health and safety problem, and

(2) Is the mine on a section 104(d) unwarrantable failure sequence, indicating that other enforcement measures had been ineffective.

MSHA requested suggestions for additional factors the Agency should use in determining whether a POV exists and requested ideas on administrative procedures for terminating a pattern notice.

MSHA published a second proposed rule on May 30, 1989 (54 FR 23156), which included criteria and procedures for identifying mines with a pattern of S&S violations. The 1989 proposal included procedures for initial identification of mines developing a pattern of violations; criteria for determining whether a pattern of violations exists at a mine; notification procedures that would provide both the mine operator and miners' representative an opportunity to respond to the Agency's evaluation that a pattern of violations may exist; and procedures for terminating a pattern notice. The 1989 proposal addressed the major issues raised by commenters. Commenters' primary concerns were MSHA's policies for enforcing the S&S provisions of the Mine Act, the civil penalty regulation, and MSHA's enforcement of the unwarrantable failure provision of the Mine Act. MSHA held two public hearings and issued a final rule on July 31, 1990 (55 FR 31128).

The existing rule established MSHA's criteria and procedures for identifying mines with a POV. The existing rule reflected MSHA's belief that Congress intended the POV sanction to be directed at restoring mines to a safe and healthful condition.

Until mid-2007, POV screening was decentralized and lacked a consistent, structured approach. MSHA District offices were responsible for conducting the required annual POV screening of mines. Following the accidents at the Sago, Darby, and Aracoma mines in early 2006, MSHA began developing a centralized, quantifiable POV screening process. MSHA initiated its newly developed Pattern of Violations Screening Criteria and Scoring Model in mid-2007 and updated and revised the screening criteria and procedures in 2010. MSHA uses a computer program based on this screening criteria and scoring model to generate lists of mines with a potential pattern of violations (PPOV).

MSHA is proposing the following changes to its existing pattern of violations regulation.

Proposed § 104.1 would provide the purpose and scope of the proposal and is unchanged from the existing provision.

Proposed § 104.2 would combine existing §§ 104.2 and 104.3. It would specify the general criteria that MSHA would use to identify mines with a pattern of violations. MSHA would review compliance, accident, injury, and illness records. MSHA believes that the proposed rule would simplify the process for determining whether a mine has a pattern of violations and would more accurately reflect the statutory intent. Consistent with the Mine Act, the proposed rule would eliminate all references to initial screening criteria.

Proposed § 104.2(a) would provide that the specific criteria ( e.g., number of S&S violations issued in the previous year) used in the review to identify mines with a pattern of S&S violations would be posted on MSHA's website at http://www.msha.gov. MSHA requests specific comments on how the agency should obtain comment during the development of, and periodic revision to, the POV screening criteria. MSHA also requests comments on the best methods for notifying mine operators of changes to these criteria. Under the proposal, MSHA would review:

(1) Citations for significant and substantial violations;

(2) Orders under section 104(b) of the Act for not abating significant and substantial violations;

(3) Citations and withdrawal orders under section 104(d) of the Act, resulting from the operator's unwarrantable failure to comply;

(4) Imminent danger orders under section 107(a) of the Act;

(5) Orders under section 104(g) of the Act requiring withdrawal of miners who have not received training and who the inspector declares to be a hazard to themselves and others;

(6) Enforcement measures, other than section 104(e) of the Act, which have been applied at the mine;

(7) Other information that demonstrates a serious safety or health management problem at the mine, such as accident, injury, and illness records; and

(8) Mitigating circumstances.

MSHA believes that posting the specific criteria and compliance data that the Agency would use on the website would allow mine operators to monitor their compliance record against the proposed POV criteria. Some mines have personnel who, currently, are requesting this information from MSHA. This website would reduce the effort for these mine operators. Access to this information through a searchable database would provide operators an opportunity to evaluate their record and determine whether they are approaching proposed POV criteria levels. This would enable operators to proactively implement measures to improve safety and health at their mines and to bring their mines into compliance. Posting the specific pattern criteria on MSHA's website will promote openness and transparency and encourage operators to examine their compliance record more closely, ascertain whether they have any recurring problems, and enhance the safety and health of miners. MSHA believes that sharing this information facilitates a more proactive approach to safety and health on the part of all involved with miner safety and health. In addition, MSHA believes that the ready availability of compliance data will eliminate the need to inform operators of a potential pattern of violations (PPOV). MSHA believes that this is an improvement over the existing process because it allows operators to continually evaluate their compliance performance.

Under proposed § 104.2(a)(1), like the existing provision, MSHA would consider a mine's S&S violations.

Like the existing provision, proposed § 104.2(a)(2) would require MSHA to consider closure orders issued under section 104(b) of the Mine Act that resulted from S&S violations.

Proposed § 104.2(a)(3), like existing § 104.3(a)(3), would require MSHA to consider unwarrantable failure citations and withdrawal orders issued under sections 104(d)(1) and (d)(2) of the Mine Act. Unwarrantable failure citations and orders often constitute S&S violations that are the types of serious, repeated violations that Congress intended to address in a POV regulation.

Proposed § 104.2(a)(4), like existing § 104.2(a)(3), would require MSHA to consider imminent danger withdrawal orders issued under section 107(a) of the Mine Act.

Proposed § 104.2(a)(5), derived from existing § 104.2(b)(1), would require MSHA to consider orders issued under section 104(g) of the Act.

Proposed § 104.2(a)(6), like existing § 104.2(b)(1), would require that MSHA consider enforcement measures other than section 104(e) of the Act, which have been applied at the mine.

Proposed § 104.2(a)(7) would clarify MSHA's intent that the proposed POV criteria include consideration of operations with serious safety and health management problems. It is derived from the existing regulation and the legislative history of the Mine Act. 1 It would require MSHA to consider other information, such as accident, injury, and illness records, that may reveal a serious safety or health management problem at a mine. This other information may also include: Enforcement measures, other than POV, applied at the mine; evidence of the operator's lack of good faith in correcting the problem that results in repeated S&S violations; repeated S&S violations of a particular standard; repeated S&S violations of standards related to the same hazard; and any other relevant information. This is essentially the same information addressed in existing §§ 104.2(b)(2) to (b)(3) and 104.3(a)(1) and (a)(2). In addition, in making a determination under this aspect of the proposal, MSHA would consider: knowing and willful S&S violations; citations and orders issued in conjunction with an accident, including orders under sections 103(j) and (k) of the Mine Act; and S&S violations of safety and health standards that contribute to the cause of accidents and injuries. MSHA data and experience show that violations of approval, training, or recordkeeping regulations, for example, can significantly and substantially contribute to safety or health hazards. This is especially true where the mine operator allows similar violations to occur repeatedly.

Under proposed § 104.2(a)(8), like existing § 104.2(b)(4), MSHA would consider mitigating circumstances. Under this proposed provision, MSHA would consider the causes of repeated violations that may be beyond the operator's control, such as changes in mine ownership or mine management, and whether conditions at the mine show a trend of significant improvement.

Under this proposed provision and consistent with the legislative history, MSHA would allow operators to take proactive measures to bring their mines into compliance. For example, operators who compare their compliance record with the POV criteria and determine that they are approaching a pattern of violations level may work with MSHA to bring their mines into compliance to avoid a POV notice. Under the proposal, an operator may submit a written safety and health management program to the District Manager for approval. To obtain approval, operators should structure safety and health management programs so that MSHA can determine whether the program's parameters would result in meaningful, measurable, and significant reductions in S&S violations. The operator should develop a process and program with measurable benchmarks for abating specific violations that could lead to a POV and addressing these hazardous conditions at their mines. Using these benchmarks, operators would be able to use the MSHA database accessible through the Agency's Web site to monitor their safety and health record. Under the proposal, MSHA would consider an operator's effective implementation of an MSHA-approved safety and health management program as a mitigating circumstance.

The proposed rule would eliminate the existing requirement in § 104.3(b) that only citations and orders that have become final are to be used to identify mines with a potential pattern of violations. This proposal is consistent with the language of section 104(e), the legislative history of the Mine Act, and the purpose of section 104(e). In explaining the need for the POV enforcement tool, Congress pointed out that “the Scotia mine, as well as other mines, had an inspection history of recurrent violations, some of which were tragically related to the disasters, which the existing enforcement scheme was unable to address.” (S. Rep. No. 181, 95th Cong., 1st Sess. at 32.) The use of the phrase “inspection history” indicates Congress' intent that POV determinations be based on inspection histories, i.e., violations found by MSHA during inspections, rather than only on final citations and orders.

The Senate Report specifically noted similarities between sections 104(d) and 104(e) of the Mine Act and stated that the POV “sequence parallels the current unwarrantable failure sequence.” (S. Rep. No. 181, supra, at 33.) This reflects Congress's intent that POV determinations, like section 104(d)(1) and (d)(2) determinations, need not be final orders. In addition, the Senate Report stated that it was “* * * the Committee's intention that the Secretary or his authorized representative [] have both [Section 104(d) and Section 104(e)] enforcement tools available, and that they [] be used simultaneously if the situation warrants.” ( Id at 34.) The proposal to consider non-final citations and orders to identify mines with a POV is consistent with the Mine Act.

The existing provision limiting MSHA's consideration of citations and orders to those that are final restricts MSHA's ability to achieve the purpose of the POV provision, consistent with Congressional intent. As stated in the Mine Act and its legislative history, the Secretary is given broad discretion to “make such rules as [she] deems necessary to establish criteria for determining when a pattern of violations” exists. (30 U.S.C. 814(e)(4)) Congress stated that the Secretary should “continually evaluate and modify the pattern of violations criteria as she deems necessary.” (S. Rep. No. 181, supra at 33.) MSHA's experience with enforcing section 104(e) has led the Agency to conclude that it is necessary to modify the final order criteria in its existing POV regulation.

In November 2010, there was a backlog of approximately 88,000 contested violations pending before the Commission. For cases disposed during November, 2010, it took, on average, 518 days for contested violations to become final. For a mine with contested citations and orders that have not become final, the final order provision does not allow MSHA to review the mine's complete recent compliance history when assessing whether a POV exists and hinders MSHA's ability to effectively enforce section 104(e) of the Mine Act. It can allow chronic violators to avoid or delay the POV sanction and to continue their repeated pattern of noncompliance with health and safety standards, without correcting the underlying problem. The final order provision in the existing regulation provides an incentive for operators to contest S&S violations to avoid being placed under a POV.

The fact that the Mine Act requires an operator to abate a hazard prior to contesting a violation provides further support for the proposed rule. Mine operators must correct the hazardous condition within the time set by the MSHA inspector, even if they challenge the violation. The proposal to eliminate the existing requirement that only final orders be used for POV determination would greatly enhance safety and health of miners. Fewer than one percent of citations are reversed. Over 700,000 violations were assessed civil penalties that became final orders during the five-year period 2006 through 2010, with 3,400 vacated after they were contested. During the same timeframe, 6,000 of the contested violations were modified from S&S to non-S&S.

Proposed § 104.2(b) would increase the frequency of MSHA's review of a mine for a POV from at least once per year under the existing regulation to at least twice per year. MSHA determined that an annual review would not adequately allow the Agency to identify mines with recurring S&S violations. The increased frequency of review would allow MSHA to more promptly identify mines with recurring S&S violations and take appropriate action. This proposal would also encourage operators to more closely examine their compliance records to determine whether greater efforts are necessary to comply with the Mine Act and MSHA's standards and regulations.

Proposed § 104.3, renumbered from existing § 104.4, would simplify the requirements for issuing a POV notice.

Proposed § 104.3(a) is similar to existing § 104.4(a). The proposal would provide that, when a mine has a POV, the District Manager will issue a POV notice to the mine operator that specifies the basis for the Agency's action. The District Manager will also provide a copy of the POV notice to the representative of miners. The proposed provision would delete all references to a PPOV; otherwise it is essentially unchanged from the existing requirement.

MSHA believes that this proposed action would allow the Agency to more effectively implement the POV provision in the Mine Act, consistent with legislative intent. MSHA's experience and data reveal that over the past 3 years, mine operators who received a PPOV letter reduced their S&S violations by at least 30 percent. In this same period, 6 of 62 operators received more than one PPOV letter. These mine operators temporarily reduced their S&S violations, but reverted back to allowing the same hazards to occur again and again without addressing the underlying causes.

Proposed § 104.3(b), essentially the same as existing § 104.4(d), would require that the mine operator post a copy of the POV notice on the mine bulletin board and that the notice remain posted until MSHA terminates the POV notice. Existing § 104.4(d) requires the operator to post all notifications issued under 30 CFR part 104 at the mine. The proposal would clarify that the operator post notifications issued under this part on the mine bulletin board.

Proposed § 104.3(c) is a new provision that would restate the intent of the Mine Act when a POV notice is issued. It essentially restates section 104(e)(1) of the Mine Act and would require MSHA to issue an order withdrawing all persons from the affected area of the mine if an authorized representative of the Secretary finds any S&S violation within 90 days after the issuance of the POV notice. No one would be allowed to enter the area affected by the violation until the condition has been abated, except those persons referred to in section 104(c) of the Mine Act who must enter the affected area to correct the violation.

Proposed § 104.3(d) is a new provision that would specifically restate the intent of the Mine Act when a POV notice is issued. It would provide that if a withdrawal order is issued under proposed § 104.3(c), any subsequent S&S violation will result in an order withdrawing all persons from the affected area of the mine until the authorized representative of the Secretary determines that the violation has been abated, except those persons identified in section 104(c) of the Mine Act.

Proposed § 104.4, renumbered from existing § 104.5, addresses the termination of a POV notice and continues to provide that a POV notice will be terminated if MSHA finds no S&S violations during an inspection of the entire mine, or if no withdrawal order for S&S violations under section 104(e)(1) of the Mine Act has been issued within 90 days of the issuance of the POV notice. MSHA's Pattern of Violations (POV) Procedures Summary, posted on MSHA's website, also includes requirements for MSHA to conduct a complete inspection of the entire mine within 90 days of issuing the POV notice. The Procedures Summary states, in part, the following:

Proposed § 104.4(b), renumbered from existing § 104.5(b), is unchanged.

Under Executive Order (E.O.) 12866, the Agency must determine whether a regulatory action is “significant” and subject to review by the Office of Management and Budget (OMB). Section 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities (also referred to as “economically significant”); (2) creating serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.

MSHA has determined that this proposed rule would not have an annual effect of $100 million or more on the economy, and is not an economically “significant regulatory action” pursuant to section 3(f) of E.O. 12866. However, the proposed rule is a “significant” regulatory action because it would likely raise novel legal or policy issues. MSHA requests comments on the estimates of costs and benefits presented in this proposed rule.

MSHA has not prepared a separate preliminary regulatory economic analysis for this rulemaking. Rather, the analysis is presented below.

The proposed rule applies to all mines in the United States. MSHA divides the mining industry into two major sectors based on commodity: (1) coal mines and (2) metal and nonmetal mines. Each sector is further divided by type of operation, e.g., underground mines or surface mines. The Agency maintains data on the number of mines and on mining employment by mine type and size. MSHA also collects data on the number of independent contractor firms and their employees. Each independent contractor is issued one MSHA contractor identification number, but may work at any mine.

For the 12 months ending January 2010, the average number of mines in operation was 14,100. These mines employed 297,000 miners, including contract workers and excluding office workers. There were 8,770 mine contractor firms with 88,000 employees, excluding office workers. Table IV-1 presents the total number of all mines and miners, by size of mine.

The estimated value of coal produced in U.S. coal mines in 2009 was $35.7 billion of which $18.5 billion was from underground coal and $17.2 billion from surface coal. The value of coal was estimated from the amount of coal produced and the price of coal. MSHA obtained the coal production estimates from the Agency's MSIS system and the price per ton for coal from the Department of Energy (DOE), Energy Information Administration (EIA), Annual Coal Report 2009, October 2010, Table 28.

The value of the U.S. mining industry's metal and nonmetal (M/NM) output in 2009 was estimated to be approximately $57.1 billion. Metal mining contributed an estimated $21.3 billion to the total while the nonmetal mining sector contributed an estimated $35.8 billion. The value of production estimates are from U.S. Department of the Interior (DOI), U.S. Geological Survey (USGS), Mineral Commodity Summaries 2010, January 2010, page 8.

The combined value of production from all U.S. mines in 2009 was $92.8 billion. Table IV-2 presents the estimated revenues for all mines, by size of mine.

Although MSHA does not have an historical basis from which to estimate the effects of placing a mine on a pattern of violations (POV), the Agency does have some experience with issuing potential pattern of violations (PPOV) notifications to operators. MSHA's data reveal that although most mine operators significantly improve health and safety conditions at their mines after receiving the PPOV notification, many later experienced both a decline in health and safety and an increase in S&S violations.

During June 2007 through September 2009, MSHA made PPOV evaluations on an average of every six to nine months. During that period, MSHA sent 68 PPOV notification letters to 62 mine operators (6 operators received more than one notification). After receiving the notification letter, of the mines that remained in operation to the next evaluation, 94 percent reduced the rate of S&S citations and orders by at least 30 percent and 77 percent reduced the rate of S&S citations and orders to levels at or below the national average for similar mines. However, as discussed previously in the preamble, improvements at some mines declined over time. Of the 62 mine operators that received PPOV notification letters during the review period, 6 received a second PPOV notification letter. In addition to the 6 mines that received two letters, 7 mines were identified in more than one evaluation as meeting the PPOV criteria but were only sent one letter generally due to mitigating circumstances. Compliance at 13 of the 62 mines that received PPOV notification letters (21 percent) deteriorated such that each of these mines either was sent or could have been sent a second letter.

Under the existing rule, MSHA identifies mines that meet the screening criteria for PPOV. MSHA conducts a review to determine if there are mitigating circumstances and issues PPOV notification letters as appropriate. The proposed rule would delete the screening process as well as all references to a PPOV.

The proposed rule would establish general criteria that MSHA would use to identify mines with a pattern of S&S violations. MSHA would post specific criteria that MSHA would use in making POV determinations, including a searchable database of mine operator compliance information, on the Agency's website. Operators would be able to use the specific criteria and the information in the database to continually monitor their safety and health performance and determine whether they are approaching proposed POV criteria levels.

Under the proposed rule, MSHA would allow operators to take proactive measures to bring their mines into compliance. MSHA would consider an operator's effective implementation of an MSHA-approved safety and health management program as a mitigating circumstance when it comes to placing a mine on a POV.

Under the proposed rule, MSHA projects that operators would continually monitor their performance and, if they believe that they are approaching a POV, would take action to improve their safety and health performance. MSHA projects that, under the proposed rule, most mine operators who see that their mines are close to a POV would institute an MSHA-approved safety and health management program to lessen the probability of being placed on a POV and the possibility of being issued closures. MSHA projects that this would result in more mines taking action than those issued PPOV notifications under the existing procedure.

Closure orders can have a substantial impact on the ability of a mine to conduct its business. The threat of closure provides a strong incentive for operators to ensure that S&S violations do not recur. MSHA projects that few operators would risk such an occurrence.

MSHA projects that under the proposal, which would increase the frequency of MSHA's review of a mine for a POV from once to twice per year, on average, approximately 50 mine operators per year would submit a safety and health management program to MSHA for approval as a mitigating circumstance. Under the proposed rule, MSHA would allow operators to take proactive measures to bring their mines into compliance with MSHA standards and regulations, reducing the probability of these mines being on a POV. MSHA further projects that an average of approximately 10 mines per year ( i.e., those that would not take proactive action, such as instituting an MSHA-approved safety and health management program) would be issued POV notifications. MSHA requests comments on these estimates which are likely to vary from year to year.

MSHA used the Agency's experience with PPOV notification letters to estimate the impact that the proposed mitigating circumstance provision (including the opportunity for operators to submit safety and health management programs) would have on the number of nonfatal injuries at mines. MSHA determined that 62 mines which received PPOV notification letters (6 received two notifications) during the June 2007 through September 2009 period experienced, on average, 11 nonfatal injuries during the year prior to receiving the letter and eight nonfatal injuries during the year after receiving the letter. MSHA used the one year period before and after PPOV notification as a basis for comparison because, as was previously noted, improvements at some mines declined over time and because a longer period was not available for some mines ( i.e., mines that were issued PPOV notifications in September 2009).

Based on the projection that 50 mines per year would average three fewer nonfatal injuries in the first year after implementing an MSHA-approved safety and health management program, MSHA projects that the number of nonfatal injuries would be reduced by a minimum of 150 (50 mines × 3 nonfatal injuries per mine) per year. MSHA believes that this is a low estimate for the following reasons:

• It is likely that including measurable benchmarks for abating specific violations and addressing hazardous conditions in the MSHA-approved safety and health management programs would make these programs more effective than the measures that recipients of the PPOV notification letters have historically instituted.

• The estimate does not include any reductions in the number of fatalities. Because mine fatalities occur on a less frequent basis than do injuries, the Agency does not believe that it has a reliable basis upon which to project a reduction in fatalities. However, the Agency believes that the implementation of an MSHA-approved safety and health management program would reduce fatalities.

• The estimate does not include any projected improvement at the 10 mines that would not institute an MSHA-approved safety and health management program and would be placed on a POV. However, due to the high threshold for getting off a POV under the proposed rule, there would likely be injury reductions for this category.

MSHA also anticipates longer lasting improvements under the proposed rule. Of the 62 mines that received PPOV notification letters from June 2007 through September 2009, 13 did not have a full second year of data following receipt of the PPOV notification letter. Of the 49 mines that had two full years of data following receipt of the PPOV notification letter, 19 (39%) experienced an increase in the number of injuries in the second year following receipt of the PPOV notification letter compared to the first. MSHA believes that, under the proposed rule, fewer mines will experience such increases. Mines that have effectively implemented an MSHA-approved safety and health management program (to avoid being placed on a POV) would have procedures in place to continuously address hazardous conditions. Mines that successfully get off of a POV would have increased incentive (see the cost analysis) to remain off and would likely institute continuing measures to minimize violations and address hazardous conditions.

MSHA based its estimates of the monetary values for the benefits associated with the proposed rule on relevant literature. To estimate the monetary values of the reductions in nonfatal injuries, MSHA performed an analysis of the imputed value of injuries avoided based on a willingness-to-pay approach. This approach relies on the theory of compensating wage differentials ( i.e., the wage premium paid to workers to accept the risk associated with various jobs) in the labor market. A number of studies have shown a correlation between higher job risk and higher wages, suggesting that employees demand monetary compensation in return for incurring a greater risk.

Viscusi & Aldy (2003) conducted an analysis of studies that use a willingness-to-pay methodology to estimate the imputed value of life-saving programs ( i.e., meta-analysis) and found that the value of each lost work-day injury prevented was approximately $50,000 in 2000 dollars. Using the GDP Deflator (U.S. Bureau of Economic Analysis, 2010), this yields an estimate of $62,000 for each lost work-day injury avoided in 2009 dollars.

MSHA recognizes that willingness-to-pay estimates involve uncertainty and imprecision. Although MSHA is using the Viscusi & Aldy (2003) study as the basis for monetizing the expected benefits of the proposed rule, the Agency does so with several reservations, given the methodological difficulties involved in estimating the compensating wage differentials (see Hintermann, Alberini, and Markandya, 2008). Furthermore, these estimates pooled across different industries may not capture the unique circumstances faced by miners. For example, some have suggested that the models be disaggregated to account for different levels of risk, as might occur in coal mining (see Sunstein, 2004). In addition, miners may have few options of alternative employers and, in some cases, only one employer (near-monopsony or monopsony) that may depress wages below those in a more competitive labor market. In the future, MSHA plans to work with other agencies to refine the approach taken in this proposed rule.

Based on the estimated prevention of 150 nonfatal injuries per year, the proposed rule would result in monetized benefits of approximately $9.3 million per year (150 nonfatal injuries × $62,000 per injury). MSHA believes that this is a low estimate for the total benefits of the proposed rule for the reasons stated above. MSHA solicits comments on the benefit estimates.

Proposed § 104.3(c) would require MSHA to issue an order withdrawing all persons from the affected area of the mine if any S&S violation is found within 90 days after the issuance of the POV notice. No one would be allowed to enter the area affected by the violation until the condition has been abated, except those persons who must enter the affected area to correct the violation.

Under proposed § 104.3(d), if a withdrawal order is issued under proposed § 104.3(c), any subsequent S&S violation would result in an order withdrawing all persons from the affected area of the mine until the authorized representative of the Secretary determines that the violation has been abated, except those persons who must enter the affected area to correct the violation.

Closure orders can have a substantial effect on the ability of a mine to conduct its business. The threat of closure provides a strong incentive for operators to ensure that S&S violations do not recur. As was noted under benefits, MSHA anticipates that few operators would risk such an occurrence. Rather than risking a POV and the possibility of a closure, MSHA projects that mine operators would monitor their compliance record against the proposed POV criteria using the Agency's website. MSHA estimates that it will take a supervisor an average of 5 minutes each month to monitor each mine's performance using the Agency's website. Based on the average supervisory wage rate for all mining in 2009 of $65.05 per hour, MSHA estimates that the yearly cost for all mine operators to monitor their performance would be about $0.9 million (14,098 mines × 5/60 hours per month × 12 months per year × $65.05 per hour).

However, MSHA believes that this may be an overestimate. As was noted above, some operators are currently requesting this information from MSHA. Making the information available on the Agency's Web site would reduce the costs for these mine operators. MSHA requests comments on the burden that monitoring compliance record against the proposed POV criteria using the Agency's Web site would place on mine operators.

MSHA projects that approximately 50 mine operators each year would submit a safety and health management program to MSHA for approval as a mitigating circumstance. MSHA believes that it would take management working with miners to develop and implement an effective safety and health management program. MSHA projects that developing such a program with meaningful and measurable benchmarks would take about 80 hours of a supervisor's time and 80 hours of miners' time. MSHA projects that it would take an additional 40 hours of a supervisor's time and 40 hours of miners' time during the approval process and that the cost for copying and mailing the program and revisions would be about $100. MSHA projects it will take 40 hours of a supervisor's time to implementing the program plus 120 hours of miners' time to run the program (based on an average size mine in terms of employment).

Although the proposed rule applies to all mining, based on the Agency's experience and due to the nature of the mining conditions, MSHA projects that the proposed rule would have a greater impact on underground coal mining than any other mining sector. During the period June 2007 through September 2009, underground coal mine operators received nearly 80 percent of the PPOV notifications. Rather than using the wage rates for all mining as was done to estimate the costs for monitoring mine performance, MSHA used the 2009 underground coal mine hourly wage rates of $84.70 for a supervisor and $35.30 for a miner to estimate these costs. Since the hourly wage rates in underground coal mining are higher than those in surface coal and metal/nonmetal mining, this approach could overstate the estimated costs.

The average cost of developing and implementing an approved safety and health program at a mine would be approximately $22,100 (160 hours of a supervisor's time × $84.70 per hour + 240 hours of miners' time × $35.30 per hour + $100). MSHA anticipates that, each year, the projected 50 mines that would choose to implement an MSHA-approved safety and health management program would incur costs of approximately $1.1 million.

Although MSHA does not have a historical basis from which to estimate the potential costs that would be incurred by a mine on a POV, MSHA determined that a good proxy for these costs would be the potential production lost during mine closures while the operators take the necessary actions to correct the safety and health violations. MSHA projects that a typical mine would lose about 0.5 percent of revenue as the result of closures (about 1 or 2 days for a large mine and a day or less for a small mine) and that lost revenue due to the closures would likely vary considerably among mines depending on the specific conditions in the mine. Some mines would likely incur greater than average losses while others would incur less than average losses.

As was noted above, based on the Agency's experience and due to the nature of the mining conditions, MSHA projects that the proposed rule would affect underground coal mining more than any other mining sector. MSHA, therefore, used the revenue in the underground coal sector to estimate potential production losses. The average number of underground coal mines in operation during a month in 2009 was 424. These mines generated an estimated $18.5 billion in revenue in 2009, an average of approximately $43.6 million per mine. One-half percent of an average mine's revenue is about $218,000.

MSHA estimates that the projected 10 mines that would be on a POV each year would potentially incur about $2.2 million in production losses (10 mines × $218,000 per mine). Since the average revenue per underground coal mine is significantly higher than the average revenue produced by a mine in the entire mining industry ( i.e., $6.6 million per mine = $92.8 billion/14,098 mines), this approach could overstate the estimated costs.

MSHA estimates that the total yearly cost of the proposed rule would be $4.2 million; $0.9 million for monitoring the performance of each mine, $1.1 million for 50 mines developing and implementing MSHA-approved safety and health management programs, plus $2.2 million for 10 mines operating under a POV. MSHA's estimates do not include the cost of coming into compliance with the underlying regulatory requirements. Although these costs can be substantial, they were previously attributed to compliance with MSHA's existing regulations and are not new compliance costs resulting from the proposed rule. MSHA solicits comments on the cost estimates.

This section presents a summary of the estimated net benefits of the proposed rule for informational purposes only. Under the Mine Act, MSHA is not required to use estimated net benefits as the basis for its decision to promulgate a rule.

Based on the estimated prevention of 150 nonfatal injuries per year, MSHA estimates that the proposed rule would result in monetized benefits of $9.3 million per year (150 nonfatal injuries per year × $62,000 per injury) compared to estimated costs of $4.2 million per year, for an estimated net benefit of approximately $5.1 million per year. MSHA solicits comments on the net benefit estimate.

MSHA has concluded that the requirements of the pattern of violations proposed rule are technologically and economically feasible.

MSHA concludes that this proposed rule is technologically feasible. The proposed rule is not technology-forcing. In order to avoid a POV, mine operators would have to comply with existing MSHA regulations, which have previously been determined to be technologically feasible.

MSHA also concludes that this proposed rule is economically feasible. Mine operators can avoid the expenses of being placed on a pattern of violations by complying with existing MSHA regulations, all of which have previously been found to be economically feasible. For those mine operators who are in danger of a POV, MSHA will consider the institution of an approved safety and health management program as a mitigating circumstance. MSHA expects few mines (about 10 per year) would incur the potential expenses associated with closures while on a POV.

MSHA has traditionally used a revenue screening test—whether the yearly compliance costs of a regulation are less than one percent of revenues—to establish presumptively that compliance with the regulation is economically feasible for the mining community. Based on this test, MSHA has concluded that the requirements of the proposed rule are economically feasible. The estimated annual compliance costs of the proposed rule to mine operators are $4.2 million, which are insignificant compared to total annual revenue of $92.8 billion for the mining industry (i.e., significantly less that one percent of the mining industry's $92.8 billion revenue, which is $928 million). Even if all of the costs were borne by the underground coal industry, the estimated $4.2 million cost of the proposed rule is about 0.02 percent of the underground coal industry's 2009 revenue of $18.5 billion. MSHA, therefore, concludes that compliance with the provisions of the proposed rule would be economically feasible for the mining industry.

Pursuant to the Regulatory Flexibility Act (RFA) of 1980, as amended by SBREFA, MSHA has analyzed the impact of the proposed rule on small businesses. Based on that analysis, MSHA has notified the Chief Counsel for Advocacy, Small Business Administration (SBA), and made the certification under the RFA at 5 U.S.C. 605(b) that the proposed rule would not have a significant economic impact on a substantial number of small entities. The factual basis for this certification is presented below.

Under the RFA, in analyzing the impact of the proposed rule on small entities, MSHA must use the SBA definition for a small entity or, after consultation with the SBA Office of Advocacy, establish an alternative definition for the mining industry by publishing that definition in the Federal Register for notice and comment. MSHA has not taken such an action and is required to use the SBA definition. The SBA defines a small entity in the mining industry as an establishment with 500 or fewer employees.

In addition to examining small entities as defined by SBA, MSHA has also looked at the impact of this proposed rule on mines with fewer than 20 employees, which MSHA and the mining community have traditionally referred to as “small mines.” These small mines differ from larger mines not only in the number of employees, but also in economies of scale in material produced, in the type and amount of production equipment, and in supply inventory. The costs of complying with the proposed rule and the impact of the proposed rule on small mines will also be different. It is for this reason that small mines are of special concern to MSHA.

MSHA concludes that it can certify that the proposed rule would not have a significant economic impact on a substantial number of small entities that would be covered by this proposed rule. The Agency has determined that this is the case both for mines with fewer than 20 employees and for mines with 500 or fewer employees.

Mine operators can avoid the expenses of being placed on a POV by complying with MSHA regulations. Under the proposed rule, MSHA will consider the institution of an approved safety and health management program as a mitigating circumstance for those mine operators who are placed on a pattern. MSHA expects few mines (about 10 per year) would incur the potential expenses associated with closure orders under a POV.

MSHA initially evaluates the impacts on “small entities” by comparing the estimated compliance costs of a rule for small entities in the sector affected by the rule to the estimated revenues for the affected sector. When estimated compliance costs are less than one percent of the estimated revenues, the Agency believes it is generally appropriate to conclude that there is no significant economic impact on a substantial number of small entities. When estimated compliance costs exceed one percent of revenues, MSHA investigates whether a further analysis is required. Since it was not possible to accurately project the distribution of mines that would incur the estimated $4.2 million to comply with the proposed rule by commodity and size, MSHA examined the impact using several alternative assumptions.

The average number of mines in operation during a month in 2009 with 500 or fewer employees was 14,050. These mines generated an estimated $71.9 billion in revenue in 2009. Even if all of the costs were incurred by mines with 500 or fewer employees, the estimated $4.2 million in compliance costs would be less than 0.006 percent of the revenue generated by all small mines according to the SBA's definition.

The average number of underground coal mines in operation during a month in 2009 with 500 or fewer employees was 412. These mines generated an estimated $13.7 billion in revenue in 2009. Even if all of the costs were incurred by underground coal mines with 500 or fewer employees, the $4.2 million in compliance costs would be about 0.03 percent of the revenue generated by small underground coal mines according to the SBA's definition.

The average number of mines in operation during a month in 2009 with 1-19 employees was 11,816. These mines generated an estimated $17.4 billion in revenue in 2009. Even if all of the costs were incurred by mines with 1-19 employees, the estimated $4.2 million compliance costs would be about 0.02 percent of the revenue generated by all small mines with fewer than 20 employees.

The average number of underground coal mines in operation during a month in 2009 with 1-19 employees was 81. These mines generated an estimated $920 million in revenue in 2009. Even if all of the $4.2 million in compliance costs were incurred by underground coal mines with 1-19 employees, the costs would be about 0.45 percent of the revenue generated by small underground coal mines with fewer than 20 employees.

Moreover, mine operators can avoid any costs associated with being on a POV simply by complying with the law. If an operator has trouble complying and is in danger of being on POV, under the proposed rule, the implementation of an approved safety and health management program would serve as a mitigating circumstance.

Accordingly, MSHA has certified that the proposed rule would not have a significant economic impact on a substantial number of small entities.

This proposed rule contains a collection-of-information requirement subject to review and approval by OMB under the Paperwork Reduction Act (PRA). MSHA estimates that under the proposed rule about 50 mines each year would develop and implement approved safety and health management programs. This would impose information collection requirements related to mitigating circumstances under proposed § 104.2(a)(8).

MSHA expects that developing an approved program with meaningful and measurable benchmarks would take about 160 hours of a supervisor's time at an hourly wage of $84.70 and 240 hours of miners' time at an hourly wage of $35.30. Costs for copying and mailing the program and revisions are estimated to be $100 per program.

The burden of developing and implementing an approved safety and health program is 400 hours per mine (160 + 240) and the average cost is approximately $22,100 (160 hours of a supervisor's time × $84.70 per hour + 240 hours of miners' time × $35.30 per hour + $100).

Burden Hours: 50 mines × 400 hours per mine = 20,000 hours.

Burden Costs: 50 mines × $100 per mine = $5,000.

The information collection package for this proposed rule has been submitted to OMB for review under 44 U.S.C. 3504, paragraph (h) of the Paperwork Reduction Act of 1995, as amended (44 U.S.C. 3501 et seq. ). MSHA requests comments to:

• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;

• Evaluate the accuracy of the Agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

• Enhance the quality, utility, and clarity of the information to be collected; and

• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

Comments on the information collection requirements should be sent to both OMB and MSHA. Addresses for both offices can be found in the ADDRESSES section of this preamble. The regulated community is not required to respond to any collection of information unless it displays a current, valid, OMB control number. MSHA displays the OMB control numbers for the information collection requirements in its regulations in 30 CFR part 3.

MSHA has reviewed the proposed rule under the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1501 et seq. ). MSHA has determined that this proposed rule would not include any federal mandate that may result in increased expenditures by State, local, or tribal governments; nor would it increase private sector expenditures by more than $100 million in any one year or significantly or uniquely affect small governments. Accordingly, the Unfunded Mandates Reform Act of 1995 requires no further Agency action or analysis.

This proposed rule would not have “federalism implications” because it would 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.” Accordingly, under E.O. 13132, no further Agency action or analysis is required.

Section 654 of the Treasury and General Government Appropriations Act of 1999 (5 U.S.C. 601 note) requires agencies to assess the impact of Agency action on family well-being. MSHA has determined that this proposed rule would have no effect on family stability or safety, marital commitment, parental rights and authority, or income or poverty of families and children. This proposed rule impacts only the mining industry. Accordingly, MSHA certifies that this proposed rule would not impact family well-being.

The proposed rule would not implement a policy with takings implications. Accordingly, under E.O. 12630, no further Agency action or analysis is required.

This proposed rule was written to provide a clear legal standard for affected conduct and was carefully reviewed to eliminate drafting errors and ambiguities, so as to minimize litigation and undue burden on the Federal court system. Accordingly, this proposed rule would meet the applicable standards provided in section 3 of E.O. 12988, Civil Justice Reform.

This proposed rule would have no adverse impact on children. Accordingly, under E.O. 13045, no further Agency action or analysis is required.

This proposed rule would not have “tribal implications” because it would not “have substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.” Accordingly, under E.O. 13175, no further Agency action or analysis is required.

Executive Order 13211 requires agencies to publish a statement of energy effects when a rule has a significant energy action ( i.e., it adversely affects energy supply, distribution or use). MSHA has reviewed this proposed rule for its energy effects because the proposed rule applies to the coal mining sector. Because this proposed rule would result in annual costs of approximately $4.2 million, most of which would be incurred by the coal mining industry, relative to annual coal mining industry revenues of $35.7 billion in 2009, MSHA has concluded that it is not a significant energy action because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Accordingly, under this analysis, no further Agency action or analysis is required.

MSHA has reviewed the proposed rule to assess and take appropriate account of its potential impact on small businesses, small governmental jurisdictions, and small organizations. MSHA has determined and certified that the proposed rule would not have a significant economic impact on a substantial number of small entities.

For the reasons set out in the preamble, and under the authority of the Federal Mine Safety and Health Act of 1977 as amended by the Mine Improvement and New Emergency Response Act of 2006, MSHA is proposing to amend chapter I of title 30 of the Code of Federal Regulations by revising part 104 as follows:

The Department of Defense Directive (DoDD) 5200.2, Personnel Security Program (PSP), codified at 32 CFR 156, was issued April 9, 1999. The Department is reissuing the DoD Directive as a DoD Instruction to update existing policy regarding the DoD Personnel Security Program and also incorporate new policy related to Homeland Security Presidential Directive-12 (HSPD-12).

This rule provides PSP policy fundamental to preventing unauthorized disclosure of sensitive and classified information that could cause irreparable damage to national security. The policy portion relating to HSPD-12 implements investigative and adjudicative policy for the Department's personal identity verification credential.

Updates to the policy reflect Joint Security and Suitability Reform Team efforts to incorporate the foundational policy changes needed to implement reform. The Intelligence Reform and Terrorism Prevention Act of 2004, E.O. 13467, E.O. 12968, E.O. 10865, and HSPD-12 are some of the current Federal laws, directives and statutes that impact the DoD PSP. Since this rule was last published, additional executive orders have been issued directing alignment of security, suitability and reciprocal acceptance of prior investigations and favorable determinations.

The procedural guidance for the DoD PSP is currently being updated and will subsequently be proposed as rule codified at 32 CFR part 154. The investigative and adjudication procedural guidance for the DoD Federal personal identity verification credential pursuant HSPD-12 is undergoing coordination and will also be proposed a separate rule.

It has been certified that 32 CFR part 156 does not:

(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a section of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribunal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this E.O.

It has been certified that 32 CFR part 156 does not contain a Federal mandate that may result in the expenditure by State, local and tribunal governments, in aggregate, or by the private sector, of $100 million or more in any one year.

It has been certified that 32 CFR part 156 is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities.

It has been certified that 32 CFR part 156 does not impose reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995.

It has been certified that 32 CFR part 156 does not have federalism implications, as set forth in E.O. 13132. This rule does not have substantial direct effects on:

(1) The States;

(2) The relationship between the National Government and the States; or

(3) The distribution of power and responsibilities among the various levels of Government.

Accordingly, 32 CFR part 156 is revised to read as follows.

Section 1162 of title 38, United States Code, authorizes VA to pay an annual clothing allowance to each veteran who, because of a service-connected disability, wears or uses a prosthetic or orthopedic appliance (including a wheelchair) which VA determines tends to wear out or tear the veteran's clothing or uses prescription medication for a skin condition that is due to a service-connected disability which VA determines causes irreparable damage to the veteran's outergarments. VA had interpreted “a clothing allowance * * * because of a service-connected disability” in section 1162(1) and (2) and the word “or” between paragraphs (1) and (2) to mean that a veteran is entitled to only one annual clothing allowance, regardless of whether the veteran uses multiple qualifying appliances for more than one service-connected disability or uses a qualifying appliance for a service-connected disability and prescription medication for a skin condition resulting from a service-connected disability. In Sursely v. Peake, 551 F.3d 1351, 1356 (Fed. Cir. 2009), VA, based upon this statutory interpretation, rejected a claim for a second clothing allowance for “independently qualifying orthopedic appliances affecting different articles of clothing.” The United States Court of Appeals for the Federal Circuit (Federal Circuit) disagreed with VA's interpretation and stated that, “by linking receipt of the benefit to a single qualifying appliance,” Congress “require[s]” VA “to pay multiple clothing allowances to a veteran who * * * uses multiple qualifying appliances.” Id. and 1356 n.4. The Federal Circuit also rejected the United States Court of Appeals for Veterans Claims' conclusion that it would be “irrational” to permit multiple clothing allowances for use of multiple prosthetic appliances affecting a single article of clothing because under such circumstances the garment may wear out faster than if affected by a single appliance. Id. at 1357-58 and 1358 n.6 (quoting 22 Vet. App. 21, 25-26 (2007)). However, the Federal Circuit noted that VA could promulgate regulations prohibiting multiple clothing allowances if “damage to a single garment resulting from multiple prosthetic appliances is ‘overlapping.' ” Id. at 1358 (quoting Esteban v. Brown, 6 Vet. App. 259, 262 (1994)).

VA proposes to amend 38 CFR 3.810(a) to implement Sursely. VA would amend current § 3.810(a)(1) so that it provides the criteria for entitlement to one annual clothing allowance currently set forth in § 3.810(a)(1) and (2). We would also make a technical change in § 3.810(a)(1)(i) by changing the reference to § 3.326(c) to § 3.326(b) to reflect a longstanding regulatory amendment. VA also would revise § 3.810(a)(2) to provide the criteria for more than one annual clothing allowance where distinct garments are affected. New § 3.810(a)(2) would state that a veteran is entitled to a clothing allowance for each prosthetic or orthopedic appliance or medication used by the veteran that satisfies the requirements of paragraph (1) of this subsection if each appliance or medication affects a distinct article of clothing or outergarment. This regulation is consistent with the Sursely holding that the veteran was entitled to a second clothing allowance “for his independently qualifying orthopedic appliances affecting different articles of clothing.” 551 F.3d at 1356.

VA also recognizes, as the Federal Circuit did, that use of multiple qualifying appliances or medications may cause a single article of clothing to wear out faster, requiring replacement of the garment more frequently during the course of the year than if the garment were affected by only one appliance or medication. Id. at 1358 n.6. VA therefore also proposes to provide in § 3.810(a)(3) that a veteran is entitled to two annual clothing allowances if: (1) A veteran uses more than one qualifying prosthetic or orthopedic appliance, medication for more than one skin condition, or an appliance and a medication; and (2) the appliances(s) or medication(s) each satisfy the requirements of § 3.810(a)(1) and together tend to tear or wear a single article of clothing or irreparably damage an outergarment at a faster rate, requiring replacement sooner than if the article of clothing or outergarment was affected by a single qualifying appliance or medication. In such circumstances, VA would provide two annual clothing allowances, rather than an allowance for each appliance or medication, because we believe that the wear and tear or irreparable damage caused by three or more appliances and/or medications will overlap the increased rate of damage caused by the second appliance and/or medication on the garment. Id. at 1358.

The collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521) referenced in this proposed rule has an existing OMB approval as a form. The form is VA Form 10-8678, Application for Annual Clothing Allowance (Under 38 U.S.C. 1162), OMB approval number 2900-0198. No changes are made in this proposed rule to the collection of information.

The Secretary hereby certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This proposed rule would not affect any small entities. Only VA beneficiaries could be directly affected. Therefore, pursuant to 5 U.S.C. 605(b), this proposed rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

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 Executive Order classifies a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB), as any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The economic, interagency, budgetary, legal, and policy implications of this proposed rule have been examined and it has been determined to be a not significant regulatory action under the Executive Order.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance program numbers and titles for this proposed rule are 64.013, Veterans Prosthetic Appliances; and 64.109, Veterans Compensation for Service-Connected Disability.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. John R. Gingrich, Chief of Staff, approved this document on January 19, 2011, for publication.

For the reasons set out in the preamble, VA proposes to amend 38 CFR part 3 as follows:

You may be potentially affected by this action if you sponsor, conduct, review, or submit to EPA research with pesticides involving human subjects. Potentially affected entities may include, but are not limited to:

• Pesticide and other agricultural chemical manufacturers (NAICS code 325320) who sponsor or conduct human research with pesticides.

• Other entities (NAICS code 541710) that sponsor or conduct human research with pesticides, and Institutional Review Boards who review human research with pesticides to ensure it meets applicable standards of ethical conduct.

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes are provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Submitting CBI. Do not submit confidential business information (CBI) to EPA through regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for preparing your comments. When submitting comments, remember to:

a. Identify the document by docket ID number and other identifying information (subject heading, Federal Register date and page number).

b. Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

c. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

d. Describe any assumptions and provide any technical information and/or data that you used.

e. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

f. Provide specific examples to illustrate your concerns and suggest alternatives.

g. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

h. Make sure to submit your comments by the comment period deadline identified.

The proposed amendments would change the 2006 rule, published in the Federal Register issue of February 6, 2006 (71 FR 6138) (FRL-7759-8), subsequently amended on June 23, 2006 (71 FR 36171) (FRL-8071-6), and codified at 40 CFR part 26, in the following substantive respects:

• By broadening the applicability of 40 CFR part 26, subparts K, L, M, and Q, so these subparts would apply not only to research submitted to or considered by EPA under the pesticide laws, but also to research involving a “pesticide” (as defined in the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) (7 U.S.C. 136(u)) which is submitted to or considered by EPA under any other regulatory statute it administers.

• By incorporating the definition of “pesticide” from FIFRA, as a substance or mixture of substances intended for pesticidal effect.

• By deleting from 40 CFR part 26, subpart K, all references to consent on behalf of a subject in research involving intentional exposure to a pesticide by a subject's “legally authorized representative.”

• By incorporating into 40 CFR part 26, subparts P and Q, factors to be considered by EPA and the Human Studies Review Board (HSRB) in their review of proposed and completed research, derived from the recommendations of NAS in its 2004 Report to EPA, and from the Nuremberg Code.

The amendments proposed here would make no changes to the Federal Policy for the Protection of Human Subjects (the “Common Rule”), which governs research with human subjects conducted or supported by EPA and many other Federal departments and agencies. EPA's codification of the Common Rule appears as subpart A in 40 CFR part 26.

Subparts B, C, and D of 40 CFR part 26 would also be unchanged by these proposed amendments. These subparts categorically prohibit any EPA research involving intentional exposure to any substance of human subjects who are children or pregnant or nursing women (40 CFR part 26, subpart B), and provide extra protections for pregnant women and for children who are the subjects of observational research conducted or supported by EPA (40 CFR part 26, subparts C and D).

The proposed amendments would retain without substantive change the core provisions of the 2006 rule applying to the conduct of human pesticide research by third parties— i.e., research neither conducted nor supported by EPA or another Common Rule Federal department or agency. These substantively unchanged provisions:

• Categorically prohibit new research involving intentional exposure of pregnant or nursing women or of children to a pesticide (40 CFR part 26, subpart L).

• Apply the provisions of the Common Rule to third-party human research involving intentional exposure of non-pregnant, non-nursing adults to a pesticide (40 CFR part 26, subpart K).

• Require submission to EPA of proposals for new covered research before it is initiated (40 CFR part 26, subpart K, § 26.1125).

• Require persons who submit to EPA reports of completed human research on pesticides to document the ethical conduct of that research (40 CFR part 26, subpart M).

• Establish an independent HSRB to review and advise EPA concerning both proposals for new human research involving intentional exposure to a pesticide and reports of completed research on which EPA proposes to rely in its actions (40 CFR part 26, subpart P).

The proposed amendments would make only minor editorial revisions to 40 CFR part 26, subpart O, which defines administrative actions available to EPA to address non-compliance with 40 CFR part 26, subparts A through L.

The proposed amendments would retain the essential structure of 40 CFR part 26, subpart P, which defines the processes of EPA and HSRB review of proposed and completed research. The amendments, however, would also add substantial new clarifying language to 40 CFR part 26, subpart P, as discussed in detail in Unit IV.C. of this document.

The proposed amendments would retain the essential structure of 40 CFR part 26, subpart Q, which defines the standards to be applied when EPA proposes to rely on data from completed research involving intentional exposure of human subjects to a pesticide. The amendments, however, would also add substantial new clarifying language to 40 CFR part 26, subpart Q, as discussed in detail in Unit IV.D. of this document.

The proposed amendments would not change the provision in 40 CFR part 26, subpart Q, forbidding EPA to rely on any otherwise unacceptable research involving intentional exposure of human subjects to a pesticide, except under extremely restrictive conditions. These conditions require a public review by HSRB, an opportunity for public comment, and a showing by EPA that to do so would result in a more protective regulatory standard than could be justified without reliance on the unethical research.

The legal authority for the 2006 rule on human research is set forth in the preamble to that final rule (71 FR 6138, February 6, 2006) (FRL-7759-8). These proposed amendments to that rule rest upon the same legal authority. In particular, the legal authority for expanding the 2006 rule to cover research involving the intentional exposure of a human subject to a pesticide submitted under any EPA regulatory statute is provided by section 201 of the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2006, Public Law 109-54 (2006 Appropriations Act), and FIFRA.

The 2006 Appropriations Act directly mandates that EPA promulgate a rule on “third-party intentional dosing human toxicity studies for pesticides * * *” without limiting the rule to pesticide studies submitted under FIFRA or section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA) (21 U.S.C. 346a).

Additionally, under FIFRA, EPA has the authority to issue regulations as to both unregistered and registered pesticides used in research involving the intentional exposure of a human subject, whether or not that research is conducted for submission under FIFRA. Section 3(a) of FIFRA authorizes EPA to regulate the distribution, sale, or use of any unregistered pesticide in any State “[t]o the extent necessary to prevent unreasonable adverse effects on the environment” (defined at FIFRA section 2(bb), in pertinent part, as “any unreasonable risk to man or the environment, taking into account the economic, social, and environmental costs and benefits of the use of any pesticide”). EPA concludes that there would be an unreasonable risk to humans if unregistered pesticides were used in research involving intentional exposure of human subjects (or sold and distributed for such use) that is not already covered by the Common Rule absent compliance with the applicable rules in 40 CFR part 26, as proposed. The importance of these rules to the protection of human subjects is demonstrated in the 2004 Report from the National Research Council of the NAS, entitled “Intentional Human Dosing Studies for EPA Regulatory Purposes: Scientific and Ethical Issues” (2004 NAS Report) ( http://www.national-academies.org ).

Section 25(a) of FIFRA authorizes EPA to “prescribe regulations to carry out the provisions of [FIFRA].” (7 U.S.C. 136w(a)). Regulations protecting human subjects in research involving the intentional exposure of human subjects to registered pesticides fall within that purview. FIFRA provides that a pesticide may not be registered unless use of the pesticide under its labeling will not cause unreasonable risks to humans or the environment, that a pesticide may not be used inconsistent with its label, and that a pesticide may not be used in human testing unless the subjects are fully informed regarding the nature, purpose, and physical and mental health consequences of the testing and freely volunteer. ( See 7 U.S.C. 136(bb), 136a(c)(5), 136j(a)(2)(G), 136j(a)(2)(P)). The 2006 rule and the amendments proposed in this document ensure that these provisions regarding use of registered pesticides in a manner that does not cause unreasonable risk and full and free consent in human testing with pesticides are effectuated.

EPA is committed to relying on scientifically sound research that is ethically conducted, and to transparency in its review processes and decision-making. EPA issued the 2006 rule to further these commitments and nothing in the amendments proposed in this document will change that. These proposed amendments can be seen as increasing the transparency of EPA's decision-making process by clarifying the scope and applicability of the requirements in 40 CFR part 26, codifying the scope and approach used in EPA's science and ethics reviews of human research involving pesticides.

In August 2005, in the 2006 Appropriations Act, which appropriated funds for EPA and other Federal departments and agencies for FY 2006, Congress included at section 201 the following provision:

In response, EPA published a proposed rule in the Federal Register issue of September 12, 2005 (70 FR 53838) (FRL-7728-2), accepted public comment until December 12, 2005, and promulgated on February 6, 2006, a final rule which took effect on April 7, 2006 (71 FR 6138) (FRL-7759-8). The 2006 rule, as subsequently amended on June 23, 2006, to extend special protections to nursing women as well (71 FR 36171) (FRL-8071-6), is discussed in Unit III.E. and is now being further amended by this proposed rule.

1. Summary of contents. The 2006 rule established a set of protections for people participating as subjects in third-party human research with pesticides. (In this context “third-party” research is research neither conducted (“first-party”) nor supported (“second-party”) by EPA or another Common Rule Federal department or agency.) The 2006 rule bans all third-party research on pesticides involving intentional exposure of children or of pregnant or nursing women. It further forbids EPA itself to conduct or support any research involving intentional exposure of pregnant or nursing women or of children to any substance. EPA was required to promulgate the 2006 rule by the 2006 Appropriations Act.

The 2006 rule also extends the ethical protections in the Common Rule to third-party studies of non-pregnant, non-nursing adult subjects intentionally exposed to pesticides. The key provisions of the 2006 rule include:

• Requiring pre-implementation submission to EPA of protocols and related information about proposed research to ensure any future studies meet high ethical standards.

• Establishing an independent HSRB to obtain expert peer review of both proposals for new research intended for submission to EPA and reports of completed human research involving intentional exposure on which EPA proposes to rely in an action taken under the pesticide laws.

• Prohibiting EPA from relying on the results of research in its actions under the pesticide laws unless EPA determines that the research meets acceptance standards derived from the recommendations in the 2004 NAS Report.

2. Research with pesticides since promulgation of the 2006 rule. Contrary to some predictions, the 2006 rule has not led to an upsurge in human research with pesticides for submission to EPA under FIFRA or FFDCA. Since promulgation of the 2006 rule EPA has received no proposals at all for research on the toxicity of a pesticide to human subjects, and has received significantly fewer than were projected proposals for new research of other kinds ( e.g., insect repellent studies). In the analyses supporting the 2006 rule, EPA estimated 33 new intentional exposure studies would be submitted each year; in fact, only 26 proposals for new research on pesticides for submission to EPA under FIFRA and FFDCA have been submitted over a span of approximately 5 years, or just over 5 per year.

3. Overview of HSRB reviews. EPA's experience in implementing the 2006 rule is critical to understanding the amendments proposed in this document. The public meetings of HSRB have served as key milestones in the implementation of the 2006 rule, and the implementation of the 2006 rule can be best characterized by summarizing what HSRB has been called upon to review. HSRB met for the first time in April 2006, immediately after the 2006 rule became effective, and has met 14 times since then, most recently in October 2010. At these meetings, HSRB has reviewed both reports of completed research and proposals for new research. Specifically, HSRB has reviewed:

• Completed reports of pre-2006 rule research reporting toxic endpoints. These have included intentional exposure toxicity tests initiated both before and after passage of the Food Quality Protection Act (FQPA) in 1996, as well as therapeutic trials of substances used both as drugs and as pesticides, reporting side effects relevant to EPA pesticide risk assessments.

• Proposals for and reports of new research involving intentional exposure to materials used in the research as pesticides.

a. Pre-rule research reporting toxic endpoints. At its first two meetings in April and May 2006, HSRB reviewed 28 reports of pre-rule research conducted with 11 substances. At all its subsequent meetings combined the Board has reviewed 14 more such reports. Half of these 42 reports were published; the rest were unpublished reports submitted directly to EPA by pesticide companies. Of the 42 reports, 37 reported non-therapeutic research, and 5 were published reports of therapeutic trials that described side effects relevant to pesticide risk assessments. We summarize the disposition of each of the 42 studies in the following paragraphs, and additional details may be accessed in the study specific reports available on the HSRB Web site at http://www.epa.gov/hsrb/index.htm.

Twenty-nine of the 37 non-therapeutic studies reviewed by HSRB were initiated before the passage of FQPA in 1996; all reported toxic endpoints. EPA conducted both science and ethic reviews of these studies prior to submission of the studies to HSRB. EPA science reviewers proposed to rely on 17 of these 29 studies. HSRB found 13 of these 17 studies scientifically acceptable under the applicable standards of the 2006 rule. EPA ethics reviewers found 5 of the 17 clearly acceptable, and deferred to HSRB concerning whether the shortcomings noted in the conduct of the remaining 12 studies rose to the level of “significant” deficiencies relative to prevailing standards of ethical research conduct. HSRB found 15 of those 17 studies ethically acceptable under the applicable standards of the 2006 rule—§ 26.1703 and § 26.1704. HSRB found 1 study ethically unacceptable because of deficiencies in risk minimization procedures that could have led to serious harm to subjects, and another unacceptable because incomplete information provided to subjects concerning previous studies seriously impaired their informed consent. These 2 studies found by HSRB to be ethically unacceptable were among those also found by HSRB to be scientifically unacceptable. EPA has not subsequently relied on any studies deemed either scientifically or ethically unacceptable by HSRB.

The 12 remaining pre-FQPA studies that EPA science reviewers had proposed to reject concerned dichlorvos (DDVP). These reports on the effects of dichlorvos had been submitted by the registrant to support a proposal to reduce the inter-species uncertainty factor in EPA's DDVP risk assessment. EPA reviewers found all 12 to be scientifically unacceptable to reduce the inter-species factor since a dose response could not be calculated due to numerous technical weaknesses. HSRB concurred. Because the reported research was deemed scientifically unacceptable for the proposed use, neither EPA nor HSRB explicitly reviewed its ethical conduct. EPA has not relied on any of these 12 studies.

Turning to the 8 post-FQPA toxicity studies that EPA presented to HSRB, we note that they were among a group of about 20 studies at the center of controversy before promulgation of the 2006 rule. Other post-FQPA human toxicity studies were deemed by EPA science reviewers to be irrelevant to EPA's risk assessments, and have not been considered further.

Of the eight relevant post-FQPA toxicity studies, EPA science reviewers found six scientifically acceptable and proposed to rely on them, found one more to be clearly scientifically unacceptable to set a point of departure because no effect was measured from the single dose level tested  1 , and deferred to HSRB with respect to the scientific acceptability of the last one. HSRB concurred that the first six studies were scientifically acceptable, and found both the others unacceptable. EPA ethics reviewers found four of the eight studies clearly acceptable, one clearly unacceptable, and deferred to HSRB's judgment whether the shortcomings noted in the conduct of the remaining three rose to the level of “significant” deficiencies relative to prevailing standards of ethical conduct. HSRB found all but one of these eight studies ethically acceptable under the applicable standards in the 2006 rule. Studies found either scientifically or ethically unacceptable by HSRB have not subsequently been relied on by EPA in any actions.

EPA also proposed to rely on five published reports of therapeutic trials of materials that may be used as either drugs or as pesticide active ingredients. In these studies the reported toxic endpoints relevant to EPA pesticide risk assessments were not the main objective of the research, they were reported side effects of treatment when a test material (which is sometimes used as a pesticide) was administered as a medication. HSRB concurred with the EPA science reviews that these four studies were scientifically unacceptable, but found one study scientifically unacceptable for the purpose EPA proposed. EPA ethics reviewers and HSRB both found all five of these studies to be ethically acceptable under the standards of the 2006 rule.

In summary, EPA and HSRB worked through the backlog of pre-rule studies of pesticide toxicity awaiting review when the 2006 rule was promulgated. EPA and HSRB agreed about the acceptability of these studies in most cases; when there was disagreement, EPA has accepted HSRB recommendation. Some pre-rule studies that met the scientific and ethical standards defined in the 2006 rule have been relied upon by EPA in actions under the pesticide laws, although EPA has not relied on any studies found unacceptable by HSRB. Meanwhile, as EPA completed the reassessment of tolerances mandated by FQPA, it found human toxicity testing to be relevant to only a handful of those assessments.

b. New research involving intentional exposure of human subjects. In addition to reviewing pre-2006 rule research, HSRB has reviewed proposals for new research involving intentional exposure of human subjects. EPA developed a detailed “framework” for its reviews of these proposals ( see the HSRB Web site at http://www.epa.gov/hsrb/index.htm ). This framework has been used to guide all subsequent EPA reviews, and has been refined in detail to incorporate suggestions from HSRB. A completed framework addressing concerns identified in the 2004 NAS Report and subsequently by HSRB has been attached to each EPA review of a proposal for new research under the 2006 rule.

Since promulgation of the 2006 rule EPA has received no proposals at all for new research concerning pesticide toxicity or metabolism in human subjects. All submitted proposals for new research have been for research involving intentional exposure of human subjects to registered pesticides used for pesticidal purposes in the research itself. This has included proposals for research to measure the duration of effectiveness of skin-applied repellents intended to keep mosquitoes, ticks, and other pests away from the treated skin of human subjects, and for research monitoring occupational exposure of pesticide handlers as they mix, load, or apply pesticides in a variety of agricultural and non-agricultural use scenarios.

Close scrutiny by both EPA and HSRB of proposals for new repellent performance testing and worker exposure monitoring studies has led to steady and substantial improvement both in the scientific design of these studies and in their provision for ethical treatment of subjects. These reviews have led to some delays in field research costly to the study sponsors, but the sponsors and investigators proposing these studies have learned how to design and execute them efficiently and in full compliance with the standards of the 2006 rule. These studies provide essential information about repellent performance and worker exposure that is not available except from well designed, ethically conducted research involving intentional exposure of human subjects to pesticides.

i. Repellent performance studies. Repellent performance studies using human subjects have been required by EPA for many years to support registration of pesticide products bearing claims to keep mosquitoes, ticks, or other pests away from treated human skin. Since 2006, HSRB has reviewed proposals for 13 new repellent performance studies testing a total of 29 repellent formulations. EPA and HSRB identified enough scientific and ethical deficiencies in their initial review of the first 2 such proposals that a second review was required. After they were revised and resubmitted, both proposals were reviewed favorably by EPA and HSRB. All subsequent proposals for new repellent performance studies have been found acceptable, with identified needed refinements, upon their first review by EPA and HSRB.

Five of the 13 proposals have been for laboratory research with caged insects or ticks reared in the laboratory and known to be disease-free. The remaining studies have been for field studies of repellency against wild populations of insects. Three of the 13 studies have measured the duration of tick repellency in the laboratory—2 of them concurrently testing repellency to 2 species of ticks. Two more have measured the duration of repellency to biting flies—1 in the laboratory with laboratory-reared stable flies, and another in the field measuring repellency against black flies. The remaining 8 studies have measured the duration of repellency against mosquitoes—7 of them in the field, in areas where previous monitoring has not found evidence of infection of potential disease vectors among the wild insects present, and 1 in the laboratory with laboratory-reared, pathogen-free mosquitoes.

In all these cases, HSRB has concurred with the EPA science and ethics reviews, in some cases recommending further refinements. One proposal was abandoned by its sponsor after a favorable HSRB review; 11 more have been amended consistent with EPA and HSRB recommendations and executed. Reports of these 11 have been submitted to EPA and reviewed by EPA and HSRB. The most recent proposal is expected to be executed in the field in 2011.

In one case EPA and HSRB found the execution of a completed field mosquito repellency test to have been non-compliant with 40 CFR part 26, subparts A-L. This study protocol was subsequently revised and re-executed; the report of the re-executed study was found acceptable by EPA and HSRB.

Reports of all the other ten completed repellent performance studies were found both scientifically and ethically acceptable by EPA and HSRB as first submitted.

ii. Studies of occupational exposure of pesticide handlers. All other proposals for new research submitted to EPA since promulgation of the 2006 rule have been for research monitoring exposure of professional pesticide handlers as they mix, load, or apply pesticides in well-defined agricultural and non-agricultural use scenarios. In such research, experienced workers performing their usual tasks are typically monitored at different sites, representing the range of variation in use practices, equipment, and other factors likely to affect exposure. Potential dermal exposure of the workers is measured by analyzing residues in special “long underwear” worn under their normal work clothing, and by rinsing their hands, face and neck. Potential inhalation exposure is measured with a portable air sampler worn in the breathing zone of each worker. This type of research has also long been required by EPA to support its assessments of worker risk.

Five proposals for field monitoring of worker exposure submitted to EPA by an industry consortium were presented to HSRB in June 2006. These proposals were from the Agricultural Handlers Exposure Task Force (AHETF). HSRB review was highly critical, and called for substantially greater information from both the consortium and from EPA concerning the overall design of the research program, the statistical design of the proposed studies, the uses to which the resulting data would be put by EPA, and many other aspects of the proposed research. All five of these proposals were subsequently withdrawn so that HSRB criticisms could be addressed prior to resubmission.

Since that initial review, the overall designs of the umbrella monitoring programs of AHETF and the designs from the Antimicrobial Exposure Assessment Task Force (AEATF II) have been fully documented and presented to HSRB. HSRB continues to review the design of individual monitoring studies, but the soundness of the overall approaches of both the AEATF II and AHETF programs have been established.

Monitoring studies for four antimicrobial exposure scenarios submitted by the AEATF II have been presented to HSRB and approved with suggestions for refinements by both EPA and HSRB. These four scenarios involve common methods of application of antimicrobial pesticide products, including mopping, wiping down surfaces with a pre-soaked ready-to-use wipe, spraying surfaces with a pump spray and wiping them down with a cloth, and spraying surfaces with an aerosol product that does not need to be wiped off. For each scenario, monitoring of workers at three distinctive locations was proposed. After amendment of the protocols consistent with EPA and HSRB recommendations, the first three of these four studies have been executed; the first complete scenario report was submitted to EPA and reviewed by HSRB in October 2010. The remaining reports of completed AEATF II exposure research were submitted to EPA in the fall of 2010, and are scheduled for presentation to HSRB in early 2011.

Monitoring studies for four agricultural exposure scenarios submitted by the AHETF have been presented to HSRB and approved, again with suggestions for refinements by both EPA and HSRB. These scenarios involve application of liquid pesticides to trellis and orchard crops using “air-blast” spray equipment with closed cabs, application of liquid pesticides using air-blast spray equipment with open cabs, mixing and loading pesticides sold in water-soluble packaging into a wide variety of application equipment, and application of herbicides to rights-of-way. Each of these scenarios calls for monitoring workers in five different regions of the United States, working with different kinds of equipment and crops. The first two of these four studies have been executed; the first complete scenario report was submitted to EPA and reviewed by HSRB in October 2010. Reports of the remaining research scenarios will be submitted to EPA and presented to HSRB in 2011.

In early 2006, the Natural Resources Defense Council, Inc., Pesticide Action Network North American, Pineros y Campesinos Unido Del Noroeste, Physicians for Social Responsibility—San Francisco, Farm Labor Organizing Committee, ALF-CIO, and Migrant Clinicians Network petitioned for review of the 2006 rule in the United States Court of Appeals for the Second Circuit (Second Circuit Court of Appeals). ( NRDC v. EPA, No. 06-0820-ag (2d Cir.)). The Petitioners argued that the 2006 rule violated the 2006 Appropriations Act because it did not bar all pesticide research with pregnant women and children, was inconsistent with the 2004 NAS Report, and was inconsistent with the Nuremburg Code. The following paragraphs describe the Petitioner's arguments in greater detail.

1. Inadequate bar against research with pregnant women and children. Petitioners argued that the scope of the 2006 rule's ban on research with pregnant women and children was unlawfully narrow because it was limited to studies intended for submission to EPA under FIFRA or FFDCA—the pesticide regulatory laws EPA administers. Petitioners argued that Congress's direction to EPA in the Appropriations Act to “not permit the use of pregnant women, infants, or children as subjects” in “intentional dosing human toxicity studies for pesticides” did not allow EPA to distinguish between studies originally intended for publication and those intended for submission to EPA, or between studies with pesticides conducted for consideration under FIFRA or FFDCA and those conducted for consideration under the Safe Drinking Water Act or any other regulatory statute. Petitioners argued that EPA's 2006 rule violated the plain language of the 2006 Appropriations Act on this point.

2. Inconsistency with the 2004 NAS Report. The 2006 Appropriations Act required EPA's rule to be consistent with the principles proposed in the 2004 NAS Report. Petitioners argued that in citing the “principles” of the 2004 NAS Report, Congress was referring to the 17 recommendations in that report. Petitioners further argued that the 2006 rule was inconsistent with several specific recommendations in the 2004 NAS Report.

First, Petitioners argued that the 2006 rule did not incorporate Recommendations 3-1 and 5-1 from the 2004 NAS Report, which recommend factors to be considered in the scientific evaluation of human research, including that such studies should have “adequate statistical power” and involve “representative populations for the endpoint in question.”

Second, Petitioners argued that the 2006 rule did not incorporate Recommendations 4-1 and 4-2 from the 2004 NAS Report, which suggest ethical considerations relevant to evaluation of human studies.

Third, Petitioners argued that by adding qualifying language to the acceptance standard for pre-rule research suggested in Recommendation 5-7 from the 2004 NAS Report, EPA made it inconsistent with the 2004 NAS Report. Petitioners argued that EPA's addition of the word “significantly” to the recommended acceptance standard, which permits EPA to rely on research not “significantly” deficient relative to prevailing standards, made the criterion in the 2006 rule unlawfully inconsistent with the recommendations in the 2004 NAS Report.

Finally, Petitioners argued that the 2006 rule unlawfully failed to require provision of medical care for study participants, as suggested by Recommendation 5-5 from the 2004 NAS Report.

3. Inconsistency with the Nuremberg Code. The 2006 Appropriations Act also required EPA's rule to be consistent with the principles in the Nuremberg Code pertaining to human experimentation. Petitioners argued that the 2006 rule was inconsistent with several principles in the Nuremburg Code.

First, Petitioners argued that although the Nuremberg Code specifies that consent must be given by the human subject, the 2006 rule permits consent to be given in certain situations by a legally authorized representative of the subject.

Second, Petitioners argued that the 2006 rule was inconsistent with the Nuremberg Code principle that a test subject “should have sufficient knowledge and comprehension of the elements of the subject matter involved as to enable him to make an understanding and enlightened decision.” Petitioners argued that the 2006 rule consent requirements were inadequate to ensure fully informed consent in the context of research involving pesticides.

Third, Petitioners argued that the 2006 rule failed to address adequately the Nuremberg Code principle that a subject must be “so situated as to be able to exercise free power of choice, without the intervention of any element of force, fraud, deceit, duress, over-reaching, or other ulterior form of constraint or coercion.” Petitioners argued that the requirement of the 2006 rule that consent should only be sought in circumstances that “minimize the possibility of coercion or undue influence” did not address the potential for fraud, deceit, over-reaching, or constraint. Petitioners asserted that constraint was a particular problem when prisoners are used as subjects in human studies, and the 2006 rule did not specifically address research with prisoners.

Fourth, Petitioners argued that the 2006 rule was inconsistent with the Nuremberg Code because it did not explicitly impose the Nuremburg Code's requirement that human studies be “designed and based on the results of animal experimentation.”

Finally, Petitioners argued that the 2006 rule was inconsistent with the Nuremberg Code principle that human testing “should be such as to yield fruitful results * * * unprocurable by other methods or means of study, and not random and unnecessary in nature.” Petitioners argued that the 2006 rule requires no inquiry into whether human testing is necessary given other methods of research.

After briefing and argument, but before a decision was rendered by the Second Circuit Court of Appeals, EPA and Petitioners began negotiations to settle the litigation. In the settlement agreement finalized on November 3, 2010, EPA agreed to conduct notice-and-comment rulemaking on the issue of whether the 2006 rule should be amended. EPA also agreed to propose, at a minimum, amendments to the 2006 rule that are substantially consistent with language negotiated between the parties and attached to the settlement agreement as Exhibit A. This agreement, including Exhibit A, is available in the docket for this action as described under ADDRESSES .

The settlement agreement further provides that EPA will propose the negotiated amendments no later than January 18, 2011, and that EPA will take final action on the amendments no later than December 18, 2011. The settlement agreement, however, makes clear that EPA retains full discretion concerning what amendments are proposed, and what, if any, amendments are finalized.

Although the wording of the amendments proposed in this document differs in a few details of construction and wording, they are substantially consistent with the regulatory language negotiated with Petitioners, and EPA considers these amendments to address the Petitioners' major arguments outlined in Unit III.D. Specifically:

• The proposed amendments would retain the scope of the 2006 rule to cover research submitted to EPA under FIFRA or FFDCA, and extend that scope to cover as well research involving intentional exposure to a pesticide, intended for submission to EPA under any other regulatory statute administered by EPA.

• The proposed amendments incorporate language from each of the recommendations from the 2004 NAS Report cited by Petitioners in their challenge to the 2006 rule, as well as other pertinent recommendations from the 2004 NAS Report.

• The proposed amendments address Petitioners' arguments concerning the Nuremberg Code by dropping from 40 CFR part 26, subpart K, all provisions for consent by a representative, and by requiring EPA to consider whether subjects gave their “free and fully informed consent” to participate in a study, whether the design of proposed new human research takes into account the knowledge gained in earlier animal testing, and whether proposed new human research is necessary.

Although these proposed amendments emerged from a settlement agreement, EPA believes that proposing these amendments is consistent with the language and purposes of the applicable statutes and because they further the 2006 rule's goal of ensuring that EPA does not rely on research involving intentional exposure of human subjects to pesticides that is not ethically conducted or that is not scientifically sound. EPA believes that many of the changes proposed in this document are codifications of the manner in which EPA and HSRB have interpreted and implemented the 2006 rule, but welcomes comment on these interpretations. EPA will fully re-evaluate the appropriateness of the proposed amendments in light of all comments received in response to this proposed rule before making a final determination. In particular, EPA seeks comment on the relative merits of the proposed changes compared to retaining the current scope and content ( i.e., current wording) of the 2006 rule.

This unit provides a description of each proposed change, the rationale for the proposed change, and the anticipated effects of each change relative to the current regulatory text ( i.e., the 2006 rule). EPA specifically requests comment on each of these proposed changes, as well as on the changes in the aggregate. In particular, EPA asks for comment on its conclusions regarding the effect of these proposed changes, including the effect of these proposed changes on the volume of studies covered by the rule, the likely statutes under which studies may be submitted, and the impact on activities covered by those other statutes, relative to the scope of the 2006 rule.

1. Summary of proposed changes. EPA is proposing amendments that would modify the scope and applicability of several subparts of the 2006 rule. The proposed changes would modify the criteria defining the types of research covered by 40 CFR part 26, subparts K, L, and M—most notably the criteria relating to the intentions of the sponsor or investigator in conducting the research or the intentions of the person submitting the research to EPA.

The specific changes proposed to the scope and applicability sections of 40 CFR part 26, subparts K, L, M, P, and Q, are explained here. Although EPA does not propose to change the text of the 2006 rule defining the scope of 40 CFR part 26, subpart O, concerning “Administrative Actions for Noncompliance,” the scope of that subpart would change nonetheless, because its applicability depends on the scope provisions in other subparts that EPA is proposing to change. More specifically, these changes alter the scope as follows: instead of covering substances under FIFRA, the proposed amendments would cover pesticides under all statutes.

In general, the proposed amendments would shift the focus from whether the research on the substance was intended for EPA's consideration and use under the pesticide laws, FIFRA and FFDCA, to whether the research was conducted with a pesticide and was intended for EPA's consideration and use in connection with an action under any regulatory statute administered by EPA. The proposed amendments also would add a new section to 40 CFR part 26, subpart P, defining its scope and would change the scope and applicability of 40 CFR part 26, subpart Q, to parallel the changes in 40 CFR part 26, subpart K.

2. Summary of anticipated effects. Although almost all studies with pesticides are conducted and submitted to EPA for consideration under FIFRA or FFDCA, it is possible that some pesticide studies may be considered by EPA only under other regulatory authorities and not be considered under FIFRA and FFDCA. If studies involving intentional exposure of humans to a pesticide are submitted or considered under other EPA regulatory statutes, with the proposed amendment, such studies would be subject to the same requirements that would have applied had they been submitted or considered under FIFRA or FFDCA. In proposing these amendments, EPA finds that these changes in scope are consistent with the focus in the 2006 Appropriations Act on intentional dosing human toxicity studies with pesticides.

In sum, EPA does not believe that the several changes to the “scope” sections of 40 CFR part 26, subparts K and L—§ 26.1101 and § 26.1201—and a new definition of “pesticide” at § 26.1102(c), that expand the range of human research to which these two subparts apply, will result in a significant increase in the number of studies reviewed under the rule. However, EPA recognizes that this is a possibility and requests comment on whether these proposed changes are clear about which studies would fall under the scope of the rule. EPA knows of no third-party research involving intentional exposure of a human subject to a pesticide that has ever been proposed, conducted, or submitted to EPA under regulatory authorities other than the pesticide laws. The proposed expansion of the scope of these subparts, however, would mean that any such studies that are proposed, conducted, or submitted to EPA will be governed by the same standards as pesticide studies submitted under FIFRA or FFDCA section 408.

3. 40 CFR part 26, subparts K and L—basic ethical requirements and prohibitions applying to third-party research involving intentional exposure of human subjects to a pesticide.

a. Current rule. Subpart K of 40 CFR part 26 extends the basic protections of the Common Rule to subjects in certain third-party human research; subpart L of 40 CFR part 26 forbids new third-party research involving intentional exposure of children or of pregnant or nursing women. In the 2006 rule these two subparts apply to “research with a human subject” which meets four criteria. First, it was initiated after April 7, 2006 (the effective date of the 2006 rule). Second, it is “research involving intentional exposure of a human subject” as defined at § 26.1102(i). Third, it was conducted or supported by a “person” as defined at § 26.1102(j). Fourth, it was intended by any person conducting or supporting the research to be submitted to EPA, or to be held for later inspection by EPA, under the pesticide laws (FIFRA or FFDCA).

The two cited definitions are critical to understanding the scope and applicability of subparts K and L of 40 CFR part 26. “Research involving intentional exposure of a human subject,” is defined at § 26.1102(i) as “a study of a substance in which the exposure to the substance experienced by a human subject participating in the study would not have occurred but for the human subject's participation in the study.” In applying this definition, EPA considers whether a test subject would have experienced equivalent exposure to a test material had the subject not participated in the research. If not, the research is deemed to involve intentional exposure of the subject. Notably this definition encompasses all classes of test substances—not only pesticides.

A “person” is defined at § 26.1102(j) to have the same meaning as in FIFRA section 2(s) (7 U.S.C. 136(s)), except that it excludes Federal agencies subject to the Common Rule and any person when performing research supported by a Common Rule Federal department or agency. This exclusion is appropriate because that research is covered by the Common Rule, which provides necessary and appropriate protections for the research subjects. Thus, research already covered by the standards of the Common Rule is not also subject to subparts K and L. These subparts, in short, apply only to “third-party research”—research that is neither conducted (“first-party”) nor supported (“second-party”) by EPA or another Common Rule Federal department or agency.

Finally, § 26.1101(g) explains how EPA will approach determination of the intent of sponsors or investigators to submit research to EPA under the pesticide laws, or hold it for inspection by EPA under the pesticide laws.

b. Proposed amendments, rationale, and anticipated effect. The amendments proposed in this document would not change the definitions of “research involving intentional exposure of a human subject” or of “person.” They would add a new definition of “pesticide” at § 26.1102(c), and would modify the applicability provisions in § 26.1101, as explained later in this Unit of the document.

The first of the four criteria for application of 40 CFR part 26, subpart K, will change to incorporate the effective date of a final rule amending the 2006 rule. EPA believes it would be inappropriate to apply these proposed amendments retroactively. For example, if post-2006 research newly covered by an amended rule as proposed in this document were submitted to EPA, its acceptability should not be judged by its compliance with a rule promulgated after it was conducted. Until the 2006 rule is amended by a final rule, its provisions continue to apply fully to new research. Hence no sponsor or investigator subject to the 2006 rule would be relieved by the change in the effective date of any obligation to comply with 40 CFR part 26, subparts K and L, for research initiated between April 7, 2006, and the effective date of any subsequent amendments.

The proposal would modify the second of the four criteria so that 40 CFR part 26, subparts K and L, would apply to research involving intentional exposure of a human subject “to a pesticide” when the research is intended for submission to EPA under any regulatory statute other than FIFRA or FFDCA. The definition of “research involving intentional exposure of a human subject” would not change, nor would the applicability of these subparts to all new third-party research involving intentional exposure of human subjects which is intended for submission to EPA under FIFRA or FFDCA.

In determining whether research involves intentional exposure to a pesticide, EPA will focus, as does the FIFRA definition of a “pesticide,” on the intended use of the substance. EPA expects that application of this standard will nearly always be straightforward. However, EPA recognizes that there may be cases where making such a determination may not be as straightforward. EPA will apply this criterion as follows.

Initially, EPA will examine the study on its face. If the study states that it involves the testing of a pesticide, or if the tested substance is used for pesticidal effect in the study, as it is in insect repellent efficacy testing or in monitoring exposure of pesticide applicators, there can be little question that the study involves exposure to a pesticide. If on the other hand the study reports testing of another type of substance, such as an industrial chemical, waste product, or air pollutant, then absent compelling evidence to the contrary, EPA will not treat the study as involving exposure to a pesticide.

If it is not clear from the face of the study whether it involves exposure to a pesticide, EPA will look to other objective factors to determine whether a substance is being tested as a pesticide. Intent to test a substance as a pesticide could be indicated by evidence that the testing was conducted or supported by an entity regulated under FIFRA or section 408 of FFDCA; the testing was conducted for the purpose of attaining a FIFRA registration or FFDCA tolerance; there are not significant commercial uses for the substance other than as a pesticide; or human exposure to the substance occurs primarily from its use as a pesticide. Absent any such evidence, EPA will generally treat the study as not involving exposure to a pesticide.

EPA expects that in most cases, the question of whether the study involves exposure to a pesticide will be quickly resolvable without looking to other objective factors such as the four identified in the previous paragraph. EPA believes that this would be true even for multiple-use substances that may be used as a pesticide and may also result in human exposure from other commercial uses or as a result of deposition in the environment as a waste product.

A good example of how EPA will determine if studies on multi-use substances are studies on a pesticide is presented by sulfur dioxide (SO 2 )—a registered pesticide active ingredient used as a fungicide in grape culture, and also a common air pollutant. Thousands of tons of SO 2 are released yearly into the atmosphere by burning of coal and other fossil fuels. In promulgating National Ambient Air Quality Standards (NAAQS) for SO 2 under the Clean Air Act (CAA) in 2010, EPA relied on numerous human studies involving intentional exposure of subjects to SO 2 . Most of these studies on their face indicate clearly that they tested SO 2 as an industrial air pollutant and not as a pesticide. The few that do not expressly state they tested SO 2 as an air pollutant are, nonetheless, easily classified as not involving exposure to a pesticide, because the testing was not conducted or sponsored by a pesticide registrant, the studies do not indicate they were performed in support of FIFRA registration, and there are clearly other major sources of human exposure to SO 2 in addition to whatever pesticide exposure occurs. Thus, these studies would not come within the scope of the 2006 rule if the scope is modified as proposed.

EPA specifically requests comment on the implications of this change for the volume of studies that may need to be reviewed under such a proposed amendment.

The amendments proposed in this document would not change the applicability of 40 CFR part 26, subparts K and L, to “persons” or the definition of that term at § 26.1102(j). Thus the third of the four criteria would not be affected by these proposed amendments.

The fourth criterion would be broadened by the amendments proposed in this document beyond the scope of the 2006 rule. The 2006 rule applies to research with any substance, conducted with intent to submit its results to EPA under FIFRA or FFDCA; as proposed here, the rule would apply as well to research with a pesticide, conducted with intent to submit its results to EPA “for consideration in connection with any action that may be performed under any regulatory statute administered by EPA” other than FIFRA or FFDCA.

The new element in this fourth criterion, putting aside the proposed amendment to refer to “pesticides,” is the reference to actions taken “under any regulatory statute administered by EPA.” Research intended for submission under FIFRA or FFDCA is covered by the 2006 rule and would continue to be covered under proposed § 26.1101(a)(1). Proposed § 26.1101(a)(2) would broaden the scope of subparts K and L of 40 CFR part 26 to apply as well to research involving intentional exposure of a human subject to a pesticide which is intended for submission to EPA for consideration in connection with any action that may be performed under any regulatory statute other than FIFRA or FFDCA. Such submission could be made under CAA, the Safe Drinking Water Act (SDWA), the Clean Water Act (CWA), the Resource Conservation and Recovery Act (RCRA), the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, or the Superfund law), or other similar statutes. EPA specifically seeks comment on the scope of this proposed change ( i.e., the frequency with which it might be triggered, including other statutes to which the proposed change would apply) and the implications of the proposed changes on the activities governed by those other regulations. EPA seeks comment on the relative merits of this change compared to retaining the current scope of the 2006 rule. As noted, EPA does not expect that these wording changes will result in any substantive changes to the number or manner in which studies are currently reviewed.

As an example, EPA's Office of Water has, in the past, set Maximum Contaminant Levels (MCLs) under the SDWA with pesticides found in drinking water. Under the proposed amendment to the scope of 40 CFR part 26, subpart K, any new third-party study involving intentional exposure of a human to a pesticide, and intended for submission to the Office of Water for consideration in setting a MCL, would now be subject to 40 CFR part 26, subpart K, including the requirement of § 26.1125 for submission of the proposal for prior review by EPA and HSRB. EPA would note that this is a theoretical example in that it is unaware of any such study having been submitted with regard to a MCL.

EPA actions not taken under the authority of regulatory statutes would not satisfy this fourth criterion. For example, an EPA comment on another Federal department's or agency's Environmental Impact Statement would not constitute an action taken under a regulatory statute, and research intended for submission solely for consideration in such a context would not be subject to 40 CFR part 26, subparts K and L.

EPA interprets the word “action” in this context broadly, embracing both regulatory and non-regulatory actions. Regulatory actions include, for example, cancellation or registration of a pesticide, establishment of a tolerance for a pesticide residue in food, or establishing a MCL for a pesticide active ingredient under SDWA. Non-regulatory actions include, for example, risk assessments of pesticide active ingredients, recommended (non-binding) safe levels of exposure such as Health Advisory Limits when these pertain to pesticides, or clean-up standards for pesticides at a Superfund site.

The amendments proposed in this document include two additional editorial revisions to clarify the scope sections of 40 CFR part 26, subparts K and L. One change would clarify the applicability of 40 CFR part 26, subpart K, by moving the exposition of how EPA will determine intent to submit from § 26.1101(g), where it appears in the 2006 rule, to § 26.1101(b), immediately following the presentation of the four criteria. The other would amend § 26.1201, the scope section of 40 CFR part 26, subpart L, to state simply that 40 CFR part 26, subpart L applies to all research subject to 40 CFR part 26, subpart K.

4. 40 CFR part 26, subpart M—requirement for documentation of the ethical conduct of completed human research submitted to EPA.

a. Current rule. Subpart M of 40 CFR part 26 requires those who submit the results of human research to EPA for consideration under the pesticide laws to submit information documenting the ethical conduct of the completed research. Under the 2006 rule, 40 CFR part 26, subpart M, applies when a “person” as defined at § 26.1102(j) submits after the effective date of the 2006 rule a report containing the results of any human research to EPA for consideration under the pesticide laws.

These criteria differ from those defining coverage by 40 CFR part 26, subparts K and L, in important ways. First, unlike other subparts of the 2006 rule, subpart M applies to submissions after the effective date of the rule of any and all human research, without regard to who conducted it, when, or for what purpose, or whether or not the reported research involved intentional exposure of a human subject. Second, subpart M applies only when a person (other than a Federal department or agency subject to the Common Rule) submits the results of human research to EPA. Subpart M does not apply when EPA, on its own initiative, retrieves published articles or otherwise obtains information derived from human research.

b. Proposed amendments and rationale. EPA proposes to broaden the applicability of 40 CFR part 26, subpart M, by amending § 26.1301, while leaving the substantive requirements of subpart M unchanged. Specifically, EPA proposes to include submissions of reports of human research on pesticides for consideration by EPA under regulatory statutes other than FIFRA or FFDCA. Under the proposed amendments, subpart M would apply when a “person” as defined at § 26.1102(j) submits after the effective date of the amended rule a report containing the results of any human research to EPA for consideration under FIFRA or FFDCA, or a report containing the results of any human research on or with a pesticide for consideration under any other regulatory statute administered by EPA.

The proposed amendments to 40 CFR part 26, subpart M, attempt to balance the need for full information on ethical issues with a concern that the public not be deterred from submitting scientific data relevant to EPA information requests. Section 26.1303 requires a submitter to provide “information concerning the ethical conduct” of the human research, including copies of relevant IRB records, and copies of records relevant to the key ethical considerations outlined in § 26.1117 and § 26.1125(a). This requirement is qualified by the provision that such records need only be provided “[t]o the extent [the records] are available to the submitter and not previously provided to EPA,” but any submitter not providing the information required must “describe the efforts made to obtain the information.”

To minimize the potential burden on commenters, EPA considered excluding from the coverage of 40 CFR part 26, subpart M, submissions of published scientific journal articles reporting human research, or of citations to such articles. In some circumstances, however, EPA believes it is important for submitters of even published human research to bear the burden of gathering the information required by § 26.1303. Specifically, EPA believes a submitter of published human research who is seeking action under a regulatory statute from EPA that would directly benefit the submitter should be obliged to gather records bearing on the conduct of the research, even if the research is described in the public literature. For example, an applicant for a pesticide registration or a party petitioning for a pesticide tolerance should have to exercise reasonable efforts to obtain records of the ethical conduct of research relied on to support the EPA action sought, whether or not the research happens to be described in a scientific journal. Reasonable efforts in these circumstances may include seeking relevant records from the research administrator or the overseeing IRB. On the other hand, if a member of the public responds to an EPA request for information on a pesticide by citing or submitting a published study, EPA believes that certification that the submitter did not sponsor, participate in, or otherwise have personal knowledge of or responsibility for the referenced research would satisfy the submitter's obligation under 40 CFR part 26, subpart M.

c. Anticipated effect. EPA's concern for the potential burden of 40 CFR part 26, subpart M, on the public is tempered by its experience under the 2006 rule. Since promulgation of the 2006 rule EPA has received very few submissions of reports of human research on or with a pesticide for consideration under FIFRA or FFDCA, and EPA expects submissions of such studies to EPA for consideration only under other regulatory statutes will be even less common.

EPA specifically requests comments on this approach to and interpretation of the requirements in 40 CFR part 26, subpart M. Such comments should address whether the proposed rule language is adequate to implement EPA's interpretation.

5. 40 CFR part 26, subpart P—EPA and HSRB review of proposed and completed human research.

a. Current rule. Subpart P of 40 CFR part 26 applies to EPA and HSRB reviews of proposals for new research involving intentional exposure of a human subject, and EPA and HSRB reviews of reports of completed research involving intentional exposure of a human subject and on which EPA proposes to rely in an action under the pesticide laws. Unlike other subparts of the 2006 rule, subpart P does not include a “scope” section; its applicability is defined only indirectly by references to other subparts.

b. Proposed amendments and rationale. EPA proposes to make explicit the applicability of 40 CFR part 26, subpart P, in a new § 26.1601. This proposed new section provides that 40 CFR part 26, subpart P, applies to EPA and HSRB reviews of (1) “proposed research subject to 40 CFR § 26.1125,” and (2) “reviews by EPA after [effective date of the amended rule] and, to the extent required by § 26.1604, by the Human Studies Review Board, of reports of completed research subject to 40 CFR 26.1701.”

c. Anticipated effect. Since 40 CFR 26.1125 is in subpart K and 40 CFR 26.1701 is in subpart Q, the broadened scope of these subparts as proposed in these amendments would indirectly broaden the scope of 40 CFR part 26, subpart P.

6. 40 CFR part 26, subpart Q—ethical standards for assessing whether to rely on the results of human research in EPA actions.

a. Current rule. Subpart Q of 40 CFR part 26 defines ethical standards that must be met for EPA to rely on the results of human research in actions taken under the pesticide laws. Specifically, 40 CFR part 26, subpart Q, applies to EPA decisions to rely on data from completed studies involving intentional exposure of a human subject, when EPA regards the data as scientifically valid and relevant to an action taken under the pesticide laws.

b. Proposed amendments and rationale. For the same reasons it is proposing to broaden the applicability of 40 CFR part 26, subpart K (discussed in Unit IV.A.1.), EPA proposes to amend § 26.1701 to broaden the applicability of 40 CFR part 26, subpart Q. Proposed § 26.1701(a) would retain without change the applicability of 40 CFR part 26, subpart Q, to research involving intentional exposure of human subjects to any substance, in the context of EPA actions taken under FIFRA or FFDCA. Proposed § 26.1701(b) would extend the applicability of 40 CFR part 26, subpart Q, to research involving intentional exposure of human subjects to a pesticide, in the context of EPA actions taken under any other regulatory statute administered by EPA.

EPA intends to interpret “action” and “regulatory statute administered by EPA” in 40 CFR part 26, subpart Q, just as these terms would be interpreted for 40 CFR part 26, subpart K. To make this scope provision consistent with the other scope provisions in this proposal, EPA proposes to depart from the language negotiated in the settlement agreement and define the scope of 40 CFR part 26, subpart Q, in terms of the “research” covered rather than the “decisions” covered.

c. Anticipated effect. EPA expects this change in the scope of 40 CFR part 26, subpart Q, to affect few, if any, EPA actions. Although such actions may occur in the future, EPA cannot identify any actions taken since 2006 under any regulatory statute other than FIFRA or FFDCA that relied on research involving intentional exposure of a human subject to a pesticide.

As explained previously, EPA is authorized to propose this change because it is consistent with the 2006 Appropriations Act. This proposal would mean that all intentional human studies involving pesticides submitted to EPA would be reviewed under the same ethical and scientific criteria. On the other hand, EPA has also noted that it expects this change will affect few additional studies and may create some uncertainty as to what studies are covered by the rule.

EPA specifically invites comment on the value of making this change and whether there are additional factors to be considered in evaluating the appropriateness of the change, such as the frequency with which it might be triggered, including other statutes to which the proposed change would apply, and on the clarity of the proposed changes.

1. Current rule. In the 2004 NAS Report to EPA, the NAS recommended use of the Common Rule as the starting point for protecting human subjects in research involving intentional exposure. Consistent with this recommendation, EPA incorporated much of the text of the Common Rule into subpart K of 40 CFR part 26, including language providing for consent for a subject's participation in research by the subject's “legally authorized representative” when the subject lacks the capacity to consent for himself or herself. The Common Rule, drafted to protect subjects in a wide variety of research settings, included these provisions to permit research in various situations, including, for example, research into emergency procedures to save lives of unconscious patients, into improved care for people suffering psychosis or schizophrenia, and to collect valuable data from research with other subjects who lacked the legal capacity to provide fully informed, fully voluntary consent.

2. Proposed amendments and rationale. EPA proposes to amend 40 CFR part 26 by deleting from subpart K all references permitting consent by a subject's legally authorized representative. The sections affected are the definition of “legally authorized representative” at § 26.1102(c); the “Criteria for IRB approval of research” at § 26.1111; the “General requirements for informed consent” at § 26.1116; and the requirements for “Documentation of informed consent” at § 26.1117.

EPA proposes to disallow consent by a representative in third-party studies because the types of research that are conducted on pesticides would not use subjects for whom such a procedure is needed. (The research covered by 40 CFR part 26, subpart K includes research involving intentional exposure of non-pregnant, non-nursing adults to a pesticide or research involving intentional exposure of non-pregnant, non-nursing adults intended for submission under FIFRA or FFDCA.)

3. Anticipated effect. EPA has never seen, and cannot envision, any such research in which it could be justified to enroll subjects lacking the capacity to consent for themselves. EPA does not propose to modify the provisions of 40 CFR part 26, subpart A, EPA's codification of the Common Rule. 40 CFR part 26, subpart A, applies to a much broader range of research with human subjects conducted or supported by EPA including research for which consent by a legally authorized representative may be appropriate.

1. Current rule. 40 CFR part 26, subpart P, defines in largely procedural terms how EPA evaluates proposals for new research submitted under § 26.1125 of 40 CFR part 26, subpart K, and how EPA is to review reports of completed research. Subpart P of 40 CFR part 26 also defines the membership and responsibilities of HSRB.

2. Proposed amendments and rationale.

a. Revisions to 40 CFR part 26, subpart P, generally. The proposed amendments to 40 CFR part 26, subpart P, include:

• A proposed new § 26.1601 explicitly defining the applicability of 40 CFR part 26, subpart P, to EPA and HSRB reviews of proposals for new research submitted under § 26.1125 of subpart K and to EPA and HSRB reviews of reports of completed research covered by subpart Q. This change is discussed in Unit IV.A.3.

• A proposed new § 26.1602 references the definitions in 40 CFR part 26, subpart K.

• A proposal to expand the discussion of EPA reviews of proposed research in § 26.1603, retaining all elements of § 26.1601 from the 2006 rule, and including a new § 26.1603(b) listing considerations to be addressed by EPA in its science reviews of proposed research, and a new § 26.1603(c) listing considerations to be addressed by EPA in its ethics reviews of proposed research.

• A proposal to slightly revise discussion of EPA reviews of completed research, redesignating § 26.1602 in 40 CFR part 26 as § 26.1604, and revising paragraph (a) to emphasize the required thoroughness of EPA's reviews and to extend its applicability to reviews of completed human research on pesticides considered under regulatory statutes other than FIFRA or FFDCA.

• The unchanged text of § 26.1603 in the 2006 rule would be redesignated as § 26.1605, defining the membership and responsibilities of HSRB.

• A proposed new § 26.1606 requiring HSRB in its reviews of proposed research to consider the same range of scientific, ethical, and other topics addressed by EPA in its reviews under § 26.1603.

• A proposed new § 26.1607 requiring HSRB in its reviews of completed research to consider both the scientific and ethical merits of the research, and to apply the appropriate acceptance standards in 40 CFR part 26, subpart Q.

As indicated previously and again throughout this discussion, EPA requests comment on each of these proposed changes, as well as on the changes in the aggregate. EPA also seeks comments on particular points as provided in the discussion.

b. Section 26.1603—EPA Review of proposed human research. Because the most significant changes proposed are the new lists in § 26.1603(b) and (c) of considerations to be addressed in EPA reviews of proposed new research, those proposed changes will be discussed in greater detail here. These proposed lists were derived primarily from the following recommendations in the 2004 NAS Report (reproduced verbatim here and referenced in the subsequent discussions):

c. Science Reviews—§  26.1603(b). The provisions in proposed § 26.1603(b) include considerations that EPA must take into account when conducting its science reviews of proposed research that would be covered by the rule. In developing this list of considerations, EPA relied on recommendations 3-1 and 5-1 from the 2004 NAS Report to identify specific items that would be relevant to evaluating the scientific merit of proposed human research. How EPA developed the specific language for each provision follows.

• Proposed § 26.1603(b)(1): Whether the research would be likely to produce data that address an important scientific or policy question that cannot be resolved on the basis of animal data or human observational research.

This language is a combination of recommendations 3-1(a) and 5-1(b) and (c) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). The language “address an important scientific or policy question” reflects excerpts taken from recommendation 5-1(c). The language “that cannot be resolved on the basis of animal data or human observation research” is taken from recommendation 3-1(a). These recommendations are intended to avoid unnecessary exposure for human subjects. If animal data or human observational research were available to address an important scientific or policy question, then there would be no scientific need for additional human research. EPA relied primarily on recommendation 5-1 in formulating the proposed language because that recommendation addresses criteria for EPA acceptance of human research, whereas recommendation 3-1describes topics that should be covered in EPA guidelines.

Based on recommendation 5-1, EPA has phrased the proposed language as whether the research “addresses” an important scientific question rather than use the phraseology “contributes to addressing” in recommendation 3-1. The Agency believes its formulation is clearer and intends to interpret this as meaning that the research needs to be designed to obtain data likely to provide significant insight into important research questions.

EPA requests comment on whether its reliance primarily on the language of recommendation 5-1(c) is appropriate here, or whether it should have used the “contributes to” language from recommendation 3-1(a).

• Proposed § 26.1603( b)(2): Whether the proposed research is designed in accordance with current scientific standards and practices to: Address the research question, include representative study populations for the endpoint in question, and have adequate statistical power to detect appropriate effects.

Again, this language is a combination of recommendations 3-1(b) and 5-1(c) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). The recommendations highlight the need for adequate statistical power and appropriate representative study populations to ensure the scientific validity and reliability (and thus ethical conduct) of human research. To accommodate these recommendations, EPA is proposing to adopt language from the recommendations 3-1(b) and 5-1(c).

For the reason stated in the previous discussion on proposed § 26.1603(b)(1), EPA placed primary reliance on recommendation 5-1. The Agency notes that the proposed § 26.1603(b)(2)(iii), which reflects the language in 5-1(c), differs from the language in 3-1(b), which says “meets requirements for adequate statistical power.” The Agency prefers to propose the language as contained in 5-1(c) because it does not believe that there is one specific set of “requirements” with which to evaluate statistical power. The Agency intends to evaluate the statistical power of a study while focusing on the ultimate goal of ensuring that appropriate effects are detected rather than on some arbitrary and undefined set of “requirements.”

EPA requests comment on whether the proposed language is clear and specifically on this language as compared to using the language directly from the recommendation in the 2004 NAS Report.

• Proposed § 26.1603(b)(3): Whether the investigator proposes to conduct the research in accordance with recognized good research practices, including, when appropriate, good clinical practice guidelines and monitoring for the safety of subjects.

This provision reflects excerpts taken from recommendation 3-1(c) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). Although the NAS focused on good clinical practice guidelines, the Agency is proposing to apply a broader standard “recognized good research practices”, which may include good clinical practice guidelines when appropriate. The rationale for this is that some human research—in fact, all human research proposed to EPA to be conducted since promulgation of the 2006 rule—is not conducted in clinical settings ( e.g., field testing of repellents or worker exposure) and thus good clinical practice guidelines would be inappropriate to apply. However, there may be other general good research practices that the research community employs to ensure scientific integrity of their studies and safety of the subjects that would be relevant for the Agency to consider. One such practice that has currently been developed is the Guidelines for Performance Testing of Skin-Applied Insect Repellent issued in October 2008, and incorporated into the OCSPP harmonized test guidelines library in July 2010, entitled “Product Performance Test Guidelines No. 810.3700: Insect Repellents to be Applied to Human Skin” ( http://www.epa.gov/ocspp/pubs/frs/publications/Test_Guidelines/series810.htm ).

EPA requests comment on this expansion and also welcomes suggestions for other good research practice documents that could be cited here as well.

d. Ethics Reviews—§ 26.1603(c). The provisions in proposed § 26.1603(c) address many important ethical concerns, including, among other things, identification and minimization of risks to participants, equitable selection of participants, and provision of medical care for participants. In developing this list of considerations, EPA relied on several recommendations from the 2004 NAS Report, including 4-1, 5-1, 5-2, 5-3, and 5-5 ( see verbatim text provided in Unit IV.C.2.b.), to identify specific considerations that would be relevant to evaluating the ethics of proposed human research. Each proposed consideration is discussed below.

• Proposed § 26.1603(c)(1): Whether adequate information is available from prior animal studies or from other sources to assess the potential risks to subjects in the proposed research.

This provision reflects excerpts taken from recommendation 5-1(a) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.), which recommends that animal studies be available prior to conducting human studies. This NAS recommendation also suggests consideration of human observational studies if available. When EPA conducts its ethics reviews, it does and will continue to consider whether there is adequate information from prior animal and human observational studies to understand the level of risk that may be presented to subjects of the proposed research. Although the NAS does not specify in its recommendation the specific purpose that the information from prior animal studies or from other sources, including human observational studies if available, serves, EPA believes its use of these studies to assess potential risks in evaluating the ethics of a human research proposal subject to this rule is reasonable and an integral part of determining whether the benefits of the research outweigh the risks of the research. The proposed language refers to “information * * * from prior animal studies or from other sources.” EPA intends the reference to “other sources” to include human observational studies, consistent with recommendation 5-1.

EPA requests comment on whether the proposed language is clear and specifically on this language as compared to using the language directly from the recommendation in the 2004 NAS Report.

• Proposed § 26.1603(c)(2): Whether the research proposal adequately identifies anticipated risks to human subjects and their likelihood of occurrence, minimizes identified risks to human subjects, and identifies likely benefits of the research and their distribution.

This provision is based on recommendation 5-1(d) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.), which states that the necessary conditions for human research include “an acceptable balance of risks and benefits and minimization of risks to participants.” EPA has separated these two conditions and addresses minimization of risk in this paragraph and the balance of risks and benefits in proposed § 26.1603(c)(3). In this paragraph, EPA also proposes to include a consideration of whether the research proposal adequately identifies anticipated risks to human subjects and their likelihood of occurrence and the likely benefits of the research and their distribution. These additional considerations are important in understanding the overall risk/benefit picture of proposed human research covered by this rule. EPA does not believe that adding these considerations will impose any additional burden on stakeholders since this information is typically provided with research proposals that are submitted to IRBs and to the Agency. EPA currently reviews human research proposals submitted to it under the 2006 rule with these considerations in mind.

EPA requests comment on whether it is appropriate to address minimization of risk and the risk-benefit balance in separate paragraphs. EPA has chosen this approach because it interprets recommendation 5-1(d) as setting forth separate and independent considerations and, given this interpretation, believes that repeating the risk-benefit balance language in this paragraph would be duplicative and confusing. EPA also recognizes an alternative view of recommendation 5-1(d) is that separating the minimization of risk consideration from the risk-benefit balance consideration alters the collective context intended by recommendation 5-1(d) of the 2004 NAS Report. As such, EPA requests comments on both approaches as they apply to the proposed §§ 26.1603(c)(2) and 26.1603(c)(3).

• Proposed § 26.1603(c)(3): Whether the proposed research presents an acceptable balance of risks and benefits. In making this determination for research intended to reduce the interspecies uncertainty factor in a pesticide risk assessment, the Administrator must consider Recommendation 4-1 in the 2004 Report from the National Research Council of the National Academy of Sciences (NAS), entitled “Intentional Human Dosing Studies for EPA Regulatory Purposes: Scientific and Ethical Issues.”

This provision reflects excerpts taken from recommendations 5-1(d) and 4-1 from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). For each human research proposal submitted to the Agency that is covered by this rule, in addition to considering whether a study proposal minimizes risks to the human subjects, EPA is proposing to consider whether the proposed research presents an acceptable balance of risks and benefits based on, among other things, the information it considers under the proposed paragraphs (c)(1) and (c)(2) in § 26.1603.

Recommendation 5-1(d) also refers to “the minimization of risks to participants.” EPA addressed that consideration in proposed § 26.1603(c)(2). The Agency requests comment on whether another reference to minimization of risk is nonetheless needed in this paragraph for consistency with the 2004 NAS Report.

For research that is intended specifically to reduce the interspecies uncertainty factor in a pesticide risk assessment, the Agency is proposing to consider whether that study presents an acceptable balance of risks and benefits in accordance with process laid out for evaluating that type of study in recommendation 4-1 and the attendant discussion in the 2004 NAS report that informs the application of that recommendation. EPA lacks experience in reviewing proposals for research intended to reduce the interspecies uncertainty factor. Since the promulgation of the 2006 rule, EPA has received no proposals for such research and, as noted in Unit IV.A.2. and A.3., EPA knows of no third-party research involving intentional exposure of a human subject to a pesticide that has ever been proposed, conducted, or submitted to EPA under regulatory authorities other than the pesticide laws. However, EPA recognizes that this is a possibility in the future.

The Agency asks for comment on how it should consider NAS recommendation 4-1, if this proposed amendment were finalized and EPA received a study proposal for that purpose, and, given the context of the proposed expansion to the scope of the 2006 rule as discussed in Unit IV.A., whether the proposed § 26.1603(c)(3) is clear about how NAS recommendation 4-1 might apply to future studies.

• Proposed § 26.1603(c)(4): Whether subject selection will be equitable.

This provision is taken directly from recommendations 5-1(e) and 5-2(a) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.).

• Proposed § 26.1603(c)(5): Whether subjects' participation would follow free and fully informed consent.

This provision reflects excerpts taken from recommendations 5-1(f) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.), which mentions free and informed consent, and the Nuremberg Code. 2

Key aspects or indicators of free and fully informed consent or legally effective consent are set out in detail in § 26.1116. They include that information be provided in a form understandable to the subject, including information on the purposes and duration of the research as well as on the procedures, risks, and any compensation involved in the research. Further, the subject must be made aware that participation in the research is voluntary, that there is no penalty for not participating, and that the subject may withdraw from the research at any time. The reference in § 26.1603(c)(5) to “free and fully informed consent” emphasizes the centrality of this concept to the ethics evaluation process.

• Proposed § 26.1603(c)(6): Whether an appropriately constituted Institutional Review Board or its foreign equivalent has approved the proposed research.

This provision reflects excerpts taken from recommendations 5-1(g) and 6-1 from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). Section 26.1125 already requires third-parties covered by the 2006 rule to obtain IRB approval before submitting proposals to EPA under subpart P, and section 26.1601(c) of the current rule allows the Agency to consider whether foreign proposed research has undergone equivalent protective procedures.

• Proposed § 26.1603(c)(7): If any person from a vulnerable population may become a subject in the proposed research, whether there is a convincing justification for selection of such a person, and whether measures taken to protect such human subjects are adequate.

This provision reflects excerpts taken from recommendation 5-2(b) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). EPA recognizes that some individuals who may become subjects in human research may be more vulnerable to coercion or undue influence, for example, prisoners, persons with mental disabilities, or economically or educationally disadvantaged persons. As such, for proposals in which such individuals may become a subject of the research, EPA is proposing to consider whether the proposal contains a convincing justification for the selection of those persons as well as whether any measures taken to protect those persons are adequate. The specific language of recommendation 5-2(b) states that “IRBs * * * should ensure that the following conditions met in selecting research participants * * * (b) Selection of persons from vulnerable populations must be convincingly justified in the protocol, which also must justify the measures to be taken to protect the participants.” In drafting this provision EPA rephrased recommendation 5-2(b) to convert it to regulatory language. In doing so, EPA first made this provision conditional (the “if” clause) because EPA does not expect that vulnerable populations will often be included in human research and there is no reason to impose a burden on researchers to justify a situation when it is inapplicable. EPA also substituted the requirement that measures taken to protect such human subjects be “adequate” instead of requiring a “convincing justification” for them.

EPA requests comment on whether the proposed language is clear and specifically on this language as compared to using the language directly from recommendation 5-2(b) in the 2004 NAS Report.

• Proposed § 26.1603(c)(8): If any person with a condition that would put them at increased risk for adverse effects may become a subject in the proposed research, whether there is a convincing justification for selection of such a person, and whether measures taken to protect such human subjects are adequate.

This provision reflects excerpts taken from recommendation 5-2(c) from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). Although EPA anticipates that persons with conditions that put them at increased risk for adverse effects would likely be screened from participating in human research subject to this rule, there may be circumstances when an exception is warranted. In those instances where such persons may become subjects in research covered by this rule, EPA is proposing to consider whether the research contains a convincing justification for the selection of those persons as well as whether any measures taken to protect those persons are adequate to decrease risks to an acceptable level. The specific language of recommendation 5-2(b) states that “IRBs * * * should ensure that the following conditions met in selecting research participants * * * (c) Selection of individuals with conditions that put them at increased risk for adverse effects in such studies must be convincingly justified in the protocol, which also must justify the measures that investigators will use to decrease the risks to those participants to an acceptable level.” For this provision, EPA followed a similar path in converting the NAS recommendation into regulatory language as it did with proposed § 26.1603(c)(7), i.e., EPA made the provision conditional and used an adequacy test rather than a convincing justification as to evaluating the measures to protect the subjects.

EPA requests comment on whether the proposed language is clear and specifically on this language as compared to using the language directly from recommendation 5-2(c) in the 2004 NAS Report.

• Proposed § 26.1603(c)(9): Whether any proposed payments to subjects are consistent with the principles of justice and respect for persons, and whether they are so high as to constitute undue inducement or so low as to be attractive only to individuals who are socioeconomically disadvantaged.

This provision reflects excerpts taken from recommendation 5-3 from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). Although this provision overlaps slightly with proposed §§ 26.1603(c)(4) and § 26.1603(c)(7), EPA is proposing to enumerate a specific consideration for whether the level of remuneration for participation in any proposal for human research covered by this rule is appropriate, i.e., consistent with the principles of justice and respect for persons, and whether it is likely to induce participation from individuals from vulnerable populations and affect the equitable selection of subjects. In converting the affirmative statement in recommendation 5-3 into a “whether” statement for regulatory language, EPA dropped the recommendation's “neither—nor” phrasing because it is potentially confusing. EPA believes that, as drafted, this provision requires consideration of whether payments are either too high or too low but requests comment on this point.

EPA requests comment on whether the proposed language is clear and specifically on this language as compared to using the language directly from recommendation 5-3 in the 2004 NAS Report.

• Proposed § 26.1603(c)(10): Whether the sponsor or investigator would provide needed medical care for injuries incurred in the proposed research, without cost to the human subjects.

This provision reflects excerpts taken from recommendation 5-5 from the 2004 NAS Report ( see verbatim text provided in Unit IV.C.2.b.). EPA is proposing to consider in its ethics review of proposed human research subject to this rule whether medical care resulting from participation in the research will be provided without cost to the human subjects.

As noted throughout this section, EPA requests comment on whether the provisions of proposed § 26.1603 are consistent with the recommendations from the 2004 NAS Report and whether the regulatory language chosen by EPA adequately captures EPA's intended goal and is otherwise clear and easily understood.

a. Current rule. 40 CFR part 26, subpart Q, establishes standards governing reliance by EPA under the pesticide laws on “scientifically valid and relevant data from research involving intentional exposure of human subjects.” Section 26.1703 forbids EPA to rely on any research involving intentional exposure of a subject who was a pregnant woman, a nursing woman, or a child. Section 26.1704 forbids EPA to rely on research initiated before the effective date of the 2006 rule in the face of clear and convincing evidence that “the conduct of the research was fundamentally unethical ( e.g., the research was intended to seriously harm participants or failed to obtain informed consent), or was significantly deficient relative to the ethical standards prevailing at the time the research was conducted.” Section 26.1705 forbids EPA to rely on research initiated after the effective date of the 2006 rule unless EPA has “adequate information to determine that the research was conducted in substantial compliance with subparts A through L * * *” Section 26.1706 permits EPA to rely on the results of human research unacceptable under the standards of §§ 26.1703-26.1705 only if EPA determines, after public notice and comment and consultation with HSRB, that reliance on the research is necessary to support “a more stringent regulatory restriction that would improve protection of public health * * * than could be justified without relying on the data.” The Agency is not proposing to amend the substance of § 26.1706.

b. Summary of proposed changes. In addition to broadening the scope of 40 CFR part 26, subpart Q, to apply to research relied on by EPA under regulatory statutes other than FIFRA or FFDCA, EPA proposes to amend the substantive standards in §§ 26.1703, 26.1704, and 26.1705 for determining the acceptability of completed research involving intentional exposure of a human subject to a pesticide. As noted throughout this document, EPA requests comment on each of these proposed changes, as well as on the changes in the aggregate. In particular, EPA seeks comment on its conclusions regarding the effect of these proposed changes relative to the scope of the 2006 rule, including the effect of these proposed changes on the volume of studies covered by the rule, the likely statutes under which studies may be submitted, and the impact on activities covered by those other statutes.

c. Anticipated effects. If a covered study does not meet the applicable standards in 40 CFR part 26, subpart Q, EPA would be prohibited from relying on the data in any action it takes under any of its regulatory authorities except under the extremely restrictive conditions defined in § 26.1706.

a. Proposed changes and rationale. Consistent with the changes proposed in 40 CFR part 26, subpart P, and discussed in Unit IV.C., EPA proposes to add in § 26.1703(a) an explicit prohibition against reliance on data from completed research “unless EPA determines that the data are relevant to a scientific or policy question important for EPA decision-making, that the data were derived in a manner that makes them scientifically valid and reliable, and that it is appropriate to use the data for the purpose proposed by EPA.”

In making this determination, EPA would be required to assess these four aspects of the research:

• Whether the research was designed and conducted according to “appropriate scientific standards and practices prevailing at the time the research was conducted.”

• The extent to which the test subjects represent the population whose response the data will be used to predict.

• The statistical power of the data to support the scientific conclusions drawn by EPA.

• Whether, in a study that reports a No Observed Effect Level (NOEL) or a No Observed Adverse Effect Level (NOAEL), some dose level elicited a biological effect.

These four aspects of the research are derived from Recommendations 3-1 and 5-1 from the 2004 NAS Report. They do not establish fixed criteria for acceptance or rejection of a study, but they identify specific aspects of a study that EPA must consider in determining that it is relevant, scientifically valid and reliable, and appropriate for a particular use.

b. Anticipated effect. As noted previously, 40 CFR part 26, subpart Q, applies to EPA decisions to rely on “scientifically valid and relevant data” from covered research. Since 2006, EPA's practice in reviewing reports of covered human research has been to examine carefully the scientific merit of the reported studies and to refuse to use research deemed invalid or irrelevant. EPA proposes to delete these factors from the scope of 40 CFR part 26, subpart Q, as defined in § 26.1701, and to codify them as factors in § 26.1703(a) to ensure that they remain central to determinations of scientific validity and relevance. If this proposed amendment is finalized, EPA would likely make minor revisions to its internal review procedures to highlight the consideration given to these four aspects of the research.

a. Proposed changes and rationale. The Agency based the ethical acceptability standard in § 26.1704 on Recommendation 5-7 from the 2004 NAS Report, which states in relevant part:

EPA adopted the recommendation from the 2004 NAS Report nearly verbatim, with the notable insertion of the word “significantly” before “deficient.” EPA explained in the preamble to the 2006 rule (at 71 FR 6161) that this was to allow it the flexibility to consider the impact on subjects of any ethical shortcomings in the conduct of the research. EPA stated in that preamble (at 71 FR 6161) that “EPA expects [the meaning of “significantly”] to acquire greater clarity over time, through HSRB and public review of Agency decisions concerning reliance on completed human research.”

EPA believes that greater clarity has, indeed, been achieved through the application of the 2006 rule by EPA and HSRB. EPA now proposes to revise § 26.1704 by deleting the word “significantly,” proposing instead to characterize explicitly the kinds of deficiencies that would make a study unacceptable.

This language is derived from the advice of HSRB as they have applied the standard of § 26.1704 in the 2006 rule. See, for example, their comments on studies involving aldicarb, methomyl, oxamyl, azinphos-methyl, DDVP, ethephon, sodium cyanide, and amitraz at: http://www.epa.gov/osa/hsrb/files/meeting-materials/apr-4-6-2006-public-meeting/april2006mtgfinalreport62606.pdf. For each study they found ethically acceptable, HSRB found “no evidence of significant deficiencies in the ethical procedures that could have resulted in serious harm (based on the knowledge available at the time the study was conducted) nor that information provided to participants seriously impaired their informed consent.”

Finally, EPA proposes to redefine the applicability of § 26.1704 in a new paragraph (a) as the complement of the more detailed scope of § 26.1705, thereby eliminating any gaps or overlap in the applicability of the two standards.

b. Anticipated effect. Proposed § 26.1704 would forbid EPA to rely on research not covered by 40 CFR part 26, subpart K, or the Common Rule in the face of clear and convincing evidence that its conduct “placed participants at increased risk of harm (based on knowledge available at the time the study was conducted) or impaired their informed consent.” EPA specifically requests comment on the incremental value of this change as well as the extent to which this change might inappropriately reduce EPA's access to human research.

a. Proposed changes and rationale. The standard in 40 CFR part 26 applying to completed research initiated after the effective date of the rule is § 26.1705, based on Recommendation 5-6 from the 2004 NAS Report, which states in relevant part (italics in the original; footnote omitted):

EPA adapted this recommendation in its drafting of § 26.1705, which provides in relevant part:

EPA now proposes to amend both the applicability of § 26.1705 and the substance of the standard itself. In the 2006 rule, § 26.1705 applies to any scientifically valid and relevant research involving intentional exposure of human subjects and initiated after the effective date of the rule. EPA proposes now to limit application of the § 26.1705 standard to research subject, at the time it was conducted, either to subparts A through L of 40 CFR part 26 or to another Federal department or agency's codification of the Common Rule.

EPA recognizes that it could in the future wish to rely on data from third-party research conducted after 2006 but which fell outside the scope of 40 CFR part 26, subpart K, and for which EPA therefore would not have conducted a protocol review under 40 CFR part 26, subpart P, before the research was conducted. For example, as discussed in Unit IV.A., 40 CFR part 26, subpart K, as now proposed would not apply to a new clinical trial evaluating the therapeutic efficacy of a drug that was also a pesticide. Because this research would fall outside the scope of 40 CFR part 26, subpart K, investigators would not have submitted the protocol to EPA under 40 CFR part 26, subpart K, and EPA and HSRB would not have reviewed it under 40 CFR part 26, subpart P. Yet, if data from such research were to be relied on by EPA, the standards of subpart Q would apply. As § 26.1705 is currently worded in 40 CFR part 26, such a study could only be relied on if “EPA has adequate information to determine that the research was conducted in substantial compliance with subparts A through L.” But because the protocol would not have been submitted for review by EPA and HSRB, the research in this example would not have been conducted in substantial compliance with 40 CFR part 26, subpart K.

EPA believes that it would be inappropriate to reject otherwise meritorious and ethical research for failure to comply with provisions in 40 CFR part 26, subparts A-L that did not apply when the research was conducted. Thus EPA proposes to make § 26.1705 applicable only to studies that were initiated after the effective date of the 2006 rule and that were subject to EPA's rules for the protection of human subjects (40 CFR part 26, subparts A through L) or another codification of the Common Rule. A companion change in § 26.1704(a) would apply the standard of § 26.1704 to all other completed research considered by EPA under 40 CFR part 26, subpart Q, without regard to when the research was initiated.

EPA proposes further changes to § 26.1705 to help make this clear. Proposed § 26.1705(b)(1) defines the applicable standard as either 40 CFR part 26, subparts A through L, or another Federal department or agency's codification of the Common Rule, whichever set of rules covered the research when it was conducted. In proposed § 26.1705(b)(2), corresponding changes are made applicable to research conducted in foreign countries.

Finally, in a new paragraph (c) in § 26.1705, EPA proposes to require substantial compliance of covered research with its protocol. A study reviewed as a proposal under subpart P of 40 CFR part 26 could be relied on only if it had been conducted in substantial compliance with the protocol found acceptable by EPA, and if the investigator did not further amend or deviate from the protocol in ways that placed participants at increased risk of harm (based on knowledge available at the time the study was conducted) or impaired their informed consent. If a completed study was not reviewed as a proposal under 40 CFR part 26, subpart P, the study could only be relied on if it had been conducted in substantial compliance with a protocol that would have been found acceptable, and if the investigator did not amend or deviate from the protocol in ways that placed participants at increased risk of harm (based on knowledge available at the time the study was conducted) or impaired their informed consent.

b. Anticipated effect. Taken together, these proposed changes in § 26.1705 reflect the interpretations and methods used by EPA and HSRB since 2006 in reviewing completed, post-rule research. Codifying these interpretations will ensure consistency and transparency in future decision-making and is consistent with the 2006 Appropriations Act.

1. Current rule. Subparts A-D of 40 CFR part 26 all apply to research with human subjects which is conducted or supported by EPA in its role as a research agency. Subparts K-Q of 40 CFR part 26 apply to pesticide research with human subjects that is conducted by regulated third parties, and to EPA's regulatory oversight of that research. Some stakeholders have suggested that this important distinction would be clearer if 40 CFR part 26 contained only those subparts applying to EPA as a research agency, and if 40 CFR part 26, subparts K-Q, were moved to a different section of EPA's regulations, within the range where other pesticide-specific regulations are found.

2. Proposed amendments and rationale. EPA is not now proposing such a re-codification, but invites public comment on the idea. Although it would necessitate many non-substantive revisions—mainly of internal cross-references—re-codification would not be difficult to accomplish. 40 CFR part 26 would retain current 40 CFR part 26, subparts A-D, and at least parts of current 40 CFR part 26, subpart O. A previously unused part within 40 CFR, within the numerical range of parts 150-180 where other pesticide-related regulations appear, would include current 40 CFR part 26, subparts K, L, M, O, P, and Q. 40 CFR part 26, subpart O, potentially applies to both EPA research and to third-party research and would need to be adapted to fit into both parts of a separated codification in 40 CFR.

3. Anticipated effect. Although this proposed re-codification may better distinguish those requirements applying to EPA as a research agency, and those applying to third-party studies, it would only change the location of the regulation within 40 CFR, and would not otherwise have any effect on the requirements.

In accordance with FIFRA section 25(a), EPA has submitted a draft of the proposed rule to the FIFRA Scientific Advisory Panel (SAP), the Secretary of Agriculture (USDA), and appropriate Congressional Committees. The FIFRA SAP waived its review of this proposal on October 12, 2010, because the significant scientific issues involved have already been reviewed by the SAP and additional review is not necessary. USDA responded without comments, but participated in the interagency review process under Executive Order 12866.

Under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993), this has been identified as a “significant regulatory action.” Accordingly, EPA submitted the draft proposed rule to the Office of Management and Budget (OMB) for review under Executive Order 12866 and any changes made in response to OMB recommendations have been documented in the docket for this rulemaking as required by the Executive Order.

The incremental costs of these proposed amendments both to industry and to EPA are expected to be negligible. EPA has not, therefore, prepared a new economic analysis for this rulemaking. Because no research has been identified that is outside the scope of the 2006 rule but that would be within the scope of these proposed amendments, EPA has no basis on which to revise the cost estimates that were provided in the economic analysis for the 2006 rulemaking or those most recently provided in the 2008 renewal of the Information Collection Request (ICR) for the existing regulation at 40 CFR part 26. The recent estimates included in the ICR are summarized in Unit VI.B. and a copy of the ICR is available in the docket.

This action does not impose any new information collection burden that would require additional review or approval by OMB under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. OMB previously approved the information collection requirements contained in the existing regulations at 40 CFR part 26 under OMB Control No. 2070-0169 (EPA ICR No. 2195). Burden is defined at 5 CFR 1320.3(b).

In its 2008 analysis supporting the most recent renewal of this ICR, EPA estimated that respondents would submit to the Agency some 34 proposals for or reports of research involving intentional exposure of human subjects each year. EPA estimated that preparation of information required by the 2006 rule would require about 598 hours per study at a cost of $45,927 per study, for a total estimated annual burden for affected entities of 20,332 hours at an estimated cost of $1,561,518. In addition, EPA estimated annual submission of 20 reports of research requiring only documentation of ethical conduct at a cost of 12 hours/$879 per report, or 240 hours/$17,580 per year. The total estimate of the annual respondent burden and cost was the sum of these two estimates, or 2,572 hours/$1,579,098.

These paperwork burden and cost estimates include activities related to initial rule familiarization, as well as activities that researchers would have to perform even without the Agency's rulemaking in this area, such as developing a protocol and maintaining records.

The average annual burden on EPA for reviewing each of the 34 study submissions was estimated to be 178 hours/$16,850 per study, or 6,052 hours/$572,900 per year. The average annual burden on EPA for reviewing each of the 20 additional submissions was estimated to be 44 hours/$3,158 per study, or 880 hours/$63,160 per year. The total estimate of the annual burden on EPA was the sum of these two estimates, or 6,932 hours/$636,000 per year.

In no year since promulgation of the 2006 rule have more than 7 protocols been submitted to EPA by industry; the average annual rate has been just over 5 for the 5-year period of 2006-2010. Somewhat fewer completed reports have been submitted during this period, so the average of new protocols and finished studies has been about 11 per year, less than a third of the projected 34 per year covered by the ICR. There is no evidence to suggest an upward trend, and nothing in these amendments is believed likely to lead to a significant change in the rate of protocol and study submissions.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., the Agency hereby certifies that this action will not have a significant adverse economic impact on a substantial number of small entities. Under RFA, small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of this proposed rule on small entities, small entity is defined in accordance with RFA section 601 as:

1. A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201.

2. A small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000.

3. A small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

Because no small entities have been identified that are directly regulated by these proposed amendments, EPA has not attempted to reduce the impact of this proposed rule on small entities. Comments are invited on all aspects of the proposal and its impacts on small entities.

This action does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of sections 202, 203, 204, or 205 of the Unfunded Mandates Reform Act (UMRA), 2 U.S.C. 1531-1538. These amendments are unlikely to affect State, local, and tribal governments at all, and are likely to affect the private sector only trivially. The action does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any 1 year.

This action does not have federalism implications because it is not expected to 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, entitled Federalism (64 FR 43255, August 10, 1999). It makes marginal changes in the scope of an existing rule applying to sponsors and investigators conducting certain kinds of research involving human subjects, and refines the standards for EPA oversight of and reliance on such research.

In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically requests comments on this proposed action from State and local officials.

This action does not have tribal implications as specified in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000). This action is not expected to have substantial direct effects on Indian Tribes, will not significantly or uniquely affect the communities of Indian Tribal governments, and does not involve or impose any requirements that affect Indian Tribes. Thus, Executive Order 13175 does not apply to this action.

EPA interprets Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (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 action is not subject to Executive Order 13045 because it does not establish an environmental standard intended to mitigate health or safety risks, nor is it an “economically significant regulatory action” as defined in Executive Order 12866. The 2006 rule applies to the conduct and review of research involving intentional exposure of human subjects, and prohibits the conduct of or EPA reliance on any such research involving subjects who are children, or pregnant or nursing women. These provisions would not be affected by the proposed amendments.

This action is not a “significant energy action” as defined in Executive Order 13211, entitled Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001), because this action is not likely to have any affect on the supply, distribution, or use of energy.

Because this action does not involve any technical standards, section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA) (15 U.S.C. 272 note), does not apply to this action.

This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994). The strengthened protections for human subjects participating in covered research established in the 2006 rule would not be altered by these proposed amendments.

Therefore, it is proposed that 40 CFR chapter I be amended as follows:

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to view public comments.

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

Various sections of the Social Security Act (the Act) define the terms used for each Medicare provider and supplier. In some cases, those definitions describe requirements that Medicare certified providers and suppliers must meet for purposes of the Medicare program. Some of those provisions also specify that the Secretary of the Department of Health and Human Services (DHHS) (the Secretary) may establish other requirements as necessary in the interest of health and safety of patients. The Public Health Service (PHS) Act also specifies additional requirements that some Medicare certified providers and suppliers must meet.

The Secretary has established in regulation the requirements that each provider and supplier must meet in order to participate in the Medicare and Medicaid programs. These requirements are called the Conditions of Participation (CoPs), or Requirements (for Long Term Care Facilities) for providers and the Conditions for Coverage (CfCs) for suppliers. The CoPs and CfCs establish health and safety measures that are intended to ensure that a minimum level of quality care is furnished to all Medicare patients.

To assist with improving the quality of health care for Medicare patients, we propose to establish a new standard for the following 10 Medicare certified providers and suppliers:

• Ambulatory Surgical Centers (ASCs).

• Hospices.

• Hospitals.

• Long Term Care (LTC) Facilities.

• Home Health Agencies (HHAs).

• Comprehensive Outpatient Rehabilitation Facilities (CORFs).

• Critical Access Hospitals (CAHs).

• Clinics and Rehabilitation Agencies.

• Portable X-Ray Services.

• Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs).

Section 142 of the Peer Review Improvement Act of 1982 (Title I, Subtitle C of the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 (Pub. L. 97-248)) amended section 1862 of the Act by adding new subsection (g), which requires that the Secretary enter into contracts with utilization and quality control peer review organizations (PROs). These organizations make determinations about whether care is reasonable and medically necessary, or is custodial in nature. They also promote the effective, efficient, and economical delivery of care, and promote the quality of that care. In 2002, CMS began referring to these Peer Review Organizations as Quality Improvement Organizations (QIOs). ( See 67 FR 36539.) The national Quality Improvement Organization (QIO) Program was established to improve the efficiency, effectiveness, economy and quality of services delivered to Medicare beneficiaries. CMS contracts with 53 QIOs (one in each State, Puerto Rico, the District of Columbia, and the U.S. Virgin Islands) for a term of 3 years.

Section 143 of TEFRA added sections 1151 through 1163 in Part B of Title XI of the Act, which established the Utilization and Quality Control Peer Review Program. Section 1151 of the Act sets out the purpose of Part B of title XI of the Act. Section 1152 of the Act defines the entities that can qualify as QIOs, including the requirement that the QIO must be composed of a substantial number of the “licensed doctors of medicine and osteopathy engaged in the practice of medicine or surgery” in the QIO's area of responsibility. Alternatively, the QIO must have available the services of a sufficient number of licensed doctors of medicine or osteopathy engaged in the practice of medicine or surgery in its area to assure adequate peer review of the services provided by the various medical specialties and subspecialties. Section 1153 of the Act provides specific requirements regarding how contracts between the QIOs and CMS must be structured. Section 1154(a)(1) of the Act describes the QIOs' responsibility to determine whether a provider's or practitioner's services and items are reasonable and medically necessary, provided in the appropriate setting, and whether the quality of services meets “professionally recognized standards” of care. QIOs also have the specific responsibility under section 1154(a)(14) of the Act to conduct an “appropriate review of all written complaints about the quality of services (for which payment may otherwise be made under title XVIII) not meeting professionally recognized standards of health care. * * *” A complaint can only be reviewed and resolved by the QIO if filed by an individual entitled to benefits for such services under Medicare (or a person acting on the individual's behalf). The QIO's review responsibility applies to any beneficiary's complaint, even if the issues raised do not appear to the QIO to involve serious or substantial quality violations.

As part of the effort to evaluate the QIO program, section 109(d)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) mandated the Institute of Medicine (IOM) to conduct a review of the program and to recommend how its impact could be enhanced. IOM published the final report on March 9, 2006 and it can be found at http://www.iom.edu/Reports/2006/Medicares-Quality-Improvement-Organization-Program-Maximizing-Potential.aspx. One of the issues the report highlighted was that QIOs perform few beneficiary complaint reviews.

We believe that a factor contributing to the low volume of beneficiary complaint reviews is that beneficiaries are unaware of their right to voice complaints to the QIO in their State. CMS, in the past, has instituted efforts to inform beneficiaries of their right to report to their respective QIOs, concerns they have about the quality of care they receive. These efforts have included the incorporation of a specific provision in the Hospital CoPs at § 482.13(a)(2) that includes a requirement that the grievance process must include a mechanism for timely referral to the appropriate Utilization and Quality Control Quality Improvement Organization of beneficiary concerns regarding quality of care. In accordance with section 1866(a)(1)(M) of the Act, hospitals and critical access hospitals (CAHs) must deliver, at or about the time of patient admission, the “Important Message from Medicare” (IM) to all inpatient Medicare beneficiaries which explains their Medicare rights, including appeal rights. The IM informs beneficiaries of their right to report to the QIO any concerns about the quality of care they received. It also requires that the hospital provide the name of the QIO and the QIO's contact information. The current data shows that QIO utilization rates are higher among in-patient Medicare beneficiaries than among Medicare beneficiaries who receive care in other settings. Under the current QIO 9th Statement of Work (8/1/2008 through 7/31/11), the QIOs have received 6,379 inpatient and 4,116 outpatient requests for complaint reviews.

Over the past decade, quality of health care has been of increasing concern. CMS recognizes this concern and has started revising patient health and safety regulations to include quality assessment and performance improvement requirements.

Currently, Medicare beneficiaries receiving hospital in-patient services are informed of their right to communicate health care concerns to a QIO. We believe that this requirement should also be provided to Medicare out-patient beneficiaries and to those beneficiaries receiving care in other healthcare settings. To further assist in improving quality of health care, we are proposing to include a new standard for 10 specific Medicare certified providers and suppliers (that is, CoPs or CfCs). The new standard would inform Medicare beneficiaries of their right to communicate health care concerns to a QIO. These standards are applicable only to Medicare beneficiaries because QIOs are only authorized to review the health care quality complaints of Medicare beneficiaries.

As part of this effort, we propose that Medicare beneficiaries be informed by written notice at the start of care (or, for some providers or suppliers, at the time of inpatient admission or at an initial assessment visit in advance of furnishing care) of their right to voice concerns about the quality of care they are receiving (or, once services have been furnished, have received) to the QIO in the State where services are being or have been provided. We also propose that the facility document that it presented written notice to the beneficiary or the beneficiary's representative or a surrogate selected by the beneficiary, such as a family member or friend of the beneficiary. This person may act as a liaison between the beneficiary and the provider/supplier to help the beneficiary communicate, understand, remember and cope with the interactions that take place during their visit/stay, and explain any instructions to the beneficiary that are delivered by the provider or supplier. If a patient is unable to fully communicate directly with the provider or supplier, then the provider or supplier may give written information to the beneficiary's representative or surrogate. Patient representatives or surrogates are not intended to serve as interpreters for limited English proficient (LEP) or deaf/hard of hearing persons. Under regulations issued pursuant to Title VI of the Civil Rights Act of 1964 (Title VI), recipients of Federal funds such as health care providers must take reasonable steps to provide LEP persons with meaningful access to programs and activities. Further, under Section 504 of the Rehabilitation Act of 1973, recipients must ensure effective communication with persons with disabilities, including those who are deaf or hard of hearing. Under both laws, interpreters necessary for meaningful access and effective communication are to be provided free of charge. If a patient wishes his or her representative or surrogate to serve in the capacity of interpreter, the provider or supplier can obtain a signed waiver from the patient documenting that a free interpreter was offered and declined in favor of using the representative or surrogate. In any case, the provider or supplier continues to be responsible for ensuring the language access and effective communication. Where necessary for compliance with Title VI, providers and suppliers should provide written translations for LEP persons, particularly for languages that are commonly used by non-English-speaking beneficiaries, such as Spanish.

These proposed requirements are based on the provisions that are already established for those Medicare beneficiaries receiving care in a hospital setting. At this time, we are not proposing to require that a specific format be utilized. Entities will have the flexibility to design their own notice and documentation process.

This proposed rule would affect the following Medicare certified providers and suppliers: (1) Ambulatory Surgical Centers (ASCs); (2) Hospices; (3) Hospitals; (4) Long Term Care Facilities (LTCs); (5) Home Health Agencies (HHAs); (6) Comprehensive Outpatient Rehabilitation Facilities (CORFs); (7) Critical Access Hospitals (CAHs); (8) Clinics and Rehabilitation Agencies; (9) Portable X-ray Services; and (10) Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs).

In addition to informing Medicare beneficiaries about QIO contact information, we have also included a proposed requirement for seven out of the ten providers and suppliers that requires each of them to inform all patients, including Medicare beneficiaries, about State agency contact information. We wanted to be sure patients also had information about filing a complaint with the State survey agency. As we mentioned previously, CMS is continually updating the health and safety standards of various providers and suppliers and, as a result, Ambulatory Surgical Centers, Long Term Care Facilities, and Home Health Agencies already have existing regulations that require them to provide patients with State survey agency contact information. We propose to add the State agency contact information requirement to the following seven types of providers and suppliers: Hospices, Hospitals, CORFs, CAHs, Clinics and Rehabilitation Agencies, Portable X-ray Services and RHCs and FQHCs.

Medicare health and safety standards are in place to protect patients. All patients receiving care at Medicare-certified facilities have the right to file a complaint or grievance with the State agency against a Medicare provider or supplier for improper care or treatment. The State survey agency and CMS work together to make sure providers and suppliers meet Federal standards. Medicare beneficiaries can file a complaint with the State agency and/or a QIO. It is our intent to ensure that, as part of patient rights, patients receive complete information about filing a complaint in the event they have a healthcare concern or complaint about the care they received from a Medicare certified facility. In the event that a QIO received a complaint from a non-Medicare beneficiary, we expect that the QIO would explain that complaints are covered only for Medicare beneficiaries and the individual should contact the facility directly for procedures for filing a complaint and information on contacting the appropriate State survey agency.

Some Medicare certified providers and suppliers were determined not to be appropriate for inclusion in this proposed rule for various reasons. For example, End Stage Renal Disease (ESRD) facilities are excluded from this proposed requirement because they already have a specific complaint process built into the ESRD Network System that is similar to the QIO complaint process. At this time, we would also like to solicit comments on whether this QIO notice should also be given at the end of a Medicare beneficiary's treatment, service or hospitalization. Another option may be to only require that the QIO notice be given upon completion of treatment or discharge (in addition to the notification upon admission) if the Medicare beneficiary has experienced an adverse event.

The data regarding the number of Medicare certified providers and suppliers that would be affected by this proposed rule would be generated by CMS' Online Survey, Certification, and Reporting (OSCAR) data system as of December 31, 2008. We note that the OSCAR system is updated frequently by individual States. Thus, the figures may not always total 100 percent.

Section 42 CFR 416.2 defines an ambulatory surgical center (ASC) as any distinct entity that operates exclusively for the purpose of providing surgical services to patients not requiring hospitalization, in which the expected duration of services would not exceed 24 hours following an admission.

The surgical services performed at ASCs are scheduled, primarily elective, non-life-threatening procedures that can be safely performed in an ambulatory setting. Patients are examined immediately before surgery to evaluate the risk of anesthesia and of the procedure to be performed. Patients are also evaluated before discharge from the ASC to ensure that there has been proper anesthesia recovery. Currently, there are 5,174 Medicare certified ASCs in the United States. Most ASCs are small physician-owned entities.

The ASC CfCs are located at § 416.40 through § 416.52. Currently, the patient rights standard for ASCs specifies that the ASC must inform the patient or the patient's representative of the patient's rights, and must protect and promote the exercise of such rights. In addition, it states that the ASC must provide the patient or the patient's representative with verbal and written notice of the patient's rights in advance of the date of the procedure, in a language and manner that the patient or the patient's representative understands. To further assist with improving the quality of health care, we are proposing to revise the ASC patient rights requirement at § 416.50 by redesignating paragraph (c) as paragraph (d) and paragraph (d) as paragraph (e) and adding a new standard at paragraph (c). The proposed standard would require the ASC to inform all Medicare beneficiaries by written notice, at the time of admission, of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. In addition, the new standard would require that the ASC provide Medicare beneficiaries with the name, telephone number, electronic mail address, and mailing address of the QIO, as well as require that the ASC document in the beneficiary's record that it has presented the written notice to the beneficiary or beneficiary's representative or surrogate.

Section 122 of TEFRA, Public Law 97-248, added section 1861(dd) to the Act to provide coverage for hospice care to terminally ill Medicare beneficiaries who elect to receive care from a Medicare-participating hospice. Under section 1861(dd) of the Act, the Secretary has established the CoPs that a hospice must meet in order to participate in the Medicare and Medicaid programs or both programs. Under section 1861(dd) of the Act, the Secretary is responsible for ensuring that the CoPs and their enforcement are adequate to protect the health and safety of individuals under hospice care. The hospice care CoPs at § 418.52 through § 418.116 apply to a hospice as an entity, as well as to the services furnished to each individual under hospice care.

Hospice care provides palliative care rather than traditional medical care and curative treatment to terminally ill individuals. Palliative care improves the quality of life of patients and their families facing the problems associated with life-threatening illness through the prevention and relief of suffering by means of early identification, assessment, and treatment of pain and other issues. Hospice care allows the patient to remain at home as long as possible by providing support to the patient and family, and by keeping the patient as comfortable as possible while maintaining his or her dignity and quality of life. A hospice uses an interdisciplinary approach to deliver medical, social, physical, emotional, and spiritual services through the use of a broad spectrum of caregivers. Currently, there are 3,346 hospice agencies nationally.

The patient's rights standard for hospice care currently states that the patient has the right to be informed of his or her rights, and that the hospice must protect and promote the exercise of these rights. However, it does not state that the patient is to receive State survey agency information to report complaints or to be informed of his or her right to communicate health care quality concerns to a QIO. Therefore, we are proposing to include these requirements by revising the hospice patient's rights requirements at § 418.52 by adding a new requirement at proposed paragraph (c)(9). We are also proposing to add a new standard at proposed paragraph (d). At proposed paragraph (c)(9), we are proposing that the hospice provide patients with the mailing address, electronic mail address, and telephone number of the State survey agency in the event they wish to report a grievance. The proposed new standard at paragraph (d) would require the hospice to inform all Medicare beneficiaries by written notice, during the initial assessment visit in advance of furnishing care, of their right to file a written complaint about the quality of care they are receiving or have received to the QIO in the State where services are being provided or were provided. In addition, the proposed standard would require the hospice to provide Medicare beneficiaries with the name, telephone number, electronic mail address, and mailing address of the QIO, as well as require that the hospice document in the beneficiary's records that it presented the written notice to the beneficiary or beneficiary's representative or surrogate.

Section 1861(e)(1) through (8) of the Social Security Act (the Act) defines the term “hospital” and lists the requirements that a hospital must meet to be eligible for Medicare participation. Section 1861(e)(9) of the Act specifies that a hospital must also meet such other requirements as the Secretary finds necessary in the interest of the health and safety of the hospital's patients. Under the authority of 1861(e), the Secretary has established in regulations at 42 CFR part 482 the requirements that a hospital must meet to participate in the Medicare program.

Section 1905(a) of the Act provides that Medicaid payments may be applied to hospital services. Regulations at § 440.10(a)(3)(iii) require hospitals to meet the Medicare conditions of participation (CoPs) to qualify for participation in Medicaid. The hospital CoPs are found at § 482.1 through § 482.66.

We are proposing to amend the patient's rights requirements at § 482.13 by adding a new requirement at subparagraph (a)(1)(i). To remain consistent among providers and suppliers, we are proposing to require that hospitals provide patients with the address and telephone number of the State survey agency to report complaints. Currently, our patient's rights regulation at § 482.13(a)(2) already requires hospitals to provide all patients with a grievance process. This regulation also includes the timely referral, for Medicare beneficiaries, to a QIO about complaints regarding the quality of care and discharges, similar to the proposals we are making here for other providers and suppliers. We are also proposing to add new standards at § 482.13(a)(1)(ii) which would require that the hospital inform all Medicare beneficiaries by written notice, at the time of inpatient admission or outpatient service, of their right to file a written complaint about the quality of care they are receiving or have received to the QIO in the State where services are being or were provided. In addition, the new standard would require the hospital to provide beneficiaries with the name, telephone number, electronic mail address, and mailing address of the QIO, as well as require that the hospital document in the beneficiary's record that it has presented the written notice to the beneficiary or beneficiary's representative or surrogate.

Section 1819(a) of the Act defines a skilled nursing facility (SNF) for Medicare purposes as an institution or a distinct part of an institution that is primarily engaged in providing skilled nursing care and related services to residents that require medical or nursing care or rehabilitation services due to an injury, disability, or illness. Section 1919(a) of the Act defines a nursing facility (NF) for Medicaid purposes as an institution or a distinct part of an institution that is primarily engaged in providing to residents: Skilled nursing care and related services for residents who require medical or nursing care; rehabilitation services due to an injury, disability, or illness; or, on a regular basis, health-related care and services to individuals who, due to their mental or physical condition, require care and services (above the level of room and board) that are available only through an institution.

To participate in the Medicare and Medicaid programs, long-term care (LTC) facilities, that is, SNFs and NFs, must meet certain Federal requirements specified at § 483.1 through § 483.75. SNFs must be certified as meeting the requirements of section 1819(a) through section (d) of the Act. NFs must be certified as meeting the requirements in section 1919(a) through section (d) of the Act.

LTC facilities provide a substantial amount of care to Medicare beneficiaries and Medicaid recipients, as well as “dual eligibles,” who qualify for both Medicare and Medicaid. As of December 2008, there were 15,727 LTC facilities and each year they provided care for about 1.7 million individuals. In 2007, SNFs and NFs accounted for more than 10 and 15 percent, respectively, of Medicare and Medicaid expenditures.

The current regulation for LTC facilities contains specific requirements that address resident rights. However, it does not require LTC facilities to inform beneficiaries of their right to communicate with a QIO. Therefore, we are proposing to revise the resident rights requirements at § 483.10 by redesignating paragraphs (c) through (o) as paragraphs (d) through (p). We are proposing to add a new standard at paragraph (c). The proposed new standard would require the LTC facility to inform all Medicare beneficiaries by written notice, at the time of admission, of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. In addition, the proposed new standard would require the LTC facility to provide the beneficiary with the name, telephone number, electronic mail address, and mailing address of the QIO, as well as require that the LTC facility document in the beneficiary's record that it has presented the written notice to the beneficiary or his or her representative or surrogate.

Under sections 1861(m), 1861(o), and 1891 of the Act, the Secretary has established in regulations the requirements that a Home Health Agency (HHA) must meet in order to participate in the Medicare program. Home health services are covered for the elderly and disabled under the Hospital Insurance (Part A) and Supplemental Medical Insurance (Part B) benefits of the Medicare program. These services must be furnished by, or under arrangement with, a HHA that participates in the Medicare program and, as a general rule, must be provided on a visiting basis in the beneficiary's home.

As of December 2008, there were 9,787 HHAs participating in the Medicare program. Medicare-certified HHAs provided home health services to 3.2 million patients nationwide in FY 2006. The effective delivery of quality home health services is essential to the care and prevention of recurrent illness and hospitalizations.

The home health services CoPs requirements are located at § 484.1 through § 484.55. Currently the patient rights standard for HHAs specifies that the HHA must provide the patient with a written notice of the patient's rights in advance of furnishing care to the patient or during the initial evaluation visit before the initiation of treatment. To further assist with improving quality of health care, we are proposing to revise the HHA patient rights requirement at § 484.10 by redesignating paragraphs (c) through paragraphs (f) as paragraphs (d) through paragraphs (g). We are also proposing to add a new standard at paragraph (c). The proposed new standard would require the HHA to inform all Medicare beneficiaries by written notice, at the time of initiation of treatment, of their right to file a written complaint about the quality of care they are receiving or have received to the QIO in the State where services are being or were provided. In addition, the proposed standard would require the HHA to provide the beneficiary with the name, telephone number, electronic mail address, and mailing address of the QIO, and to document in the beneficiary's record that the written notice was presented to the beneficiary or beneficiary's representative or surrogate.

Section 1861(cc) of the Act defines the term “comprehensive outpatient rehabilitation facility” (CORF) and lists the requirements that a CORF must meet to be eligible for Medicare participation. By definition, under 42 CFR 485.51(a), a CORF is a non-residential facility that is established and operated exclusively for the purpose of providing diagnostic, therapeutic, and restorative services to outpatients for the rehabilitation of injured, disabled, or sick persons, at a single fixed location, by or under the supervision of a physician. As of December 2008, there were 476 Medicare-certified CORFs in the United States.

Section 1861(cc)(2)(J) of the Act also states that the CORF must meet other requirements that the Secretary finds necessary in the interest of the health and safety of a CORF's patients. Under this authority, the Secretary has established requirements at § 485.50 through § 485.74, that a CORF must meet to participate in the Medicare program.

We are proposing to amend the governing body and administration requirements at § 485.56 by adding a new requirement at paragraph (e)(11). We are also proposing to add a new standard by adding a new paragraph (g). At proposed paragraph (e)(11), we are proposing to require that CORFs provide patients with the mailing address, electronic mail address, and telephone number of the State survey agency to report complaints. The proposed new standard in paragraph (g) would require the CORF to inform all Medicare beneficiaries by written notice, at the time of initiation of treatment, of their right to file a written complaint about the quality of care they are receiving or have received to the QIO in the State where services are being or were provided. In addition, the proposed standard would require the CORF to provide the beneficiary with the name, telephone number, electronic mail address, and mailing address of the QIO, and document in the beneficiary's record that it has presented the written notice to the beneficiary or beneficiary's representative or surrogate.

Sections 1820 and 1861(mm) of the Act provide that critical access hospitals participating in Medicare and Medicaid meet certain specified requirements. CMS has implemented these provisions in 42 CFR part 485, subpart F, Conditions of Participation for Critical Access Hospitals (CAHs). There are 1,305 CAHs that must meet the CAH CoPs. CAHs are small, generally rural, limited-service facilities with low patient volume. The intent of designating facilities as “critical access hospitals” is to preserve access to primary care and emergency services that meet community needs. A CAH designation is a core component of the State's Medicare Rural Hospital Flexibility Program (Flex Program). To be designated as a CAH, a facility must be located in a State that has established a Flex program, be located in a rural area or be treated as rural in accordance with existing § 485.610(b), which, among other things, allows qualified hospital providers in urban areas to be treated as rural for purposes of becoming a CAH. Facilities that are so designated and meet the CAH conditions of participation (CoPs) under 42 CFR part 485, subpart F, will be certified as CAHs by CMS.

The current regulations at § 485.601 through § 485.647 do not contain patient rights requirements. Therefore, we are proposing to revise the organizational structure requirements by adding two new standards at § 485.627(c) and (d). The first proposed standard would require the CAH to provide CAH patients with the mailing address, electronic mail address, and telephone number of the State survey agency if the patient wishes to report complaints. The second proposed standard would require the CAH to inform all Medicare beneficiaries by written notice, at the time of service, of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. In addition, the new standard would require the CAH to provide the beneficiary with the name, telephone number, electronic mail address, and mailing address of the QIO, and to document in the beneficiary's record that the CAH has presented the written notice to the beneficiary or beneficiary's representative or surrogate.

Under section 1861(p) of the Act, the Secretary has established CoPs that clinics and rehabilitation agencies must meet when they provide outpatient physical therapy (OPT) and speech- language pathology services. Section 1861(p) of the Act describes “outpatient physical therapy services” to mean physical therapy services furnished by a provider of services, a clinic or rehabilitation agency, or by others under an arrangement with, and under the supervision of, such provider, clinic or rehabilitation agency to an individual as an outpatient. The patient must also be under the care of a physician.

The term also includes speech-language pathology services furnished by a provider of services, a clinic, or a rehabilitation agency, or by others under an arrangement. There are 2,781 Medicare certified clinics and rehabilitation agencies that provide outpatient physical therapy and speech-language pathology services.

The current regulations at § 485.701 through § 485.729 do not contain patient rights requirements, therefore, we are proposing to revise the administrative management requirements by adding two new standards at § 485.709(e) and § 485.709(f). The first proposed standard would require that the clinic or rehabilitation agency provide all patients with the mailing address, electronic mail address, and telephone number of the State survey agency in order to permit patients to report complaints. The second proposed standard would require the clinics or rehabilitation agencies to inform all Medicare beneficiaries by written notice, at the time of initiation of treatment, of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. In addition, the new standard would require the facility to provide the beneficiary with the name, telephone number, electronic mail address, and mailing address of the QIO, and would require that clinics or rehabilitation agencies document in the beneficiary's record that they have presented the written notice to the beneficiary or beneficiary's representative or surrogate.

The Conditions for Coverage (CfC) for portable x-ray services are specified under section 1861(s)(3) of the Act and were adopted in January 1969. X-ray services are provided under the supervision of a qualified physician. Diagnostic x-ray services furnished by a portable x-ray supplier are covered under Medicare when furnished in a place of residence used as the patient's home. Suppliers of portable x-ray services must conform to the requirements specified at § 486.100 through § 486.110.

We are proposing to amend the requirements at § 486.106 by adding new standards at § 486.106(d) and (e). The first proposed new standard would require suppliers of portable x-ray services to provide patients with the mailing address, electronic mail address, and telephone number of the State survey agency to report complaints. The second proposed standard would require the suppliers to inform all Medicare beneficiaries by written notice, at the time services are provided, of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. In addition, the new standard would require the supplier to provide beneficiaries with the name, telephone number, electronic mail address, and mailing address of the QIO, and to document in the beneficiary's record that they presented written notice to the beneficiary or beneficiary's representative or surrogate.

Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) under section 1861(aa) of the Act were established to improve and maintain primary care for rural and underserved communities. To qualify as an RHC, a facility must be located in a medically underserved area (MUA), a health professional shortage area (HPSA) either by population or geographic area or location, or a State Governor-designated shortage area. To qualify as an FQHC, a facility may be located in either an urban or rural area. The distinction between urban and rural is based on whether or not the area in which a clinic is located is part of a Metropolitan Statistical Area.

Primary health care services for RHCs and FQHCs are defined as the treatment of acute or chronic medical problems which usually brings a patient to a physician's office. An RHC may be any primary care practice (for example, family practice, pediatric, obstetrics, gynecology, or internal medicine). An FQHC must provide primary care for all life-cycle ages. Therefore, primary care specialty practices are not eligible for FQHC status unless they provide primary care for all life-cycles. The FQHC program is funded under Section 330 of the Public Health Service Act.

RHCs and FQHCs improve access to primary health care in rural or underserved communities and promote a collaborative model of health care delivery using physicians and non-physician practitioners. Currently, there are 3,758 Medicare-approved RHCs and approximately 4,384 FQHCs. To qualify for Medicare reimbursement, RHCs and FQHCs must comply with conditions for certification and CfCs, respectively, at CFR part 491, subpart A. The current conditions for RHCs and FQHCs, are located at § 491.1 through § 491.11.

We are proposing to revise the provision of services condition at § 491.9 by adding two new standards at § 491.9(e) and (f). The first proposed new standard would require the clinic or center to provide all patients with the mailing address, electronic mail address, and telephone number of the State survey agency in order to allow patients to report complaints. The second proposed standard would require RHCs and FQHCs to inform all Medicare beneficiaries by written notice, at the time of service, of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. In addition, the RHC or FQHC would be required to provide beneficiaries with the name, telephone number, electronic mail address, and mailing address of the QIO, and to document in the beneficiary's record that they have presented the written notice to the beneficiary or beneficiary's representative or surrogate.

Under the Paperwork Reduction Act of 1995 (PRA), we are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(a) of the PRA requires that we solicit comment on the following issues:

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

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

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

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

We are soliciting public comment on each of these issues for the following sections of this document:

Proposed § 416.50(c)(1) would require that at the time of admission, an ASC must inform all Medicare beneficiaries by written notice of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. Proposed § 416.50(c)(3) would require the ASC to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting receipt of the notice.

We believe 5,174 ASCs must comply with these requirements. We estimate that proposed § 416.50 will impose a one-time 2 hour burden for the development of a standard written notice containing the name, address, and telephone number of the QIO. The total burden associated with this task is 10,348 hours. Similarly, we estimate that each ASC will distribute approximately 1,224 notices per year for a total of 6,332,976 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, beneficiary's representative or surrogate and to document distribution of the notification. The estimated annual burden for this requirement is 527,748 hours. The total estimated annual burden associated with all of the requirements in proposed § 416.50 is 538,096 hours. The total cost associated with this requirement is $18,978,232.

Proposed § 418.52(c)(9) would require that hospices provide patients with the address and telephone number of the State survey agency to report complaints. Proposed § 418.52(d)(1) would require that at the time of admission, a hospice must inform all Medicare beneficiaries by written notice of their right to file a written complaint to the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. Proposed § 418.52(d)(3) would require the hospice to document that the written notice was presented to the beneficiary, the beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting the receipt of the notice.

We believe 3,346 hospice facilities must comply with these requirements. We estimate that proposed § 418.52 will impose a one-time 2-hour burden for the development of a standard written notice containing the address and telephone number of the State survey agency and the name, address, and telephone number of the QIO. The total burden associated with this task is 6,692 hours. Similarly, we estimate that each hospice will distribute approximately 314 notices per year for a total of 1,050,644 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, the beneficiary's representative or surrogate and to document the distribution of the notice. The estimated annual burden for this requirement is 87,554 hours. The total estimated annual burden associated with all of the requirements in proposed § 418.52 is 94,246 hours. The total cost associated with this requirement is $3,392,298.

Proposed § 482.13(a)(1)(i) would require that hospitals provide patients with the address and telephone number of the State survey agency to report complaints. We believe a total of 4,859 hospitals must comply with this requirement. We estimate that proposed § 482.13 will impose a one-time one hour burden for the development of a standard written notice containing the address and telephone number of the State survey agency. The total burden associated with this task is 4,859 hours at a cost of $238,091. This notice can be incorporated into existing admission paperwork documents that are already required and given to the beneficiary, beneficiary's representative or surrogate, therefore we are not assigning additional burden hours.

Proposed § 482.13(a)(1)(ii) would require that at the time of inpatient admission or outpatient service, the hospital must inform all Medicare beneficiaries by written notice of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received.

Proposed § 482.13(a)(1)(ii) would also require the hospital to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting the distribution of the notice.

We believe 4,859 hospitals must comply with these requirements. We estimate that proposed § 482.13 will impose a one-time two hour burden for the development of a standard written notice containing the name, address, and telephone number of the QIO. The total burden associated with this task is 9,718 hours. Similarly, we estimate that each hospital will distribute approximately 228 notices per year for a total of 1,107,852 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, the beneficiary's representative or surrogate and to document the distribution of the notice. The estimated annual burden for this requirement is 92,321 hours at a cost of $3,231,235. The total estimated annual burden associated with all of the requirements in proposed § 482.13 is 102,039 hours. The total cost associated with this requirement is $3,707,417.

Proposed § 483.10(c)(1) would require that at the time of admission, a LTC facility must inform all Medicare beneficiaries by written notice of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. Proposed § 483.10(c)(3) would require the LTC facility to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting the distribution of the notice.

We believe 15,727 LTC facilities must comply with these requirements. We estimate that proposed § 483.10 will impose a one-time 2 hour burden for the development of a standard written notice containing the name, address, and telephone number of the QIO. The total burden associated with this task is 31,454 hours. Similarly, we estimate that each LTC facility will distribute approximately 89 notices per year for a total of 1,399,703 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, the beneficiary's representative or surrogate and to document the distribution of the notice. The estimated annual burden for this requirement is 116,642 hours. The total estimated annual burden associated with all of the requirements in proposed § 483.10 is 148,096 hours. The total cost associated with this requirement is $5,623,716.

Proposed § 484.10(c)(1) would require that at the time of initiation of treatment, an HHA must inform all Medicare beneficiaries by written notice of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. Proposed § 484.10(c)(3) would require the HHA to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and to document the distribution of the notice.

We believe 9,787 HHAs must comply with these requirements. We estimate that proposed § 484.10 will impose a one-time 2 hour burden for the development of a standard written notice containing the name, address, and telephone number of the QIO. The total burden associated with this task is 19,574 hours. Similarly, we estimate that each HHA will distribute approximately 625 notices per year for a total of 6,116,875 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, beneficiary's representative or surrogate and to document the distribution of the notice. The estimated annual burden for this requirement is 509,739 hours. The total estimated annual burden associated with all of the requirements in proposed § 484.10 is 529,313 hours. The total cost associated with this requirement is $18,799,991.

Proposed § 485.56(e)(11) would require that the CORF provide patients with the address and telephone number of the State survey agency to report complaints. Proposed § 485.56(g)(1) would require that at the time of initiation of treatment, a CORF must inform all Medicare beneficiaries by written notice of their right to file a written complaint to the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. Proposed § 485.56(g)(3) would require the CORF to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting the distribution of the notice.

We believe 476 CORFs must comply with these requirements. We estimate that proposed § 485.56 will impose a one-time 2 hour burden for the development of a standard written notice containing the address and telephone number of the State survey agency and the name, address, and telephone number of the QIO. The total burden associated with this task is 952 hours. Similarly, we estimate that each CORF will distribute approximately 13 notices per year for a total of 6,118 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, the beneficiary's representative or surrogate and to document distribution of the notice. The estimated annual burden for this requirement is 516 hours. The total estimated annual burden associated with all of the requirements in proposed § 485.56 is 1,468 hours. The total cost associated with this requirement is $64,708.

Proposed § 485.627(c) would require that the CAHs provide all patients with the address and telephone number of the State survey agency to report complaints. Proposed § 485.627(d)(1) would require that at the time of service, the CAH must inform all outpatient Medicare beneficiary patients by written notice of their right to file a written complaint to the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. Proposed § 485.627(d)(3) would require the CAH to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting the distribution of the notice.

We believe a total of 1310 CAHs must comply with these requirements. We estimate that proposed § 485.627 will impose a one-time 2 hour burden for the development of a standard written notice containing the address and telephone number of the State survey agency and the name, address, and telephone number of the QIO. The total burden associated with this task is 2620 hours. Similarly, we estimate that each CAH will distribute approximately 1000 notices per year for a total of 1,310,000 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, the beneficiary's representative or surrogate and to document distribution of the notice for a total annual burden of 109,167. The estimated annual burden associated with all of the requirements in proposed § 485.627 is 111,787 hours. The total cost associated with this requirement is $3,949,225.

Proposed § 485.709(e) would require that the clinic or rehabilitation agency provide patients with the address and telephone number of the State survey agency to report complaints. Proposed § 485.709(f)(1) would require that at the time of initiation of treatment, the clinic or rehabilitation agency must inform all Medicare beneficiaries by written notice of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. Proposed § 485.709(f)(3) would require the clinic, or rehabilitation agency to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting the distribution of the notice.

We believe a total of 2,781 clinics and rehabilitation agencies must comply with these requirements. We estimate that proposed § 485.709 will impose a one-time 2 hour burden for the development of a standard written notice containing the address and telephone number of the State survey agency and the name, address, and telephone number of the QIO. The total burden associated with this task is 5,562 hours. Similarly, we estimate that each clinic or rehabilitation agency will distribute approximately 1,084 notices per year for a total of 3,014,604 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, the beneficiary's representative or surrogate and to document distribution of the notice. The estimated annual burden for this requirement is 251,217 hours at a cost of $8,792,595. The total estimated annual burden associated with all of the requirements in proposed § 485.709 is 256,779 hours. The total cost associated with this requirement is $9,065,133.

Proposed § 486.106(d) would require that the supplier of portable x-ray services provide patients with the address and telephone number of the State survey agency to report complaints. Proposed § 486.106(e)(1) would require that at the time that services are provided, a supplier of portable x-ray services must inform all Medicare beneficiaries by written notice of their right to file a written complaint about the quality of care they are receiving or have received to the QIO in the State where services are being or were provided. Proposed § 486.106(e)(3) would require the supplier of portable x-ray services to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting the distribution of the notice.

We believe 547 suppliers of portable x-ray services must comply with these requirements. We estimate that proposed § 486.106 will impose a one-time 2 hour burden for the development of a standard written notice containing the address and telephone number of the State survey agency and the name, address, and telephone number of the QIO. The total burden associated with this task is 1,094 hours at a cost of $53,606. Similarly, we estimate that each supplier of portable x-ray services will distribute approximately 2,437 notices per year for a total of 1,333,039 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, the beneficiary's representative or surrogate and to document distribution of the notice. The estimated annual burden for this requirement is 111,086 hours at a cost of $3,888,010. The total estimated annual burden associated with all of the requirements in proposed § 486.106 is 112,180 hours. The total cost associated with this requirement is $3,941,616.

Proposed § 491.9(e) would require that the RHC or FQHC provide patients with the address and telephone number of the State survey agency to report complaints. Proposed § 491.9(f)(1) would require that at the time of service, an RHC or FQHC must inform all Medicare beneficiaries by written notice of their right to file a written complaint with the QIO in the State where services are being or were provided about the quality of care they are receiving or have received. Proposed § 491.9(f)(3) would require the RHC or FQHC to document that the written notice was presented to the beneficiary, beneficiary's representative or surrogate. The burden associated with these requirements is the time and effort associated with developing and distributing a standard written notice and documenting the distribution of the notice.

We believe a total of 8,142 RHCs or FQHCs must comply with these requirements. We estimate that proposed § 491.9 will impose a one-time 2 hour burden for the development of a standard written notice containing the address and telephone number of the State survey agency to report complaints and the name, address, and telephone number of the QIO. The total burden associated with this task is 16,284 hours at a cost of $797,916. Similarly, we estimate that each RHC or FQHC will distribute approximately 8 notices per year for a total of 65,136 annual notices. We estimate that it will take a total of 5 minutes to notify the beneficiary, the beneficiary's representative or surrogate and to document distribution of the notice. The estimated annual burden for this requirement is 5,428 hours at a cost of $189,980. The total estimated annual burden associated with all of the requirements in proposed § 491.9 is 21,712 hours. The total cost associated with this requirement is $987,896.

The Federal Emergency Management Agency (FEMA) proposes to make determinations of BFEs and modified BFEs for each community listed below, in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR 67.4(a).

These proposed BFEs and modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities. These proposed elevations are used to meet the floodplain management requirements of the NFIP and also are used to calculate the appropriate flood insurance premium rates for new buildings built after these elevations are made final, and for the contents in those buildings.

Comments on any aspect of the Flood Insurance Study and FIRM, other than the proposed BFEs, will be considered. A letter acknowledging receipt of any comments will not be sent.

National Environmental Policy Act. This proposed rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Executive Order 12866, Regulatory Planning and Review. This proposed rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866, as amended.

Executive Order 13132, Federalism. This proposed rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This proposed rule meets the applicable standards of Executive Order 12988.

Accordingly, 44 CFR part 67 is proposed to be amended as follows:

Section 1322 of Patient Protection and Affordable Care Act (the Affordable Care Act) requires the Secretary to establish the Consumer Operated and Oriented Plan program (CO-OP program) to foster the creation of “qualified nonprofit health insurance issuers” (qualified nonprofit issuers) that will offer qualified health plans in the individual and small group markets. Such qualified nonprofit issuers must, as directed by the new law, operate with a strong consumer focus and use any profits to lower premiums, improve benefits, or improve the quality of health care delivered to plan members. For purposes of this document, “a CO-OP” refers to a qualified health plan offered by a qualified nonprofit issuer.

Under the CO-OP program, the Secretary will make loans to assist in funding start-up costs for qualified nonprofit issuers and will award grants (repayable in 15 years) to assist such issuers in meeting State solvency requirements. The Secretary must award the loans and grants and begin funding distribution no later than July 1, 2013. Loans must be repaid within 5 years and grants must be repaid within 15 years, taking into account State reserve requirements and solvency regulations.

The Affordable Care Act requires the Secretary to convene a Federal advisory board. This advisory board will offer recommendations to the Secretary on the awarding of loans and grants to emerging co-ops under Section 1322.

We are inviting public comment to aid in the development of regulations regarding this loan and grant program. To assist interested parties in responding, this request for comment describes various topics about which the Secretary is particularly interested in receiving public comments. Commenters should use the questions below to provide the Secretary with relevant information for the development of regulations regarding the CO-OP program. However, it is not necessary for commenters to address every question below, and commenters may also address additional issues related to the provisions for the CO-OP program in the Affordable Care Act. Individuals, groups, and organizations interested in providing comments may do so by following the instructions in the ADDRESSES section above.

Below, we summarize relevant statutory provisions and solicit public comment on the topics about which the Secretary is particularly interested.

Section 1322(a) of the Affordable Care Act directs the Secretary to establish a program to foster, through grants and loans, the establishment of qualified nonprofit health insurance issuers. Substantially all of the activities of the qualified nonprofit issuers must be in the individual and small group markets. The issuers must be licensed in the State(s) in which they operate. The CO-OP program shall provide for the awarding of loans and grants to provide assistance for the establishment of qualified nonprofit issuers.

Section 1322(c) of the Affordable Care Act defines a “qualified nonprofit health insurance issuer” as one: (1) That is organized under State law as a nonprofit member corporation, (2) substantially all of the activities of which consist of the issuance of qualified health plans in the individual and small group markets, and (3) that meets other requirements of section 1322(c). To qualify for a loan or grant, the qualified nonprofit issuer (or a related entity or predecessor) must not have been a health insurance issuer on July 16, 2009 and must not be sponsored by a State or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision. Section 1322(c)(4) provides that an organization cannot be a qualified nonprofit health insurance issuer unless any profits made by the organization are required to be used to lower premiums, to improve benefits, and for other programs intended to improve the quality of health care delivered to its members. Section 1322(e) provides that no representative of any Federal, State, or local government (or any political subdivision or instrumentality thereof), and no representative of a health insurance issuer or a related entity, may serve on the board of directors.

1. What is your assessment of the types of groups or organizations that would meet the criteria outlined above, and be successful in establishing durable qualified plans in the individual and small group markets? Do any organizations currently exist that would satisfy these statutory eligibility criteria for receiving a loan or grant under the CO-OP program? To what extent, and in what way, do funding needs of qualified nonprofit issuers that have already been established differ from the needs of those that have not been? How might funding needs differ for other groups or organizations that do not currently exist, but would be successful in establishing durable qualified plans in the individual and small group markets? How would such differences be considered in determining appropriate financing terms for Federal loans or grants?

2. What skills, background, and expertise should be required of the loan or grant applicant? What skills, background and expertise should be required of the management team of the qualified nonprofit issuer once the entity is operational ( e.g. , experience in providing coverage)? What factors are most likely to lead to the successful operation and sustainability of a CO-OP?

3. What relationship with CO-OP enrollees would promote initial and continued enrollment, e.g., service to a geographic community, a strong provider network, its health care mission, etc.?

4. What issues might a qualified nonprofit issuer face in developing provider networks in rural or other medical shortage areas?

5. How much time would a new qualified non-profit issuer need to establish a plan, become operational, begin to accept enrollment and provide health insurance coverage? What factors may affect the timeline necessary to become operational, and how?

6. What specific details should be required in feasibility studies, business plans, and marketing plans provided by prospective applicants before any loan or grant award is made? What should be included in the scope and content of these studies and plans? What level of detail should be required at the time of application?

7. What level of investment would be required by a qualified nonprofit issuer to develop sufficient administrative and claims processing information technology (IT) systems? Is there a minimum level of investment that would be required regardless of the size of enrollment? Does it vary according to enrollment size, geographic location, or other factors, and by how much? Are funding needs for this purpose different for any qualified nonprofit issuers that may already be in existence, and if so, in what way?

8. What level of investment would be required by a qualified nonprofit issuer to develop sufficient health information technology systems necessary to operate a health plan in the health insurance Exchange market, including the use of electronic health records? Is there a minimum level of investment that would be required regardless of the size of enrollment? Does it vary according to enrollment size, enrollee characteristics, or other factors, and by how much? Are funding needs for this purpose different for any qualified nonprofit issuers that may already be in existence, and if so, in what way?

9. What is the range of funding necessary to capitalize and fund the establishment of a new qualified nonprofit issuer? How much of that amount can be raised privately, or funded through non-Federal government support? What factors should be considered in determining the appropriate amount of Federal loans and/or grants that would be needed to support the establishment of a new nonprofit health insurance issuer? To what extent do the funds needed to capitalize a qualified nonprofit issuer, and the degree of Federal support necessary likely to vary across issuers?

10. What level of investment is needed to maintain appropriate fiduciary management and oversight, including setting actuarially sound premiums?

11. Are you aware of any State laws that could create opportunities for or barriers to the formation of qualified nonprofit issuers? Do you think States are likely to create or amend licensure laws to accommodate the formation of qualified nonprofit issuers? Under what circumstances could regional qualified nonprofit issuers serving multiple states be formed? Is there a role for a federation of qualified nonprofit issuers to serve more than one state or region, with risk shared among the issuers? Would this approach be desirable for specific types of communities (for example, agricultural/rural communities)? How would such a federation be organized? How would it be capitalized? What are the advantages and disadvantages of a regional qualified nonprofit issuer or a regional federation of issuers? What barriers would need to be overcome? What would be the advantages of, and barriers to, serving a metropolitan area that crosses State lines?

12. While “substantially all” of a qualified nonprofit issuer's activities must be in the individual and small group markets, in what other markets or product lines, if any, would it be desirable for qualified nonprofit issuers to participate? For instance, could they participate in Medicaid or the Children's Health Insurance Program (CHIP) and still satisfy the statutory criteria for being a qualified nonprofit issuer? How difficult would it be for a new qualified nonprofit issuer to successfully participate in the small group market? How difficult would it be for a new qualified nonprofit issuer to successfully participate in the individual market? To what extent would participation in other markets affect the viability of new qualified nonprofit issuers or their ability to satisfy the statutory criteria for being a qualified nonprofit issuer? What type of start-up costs are necessary and reasonable for establishing a qualifying CO-OP? What startup costs might be associated with establishing a private purchasing council?

13. Are there other considerations that should inform what costs would be eligible for a CO-OP loan? Should there be limited time periods for which Federal loans for start-up costs may be available? Are there any start-up costs that would be incurred after the qualified nonprofit issuer begins to provide coverage under one or more plans?

14. What market factors would most likely affect a qualified nonprofit issuer's durability in the market? What factors should be considered in determining which issuers are likely to be viable in the long-term?

15. In evaluating applications for loans and grants, what actuarial and minimum plan enrollment criteria should be considered? What is the effect, if any, if providers are anticipated to bear risk? How would such criteria affect the financial soundness of the qualified issuer?

16. What types of technical assistance, if any, should the Secretary provide to grantees? How should such technical assistance be structured?

17. In what geographic areas are qualified nonprofit issuers most likely to be successful ( e.g., rural or metropolitan areas or certain regions of the country)?

18. How can qualified nonprofit issuers build provider networks? What strategies have proven effective?

19. What is the extent of interest in forming qualified nonprofit issuers under Section 1322 of the Affordable Care Act? In what State(s) or geographic region are these entities likely to be established?

Section 1322(b) of the Affordable Care Act requires that the Secretary shall give priority to applicants that will offer qualified health plans on a statewide basis, utilize integrated care models, and have significant private support.

1. How should the term “integrated care model” be defined in the context of section 1322? How should the degree of integration and the degree to which integrated care is used be measured? Should qualified nonprofit issuers formed by primary care networks, even if they contract with secondary and tertiary providers, also be given priority for the award of a grant or loan? To what degree should priority be based on whether providers share risk?

2. How should “significant private support” be defined in this context?

3. What options for private support should qualified nonprofit issuers be able to pursue while maintaining nonprofit status? How can such support be structured to avoid inurnment to the benefit of non-members and protect the independence of consumer governance?

4. What types of organizations are most likely to be successful in meeting any or all of the statutory priority criteria?

Section 1322(b)(2)(A)(iii) of the Affordable Care Act requires the Secretary to ensure that there is sufficient funding to establish at least one qualified nonprofit issuer in each State, except that nothing shall prevent the establishment of multiple issuers in a State if the funding is sufficient. Section 1322(b)(2)(B) provides that if no issuer applies to be a qualified nonprofit health insurance issuer in a State, the Secretary may use the amounts for the awarding of grants to encourage the establishment of an issuer or the expansion of another qualified nonprofit health insurance issuer from another State into the State where no issuer applied.

1. How can the Secretary best ensure sufficient funding to establish at least one qualified nonprofit issuer in each State?

2. How might the Secretary encourage the establishment of a CO-OP in a state without a qualified nonprofit issuer?

Section 1322(b)(C)(ii) of the Affordable Care Act restricts the use of loan and grant funds for (i) carrying out propaganda, or otherwise attempting to influence legislation, or (ii) for marketing.

1. How should the restriction on the use of federal funds for marketing be applied?

2. What other sources of financing for marketing would be available to qualified nonprofit issuers?

3. What accounting standards and metrics should be used to determine the sources of funding for marketing activities? If qualified nonprofit issuers did engage in these activities using non-federal funding, what rules should be in place to ensure federal funds are not used?

Section 1322(b)(2)(D) of the Affordable Care Act requires the Secretary to award and begin the distribution of loans and grants not later than July 1, 2013.

1. To what extent is it necessary for new qualified nonprofit issuers to be operational by 2014 in order to be successful? How soon should grants or loans be distributed to establish qualified nonprofit issuers that can be operational in 2014?

2. How might funds be best allocated and, to what extent should distribution of loan funds be front-loaded to meet the statute's goal of establishing a CO-OP in each state?

3. Given the limited funding for this program, how long should draw down on grants and loans be permitted after the award date if loans and grants are not being utilized?

Section 1322(b)(3) of the Affordable Care Act requires that regulations regarding the repayment of loans and grants be “consistent with State solvency regulations and other similar State laws that may apply.” Loans shall be repaid within 5 years and grants shall be repaid within 15 years, taking into consideration any appropriate State reserve requirements, solvency regulations, and requisite surplus note arrangements that must be constructed to provide for repayment prior to awarding loans/grants.

1. When developing a repayment schedule, how should HHS take into consideration state reserve requirements?

2. What factors will determine the ability of qualified nonprofit issuers to generate sufficient revenues to repay the loans and grants? How and when will such issuers likely develop sufficient revenues to start the repayment of grants provided to fund reserves?

3. What interim benchmarks after initial funding should the Secretary use to determine an issuer's ongoing likelihood of success and whether corrective actions, or other protective measures might be necessary with respect to loan and grant funds?

4. What data are available about the potential success and failure rate of nonprofit health plans who may apply for grants and loans? If data are not available, what proxy data would be useful to inform benchmarks, or other performance standards?

Section 1322(c)(2) of the Affordable Care Act provides that an organization shall not be treated as a qualified nonprofit issuer (and therefore shall not be qualified to apply for loans and grants under the CO-OP program) if the organization or a related entity (or a predecessor of either) was a health insurance issuer on July 16, 2009. Section 1322(c)(2) of the Affordable Care Act also provides that an organization shall not be treated as a qualified nonprofit issuer if it is sponsored by a State or local government, political subdivision thereof, or an instrumentality of such government or political subdivision.

1. What should and should not constitute a “related entity” or “predecessor” of a health insurance issuer for purposes of Section 1322 of the Affordable Care Act?

Section 1322(c)(3) of the Affordable Care Act requires that a qualified nonprofit issuer must be a nonprofit, member corporation and meet a number of governance requirements including the following:

• The governance of the organization must be subject to a majority vote of its members;

• Its governing documents must incorporate ethics and conflict of interest standards against insurance industry involvement and interference; and

• The organization is required to operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members.

1. How can prospective applicants demonstrate a commitment to operating with a strong consumer focus, including responsiveness and accountability to members? How can prospective applicants demonstrate a commitment to responsiveness and accountability to members from diverse populations?

2. What type(s) of governance structure(s) should be required? What criteria should be used in determining who is eligible to be members of the organization and of the governing body? What type of characteristics should the governing body have to ensure consumer representation and involvement? What are the options for consumer governance, beyond electing the board of directors, that would most promote ongoing consumer engagement and responsiveness of the qualified nonprofit issuer to consumer needs?

Section 1322(c)(4) of the Affordable Care Act provides that an organization cannot be a qualified nonprofit health insurance issuer unless any profits made by the organization are required to be used to lower premiums, to improve benefits, and for other programs intended to improve the quality of health care delivered to its members.

1. How could the governance structure and type of organization help ensure that excess revenues are used for the benefit of members? What accounting standards and metrics should be used to determine how such funds are applied? Should such funds in one year be used to lower premiums in a subsequent year? What types of benefits might be considered? Should excess funds be used to prepay loans or grants, to allow for greater revenues/benefits to the members over time? Is this preferable to giving refunds to members for the year in which the profit was earned?

2. How should programs intended to improve the quality of care be defined and measured in this context?

Section 1322(c)(5) of the Affordable Care Act requires qualified nonprofit issuers to meet all the requirements that other issuers of qualified health plans are required to meet, including solvency and licensure requirements, rules on payments to providers, network adequacy rules, rate and form filing rules, any applicable State premium assessments and any other State laws described in section 1324(b).

1. Do any States permit newly-formed issuers (or plans) to meet these requirements incrementally over a period of time after enrollment and provision of health insurance coverage?

Please include in your comment letter any additional questions or comments you have about the CO-OP program.