The Animal and Plant Health Inspection Service (APHIS) of the United States Department of Agriculture (USDA) regulates the importation of animals and animal products into the United States to guard against the introduction of animal diseases not currently present or prevalent in this country. The regulations in 9 CFR part 94 (referred to below as the regulations) prohibit or restrict the importation of specified animals and animal products to prevent the introduction into the United States of various animal diseases, including classical swine fever (CSF), foot-and-mouth disease (FMD), swine vesicular disease (SVD), and rinderpest. These are dangerous and communicable diseases of ruminants and swine.

The regulations in 9 CFR part 98 govern the importation of animal germplasm to prevent the introduction of contagious diseases of livestock and poultry into the United States. Subparts A and B of part 98 apply to animal embryos, and subpart C (§§ 98.30 through 98.38) applies to animal semen.

Sections 94.9 and 94.10 of the regulations list regions of the world that are declared free of, or low-risk for, CSF. The APHIS-defined EU CSF region, consisting of the 19 Member States of the EU that we currently recognize as a single region with regard to CSF, is currently the only region we consider low-risk for CSF. Sections 94.24 and 98.38 specify restrictions necessary to mitigate the risk of introducing CSF into the United States via pork, pork products, live swine, and swine semen from that region. We will discuss the restrictions on swine semen, found in § 98.38, at greater length later in this document.

Section 94.12 of the regulations lists regions that are declared free of SVD, and § 94.13 of the regulations lists regions that have been determined to be free of SVD, but that are subject to certain restrictions because of their proximity to, or trading relationships with, SVD-affected regions.

Section 94.1 of the regulations lists regions of the world that are declared free of rinderpest or free of both rinderpest and FMD. Section 94.11 of the regulations lists regions that have been determined to be free of rinderpest and FMD, but that are subject to certain restrictions because of their proximity to or trading relationships with rinderpest- or FMD-affected regions.

On May 1, 2004, Estonia, Hungary, Slovakia, and Slovenia became Member States of the EU. As part of the accession process, these new EU Member States adopted the legislation of the European Commission (EC)  1 regarding animal health, welfare, and identification, including legislation pertaining to CSF, FMD, and SVD. This legislation became the basis for new standard operating procedures for domestic animal health matters in Estonia, Hungary, Slovakia, and Slovenia by the time of their accession. Estonia, Hungary, Slovakia, and Slovenia also adopted the harmonizing EC legislation regarding sanitary measures applicable to import and trade in live animals and animal products.

Prior to joining the EU in 2004, the Government of Slovakia requested APHIS to evaluate its animal health status with respect to CSF in 1997, to SVD in 2001, and to FMD and rinderpest in 2002. Likewise, the Government of Hungary requested that APHIS evaluate its animal health status with respect to CSF in 2001. After joining the EU, the Government of Estonia made a similar request with respect to CSF and SVD in 2005, and, that same year, the Government of Slovenia made a request for APHIS to evaluate its animal health status with respect to CSF, SVD, FMD, and rinderpest. APHIS had previously listed Estonia as free of FMD and rinderpest in a final rule published in the Federal Register on May 30, 2002 (67 FR 37663-37664, Docket No. 01-041-2), and had listed Hungary as free of FMD and rinderpest in a final rule published in the Federal Register on June 1, 1994 (59 FR 28216-28218, Docket No. 93-172-2), and SVD in a final rule published in the Federal Register on August 2, 1973 (38 FR 20610-20611).

In this document, we are proposing to add Estonia, Hungary, Slovakia, and Slovenia to the APHIS-defined EU CSF region. We are also proposing to remove one of the conditions pertaining to the importation of swine semen from that region. With the exception of semen collected from swine in Denmark, Finland, the Republic of Ireland, Sweden, or the United Kingdom, we require that, before swine semen may be exported to the United States, the semen and donor boars be held at the semen collection center for at least 40 days following collection of the semen, and, along with all other swine at the semen collection center, exhibit no clinical signs of CSF. For reasons discussed later in this document, we have determined that this requirement is unnecessary.

We are also proposing to add Estonia, Slovakia, and Slovenia to the list of regions recognized as free of SVD, and to the list of SVD-free regions whose exports of pork and pork products to the United States are subject to certain restrictions to prevent the introduction of SVD into this country.

Additionally, we are proposing to add Slovakia and Slovenia to the list of regions recognized as free of FMD and rinderpest. We are also proposing to add Slovakia and Slovenia to the list of FMD and rinderpest-free regions whose exports of ruminant and swine meat and products to the United States are subject to certain restrictions to prevent the introduction of FMD and rinderpest into this country.

As part of our evaluation of their disease status, APHIS identified the smallest administrative units (AUs) within each of these EU Member States that we would consider designating as regions in the event of future animal disease outbreaks. See the discussion of these AUs under the section titled “Administrative Units.”

Before discussing our assessments of the animal health status of Estonia, Hungary, Slovakia, and Slovenia with regard to CSF and other diseases, and our determination that Estonia, Hungary, Slovakia, and Slovenia can be added to the APHIS-defined EU CSF region, we consider it helpful to explain how the region came about and how countries were added to that region. Later in this document, we will discuss under what conditions swine semen may currently be imported into the United States from that region, in order to provide context for the provision that we are proposing to remove from those requirements.

Traditionally, we have recognized countries either as affected with CSF or free of CSF. Pork and pork products from a country affected with CSF could be imported into the United States only after meeting rigorous processing and certification requirements; live swine, with a few, limited exceptions, could not be imported into the United States from such countries. Conversely, swine, pork, pork products, and semen from countries that we considered free of CSF could be imported into the United States under certain conditions.

In 1999, we prepared a risk analysis, titled “Biological Risk Analysis: Risk assessment and management options for imports of swine and swine products from the European Union—June 2, 1999,” in response to a request from the EC that we recognize a region of 10 EU Member States as free of CSF. That analysis, along with another, supplemental risk analysis, “Risk Analysis for Importation of Classical Swine Fever Virus in Swine and Swine Products from the European Union—December 2000,” took into consideration the CSF history of the 10 Member States in the EC's request, the CSF history of countries adjacent to this region, the veterinary infrastructure and policies of the region, and the historical volumes of imports into the United States of breeding swine, swine semen, pork, and pork products from the region. Moreover, the analyses also took into consideration the open borders among Member States of the EU, and the possibility of commingling of pork products from a CSF-free region and a CSF-affected region prior to their importation into the United States.

The analyses concluded that, because of this open-border policy, and because CSF was endemic in wild boar in several parts of the EU, it was likely that limited outbreaks of CSF would continue to occur in domestic swine in the region.

Based on the analyses, we decided that the unrestricted importation of swine, swine semen, pork, and pork products from the region could present a risk of introducing CSF into the United States. However, we also decided that this risk was low, and that the application of certain risk mitigation measures on the importation of these products would further reduce the risk of introduction of CSF into the United States. Therefore, we initiated a rulemaking that we finalized on April 7, 2003 (68 FR 16922-16941, Docket No. 98-090-5), to recognize a single region of 10 Member States or parts of Member States of the EU that we determined to present a low risk of introducing CSF into the United States.

In that rule, we mentioned that we considered the control mechanisms for CSF employed by the EU to be sufficient to mitigate any risk that continuing outbreaks of CSF in the EU could pose to swine, swine semen, pork, or pork products destined for export to the United States. We outlined these EU-imposed mitigation measures, which included measures to prevent widespread exposure and establishment of the disease; specific mitigation measures, such as wildlife surveillance and epidemiological investigations; and contingency plans establishing proactive approaches to CSF control. In sum, we stated that we considered the EU as a whole to be homogeneous with regard to CSF risk, regardless of individual outbreaks within Member States.

Accordingly, in a rulemaking that we finalized on May 19, 2006 (71 FR 29061-29072, Docket No. 02-046-2), we recognized the EU-15. 2 We considered the EU-15 to be those 15 Member States comprising the EU as of April 20, 2004: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, Republic of Ireland, Spain, Sweden, and the United Kingdom (England, Scotland, Wales, the Isle of Man, and Northern Ireland).

Second, in recognition of the presence of CSF within the EU, and the possibility of future outbreaks of the disease, we also recognized “restricted zones,” or quarantined areas for CSF within the Member States of the EU-15. We defined a restricted zone in the regulations as “An area, delineated by the relevant competent veterinary authorities of the region in which the area is located, that surrounds and includes the location of an outbreak of CSF in domestic swine or detection of the disease in wild boar, and from which the movement of domestic swine is prohibited.” We stated that, once a restricted zone was established, a prohibition on the importation of swine and swine products from that region into the United States would be immediate, with no action required by APHIS.

Finally, on November 28, 2007, we issued a final rule (72 FR 67227-67233, Docket No. APHIS-2006-0106)  3 that amended the regulations to add the Czech Republic, Latvia, Lithuania, and Poland to the low-risk region for CSF. The rule also removed the term “EU-15” and added “APHIS-defined EU CSF region” in its place, since the addition of these countries had rendered the former term obsolete.

We will now discuss the analyses that have led us to propose to include Estonia, Hungary, Slovakia, and Slovenia in the EU CSF region, to conclude that Estonia, Slovakia, and Slovenia are free of SVD, and to conclude that Slovakia and Slovenia are free of FMD and rinderpest.

APHIS has conducted an evaluation regarding the CSF and SVD status of Estonia; an evaluation regarding the CSF status of Hungary; an evaluation regarding the CSF, SVD, FMD, and rinderpest status of Slovakia; and an evaluation regarding the CSF, SVD, FMD, and rinderpest status of Slovenia. The evaluations regarding Estonia and Slovakia were finalized in January 2011, the evaluation regarding Hungary in May 2009, and the evaluation regarding Slovenia in October 2007. Each evaluation may be viewed on the Regulations.gov Web site ( see ADDRESSES above for instructions for accessing Regulations.gov). In the following paragraphs, we summarize our findings for each of the 11 factors set out in our procedures for requesting recognition of regions in 9 CFR 92.2 and summarize our risk considerations of these findings following our discussion of the factors.

As stated above, Estonia, Hungary, Slovakia, and Slovenia have adopted the legislation of the EC regarding animal health, welfare, and identification, as well as sanitary measures applicable to import and trade in live animals and animal products. At the time of accession, Commission Decisions and Regulations concerning CSF, SVD, and FMD became directly applicable in the new EU Member States, whereas Council Directives were implemented in national legislation. Our evaluations document that Estonia, Hungary, Slovakia, and Slovenia have, in fact, implemented these directives; this documentation was corroborated by site visits.

APHIS concludes that the official veterinary services of Estonia, Hungary, Slovakia, and Slovenia have sufficient legal authority, personnel, and financial resources to carry out animal health activities quickly and efficiently. The official offices are well-organized, with clear lines of command and reporting, as well as sufficient autonomy at the local level to carry out the tasks assigned. Internal and external auditing practices are adequate to monitor for compliance with the provisions of the pertinent animal health legislation.

CSF: The most recent outbreak of CSF in domestic swine in Estonia occurred in 1994. In Hungary, the most recent outbreak of CSF in domestic swine occurred in 1993. In Slovakia, the last outbreak of CSF in domestic swine occurred in 2008. In Slovenia, the last outbreak in domestic swine occurred in 1996.

In both Hungary and Slovakia, CSF is endemic within the wild boar population. We discuss this at greater length later in this document.

SVD: SVD has never been reported to have occurred in either Estonia or Slovenia. In 1972, there were 16 cases of SVD reported in Slovakia; in each case, the swine had been imported into the country.

FMD: FMD was last reported in Slovenia in 1968, and in Slovakia in 1973.

Rinderpest: Rinderpest was last reported in Slovakia in 1881, and in Slovenia in 1883; the countries are recognized by the World Organization for Animal Health (OIE) as being free of the disease.

CSF: Estonia is bordered by Latvia to the south and Russia to the east. APHIS considers Latvia to be a low-risk region for CSF. APHIS has not evaluated Russia for its CSF status. However, Russia has experienced multiple outbreaks of CSF in domestic swine since 1996, and had its most recent outbreak in 2010. It is worth noting, in this regard, that APHIS considers any country that we have not evaluated for CSF as having a status equivalent to that of a CSF-affected country.

The risk analysis for Estonia considers the occurrence of CSF in Russia to be a potential risk factor for the introduction of CSF into that country. However, no region in Russia that borders Estonia has reported a CSF outbreak since 2000, and adequate control measures appear to be in place to prevent the possible spread of the disease to Estonia. Therefore, the analysis concludes that the Russian regions adjacent to Estonia do not appear to pose a high risk as potential sources of CSF introduction.

Hungary shares borders with seven countries. Of these, four are EU Member States: Austria, Slovakia, Romania, and Slovenia. The remaining three—Croatia, Serbia and Montenegro, and Ukraine—are EC-designated “third countries,” i.e., countries that are approved by the EC to export certain live animals and animal products to EU Member States because they meet certain animal health standards that are at least equivalent to those required of EU Member States. None of these three countries, however, is approved to export live swine, swine semen, pork, or pork products to the EU at this time.

APHIS considers Austria to be a low-risk region for CSF. CSF has been enzootic, or persistently present, within Romania for the last few years, although it currently appears to be under control. Hungary continues to implement enhanced checks for forbidden pork products from Romania in passenger baggage at and near the Hungary/Romania border. The CSF disease histories of Slovakia and Slovenia are discussed earlier in this document.

APHIS has not evaluated Croatia, Serbia and Montenegro, or Ukraine for their CSF status. Between July 2006 and April 2008, Croatia reported a series of outbreaks in its domestic swine population—129 occurrences in total, over 11 counties—with several occurring between 20 and 50 kilometers (approximately 12.4 to 31 miles) from the Hungarian border. In addition, according to the OIE, Serbia and Montenegro was known to have had widespread CSF in its domestic swine population as recently as 2005. Subsequently, Serbia and Montenegro implemented vaccination in the domestic swine population in order to control the outbreak. No evidence exists, however, to suggest that CSF has been eradicated in the country; in fact, there was a limited outbreak in domestic swine as recently as 2010. Finally, Ukraine reported its last CSF outbreak in 2001. In response to the outbreak, Ukraine undertook several disease control measures, including a quarantine of the area, depopulation of weak or sick animals, and vaccination of all domestic swine within a 3 kilometer (approximately 1.86 mile) radius.

Because five of the seven countries adjacent to Hungary have had recent CSF outbreaks, the risk analysis for that country considers these countries to be potential sources of infection of CSF. The analysis notes that Hungary has surveillance measures in place to detect CSF in its wild boar population and, because of the harmonized control measures that Hungary adopted at the time of its accession into the EU, the analysis considers the risk of CSF in its wild boar to be sufficiently mitigated.

Slovakia is bordered by Austria to the west, the Czech Republic to the northwest, Poland to the northeast, Ukraine to the east, and Hungary to the south. APHIS considers Austria, the Czech Republic, and Poland to be low-risk regions for CSF.

The analysis concludes that CSF could be introduced into domestic swine in Slovakia from a neighboring country, but that EC control measures serve to limit this risk, and that, accordingly, the risk is less immediate than that posed by native infected boar.

Slovenia is bordered by Austria to the north, Italy to the west, Hungary to the upper northeast, and Croatia to the south and lower northeast. APHIS considers Austria and Italy to be low risk regions for CSF. Croatia has experienced recent outbreaks of CSF. 4 The CSF disease history of Hungary is discussed earlier in this document.

The risk analysis considers the occurrence of CSF in Croatia to present a potential risk factor for the introduction of CSF into Slovenia. However, APHIS recognizes that Slovenia, in response to outbreaks within Croatia, strengthened its CSF surveillance along the Croatian border, and considers this a reasonable risk mitigation.

SVD: With regard to the SVD status of countries bordering Estonia, neither Latvia nor Russia has ever reported an outbreak of SVD. With regard to the status of those countries bordering Slovakia and Slovenia, APHIS considers Austria, the Czech Republic, Hungary, and Poland to be free of SVD. APHIS considers certain regions of Italy to be affected with SVD, and has not evaluated either Croatia or Ukraine for their SVD status. The risk analyses conclude that the regions adjacent to Estonia, Slovakia, and Slovenia appear to pose a low risk as potential sources of SVD introduction into these three countries.

FMD: With regard to the FMD status of countries bordering Slovakia and Slovenia, APHIS considers Austria, the Czech Republic, Hungary, Italy, and Poland to be free of FMD, but has not evaluated Croatia or Ukraine for their FMD status. The risk analysis concludes that the risk of introduction of FMD into Slovakia or Slovenia from neighboring countries is low, and mitigated by movement controls and border veterinary inspection.

Rinderpest: APHIS considers Austria, the Czech Republic, Hungary, Italy and Poland to be free of rinderpest, but has not evaluated Croatia or the Ukraine for their rinderpest status.

Estonia is separated from most nearby regions by large bodies of water. It is bordered to the southwest by the Gulf of Riga, to the west by the Baltic Sea, to the north by the Gulf of Finland, and to the east by Lake Peipus, Lake Pskov, and the Narva River. Estonia shares land borders with only two countries: Latvia to the south, and Russia to the east. As mentioned above, APHIS considers Latvia to be a low risk for CSF, and Latvia has never reported an occurrence of SVD. There have been multiple outbreaks of CSF in Russia in recent years; however, there has not been an outbreak in the two administrative regions that border Estonia since 2000. Thus, land regions immediately adjacent to Estonia do not appear to pose a high risk for CSF and SVD.

There are few natural barriers to animal or human movement along the majority of Hungary's borders. The most significant natural barrier is the Danube River, which constitutes a portion of the border with Slovakia. Nonetheless, the analysis considers the risk of introduction of CSF into Hungary to be partially mitigated by border veterinary inspection and ongoing disease surveillance efforts, which are concentrated on border counties.

There are few natural barriers to the introduction of CSF, FMD, SVD, or rinderpest via animal or human movement along the border between Slovakia and neighboring countries. As noted above, the Danube River forms part of the border between Slovakia and Hungary; it also runs along a portion of the Austro-Slovakian border. The Carpathian Mountains lie to the north, but are not high enough to substantially limit animal movement. Animals in neighboring countries that could serve as reservoirs for CSF, SVD, FMD, and rinderpest—deer, chamois, bison, and wild boar—tend to be nonmigratory, and all bordering countries except Ukraine are considered by APHIS to be free of FMD, SVD, and rinderpest. Accordingly, the analysis concludes that CSF, SVD, FMD, or rinderpest could be introduced into Slovakia through animal movement, but that the risk of such introduction is very low with regard to FMD, SVD, or rinderpest. There is a slightly greater risk of CSF introduction into Slovakia, since wild boars are the primary reservoir of the disease and may enter Slovakia from neighboring countries. Nonetheless, the risk of CSF introduction is still low, based on the risk-mitigation measures Slovakia has in place, including wildlife surveillance.

Slovenia is bordered by the countries of Austria, Italy, Hungary, and Croatia. The Adriatic Sea is on its southwestern border. The Julian Alps provide a natural barrier between Slovenia and Austria, and substantially limit animal movement at their highest points. The Alps also separate Slovenia from Italy, but are more passable along this border, particularly since their incline drops as they approach the Adriatic Sea. Slovenia is separated from Croatia and Hungary by a State border alone. Effective movement controls, border veterinary inspection, and enhanced disease surveillance in border regions mitigate the risk of introduction of disease from these two countries.

Due to the absence of CSF and SVD outbreaks in recent years, there are no CSF and SVD control programs currently active in Estonia.

In response to the detection of CSF in wild boar along the border with Slovakia, Hungary has exercised disease control measures within the infected area. As pertains to the wild boar population, Hungary has implemented hunting restrictions and mandatory veterinary inspections for any boar shot or found dead within an affected county. As pertains to the domestic swine population, Hungary has implemented a census of all swine on premises within the quarantined area, standard procedures for cleaning and disinfection, and enhanced reporting requirements for swine exhibiting clinical signs of CSF infection.

Shortly before Slovakia's accession to the EU, the EC recognized that CSF was endemic in the wild boar population in a certain area of the country, and thus designated the area a restricted area. Accordingly, the EC imposed movement restrictions on swine and swine products from the area, and required Slovakia to undertake an eradication-based CSF vaccination program for wild boar within the area. Slovakia does not have active disease control programs for SVD, FMD, or rinderpest, as none of these diseases have been reported in the country in many years.

Control measures for CSF in Slovenia include active systematic monitoring, veterinary inspection, movement certificates, field investigations, and laboratory investigations. Due to the prolonged absence of SVD, FMD, and rinderpest in Slovenia, Slovenia does not have aggressive active disease surveillance programs for these diseases, but maintains interlocking safeguards in order to prevent, detect, and suppress them. These safeguards include veterinary certificates, standard procedures for cleaning and disinfection, training of veterinarians, veterinary technicians, and animal owners, indemnity and compensation for diseased animals, and incentives for compliance with animal health regulations.

General preventive vaccination against CSF and SVD is prohibited in Estonia; emergency vaccinations for CSF are permitted only under exceptional circumstances to prevent the spread of the disease in the event of an outbreak, and only if sanctioned by the EC.

Routine vaccination for CSF has been prohibited within Hungary since 1974. As noted above, the current outbreak of CSF in the wild boar population within the country is being managed through hunting restrictions, population control, and surveillance efforts.

Routine vaccination of domestic swine against CSF and SVD is currently prohibited in Slovakia, as is vaccination of any animal for FMD, although FMD vaccinations may be implemented in the event of an outbreak. As noted above, however, there is CSF vaccination of wild boar in the EC-designated restricted area within the country. Moreover, since the last vaccination of domestic swine for CSF occurred in 2000, there is some potential of detecting vaccine titers during CSF slaughter surveillance. Finally, FMD vaccinations may be implemented in the event of an outbreak.

The last vaccination against CSF occurred in Slovenia in 2000; however, Slovenia has the authority to implement emergency vaccinations in the event of a CSF outbreak. SVD vaccination is prohibited. FMD vaccinations, although currently prohibited, may be implemented in the event of an outbreak.

Some forms of CSF, SVD, and FMD are difficult to detect in live animals or in post-mortem examinations without laboratory testing, and, in some instances, detection may be delayed due to deficiencies in active surveillance or diagnostic testing capabilities. Any such delay in detection of an outbreak could increase the risk that infected animals or animal products are exported to the United States. Consequently, the risk analyses analyze potential pathways for disease introduction into Estonia, Hungary, Slovakia, and Slovenia, such as importation and intra-Community trade in live animals and animal products, vehicular and human traffic, and commodities for human consumption.

Import Controls: Importations must occur at specified road, rail, air, and/or sea ports through a border inspection post (BIP) approved by the EC; inspections and veterinary checks occur at such BIPs. The EC conducts a rigorous inspection of each BIP prior to approval and carries out regular audits to monitor the efficacy of sanitary controls. APHIS considers EC-approved BIPs to be capable of performing appropriate inspections and veterinary checks on animals and animal products; this was corroborated by several site visits to Slovakian and Hungarian BIPs in November 2004 and by visits to two BIPs in Estonia in November 2005. Although the site visit to Slovenia did not include a visit to a BIP, Slovenia provided APHIS with information certifying that each Slovenian BIP is approved by the EC.

Swine, ruminants, and derived products such as meat, meat products, and genetic material are harmonized commodities under EC legislation, which means that the restrictions on imports from non-EU countries are generally standardized across all EU Member States. Binding EC legislation lists the non-EU countries, and establishments within those countries, that are approved for export of certain commodities to the EU. Slaughterhouses, cutting plants, semen collection centers, and other exporting establishments are subject to inspection prior to approval. Veterinary certificates required for export to the EU outline comprehensive animal health and testing requirements and must be endorsed by an official veterinarian of the exporting country.

At the time the analyses were conducted, four non-EU countries were authorized to export both live swine and fresh pork products to EU Member Countries: Chile, New Zealand, Norway, and Switzerland. Three additional countries (Australia, Canada, and the United States) were authorized to export fresh pork products alone, and one (Iceland) was authorized to export live swine, but not pork products. The United States is free of SVD, CSF, and FMD. APHIS recognizes all seven other countries to be free of SVD (although some are subject to the restrictions specified in § 94.13), and all but Switzerland to be free of CSF. 5 APHIS also considers these countries to be free of FMD, although some are subject to the restrictions specified in § 94.11.

However, although the importation of swine and pork products into Estonia, Hungary, Slovakia, and Slovenia is currently limited to these eight countries, and although the import practices of Estonia, Hungary, Slovakia, and Slovenia have proven generally effective with regard to CSF, SVD, or FMD, EC legislation allows EU Member States to import fresh pork and pork products derived from swine from several regions that APHIS has not evaluated and therefore regards as having the same status as regions affected with these diseases. Moreover, EU Member States may also import bovine embryos and meat and meat products from both domestic and wild ruminants from regions that APHIS considers affected with FMD.

Veterinary inspectors at the entry BIPs check that the documentation accompanying commodities is in order, including appropriate health certificates and other movement control documents, and that the shipment is properly identified and the identification matches the documentation. Veterinary inspectors also conduct physical examinations of incoming shipments in accordance with EC legislation. However, because CSF, SVD, and FMD testing is generally not required at the BIPs, the mandated inspections would not usually detect subclinical infection. The causal agents of CSF, SVD, and FMD could also remain viable through carcass maturation, transport, and storage, and could be present in genetic material.

Accordingly, the risk evaluations determined that there is some risk of CSF, SVD, and/or FMD introduction into Estonia, Hungary, Slovakia, and Slovenia through the importation of commodities from non-EU Member States. However, the evaluations also found that this risk is substantially mitigated by EC certification requirements for meat, meat products, and genetic material, such as veterinary inspection of live animals prior to shipment, restrictions on the sources (countries, regions, premises, or production facilities) from which trade is permitted, certification of disease status by an official veterinarian, veterinary inspection at BIPs, and requirements for processing meant to inactivate viral disease agents.

Trade Controls: As EU Member States, Estonia, Hungary, Slovakia, and Slovenia may engage in intra-Community trade with other Member States as governed by EC legislation that was transposed into national legislation prior to accession. Live animals and animal products must originate from a holding center or organization ( e.g., market or assembly center) that is under State veterinary control, i.e., that has regular veterinary checks. The animals must be appropriately identified, must be accompanied by an appropriate health certificate signed by an official veterinarian of the country of origin, and must be segregated according to destination, if destined for shipment to multiple locations. Intra-Community trade in swine and swine products, including semen and embryos, from CSF- or SVD-affected regions of EU Member States is prohibited, and States with such regions must adhere to animal health control measures meant to control the spread of these diseases in order to engage in trade with other Member States. Because FMD is not known to be present in the EU, there are no current trade restrictions based on FMD; however, EC legislation authorizes the imposition of such restrictions in the event of an outbreak.

Establishments such as slaughterhouses, processing plants, milk processing plants, and semen collection centers must be approved by the Member State in which they reside according to criteria similar to those for exporting establishments in non-EU countries. The EC and official veterinary services of the Member State conduct periodic audits to monitor compliance with approval criteria and certification requirements.

The risk analyses conclude that there is some risk of CSF, SVD and/or FMD and rinderpest being introduced into Estonia, Hungary, Slovakia, and Slovenia from other EU Member States, but this risk is low, based on the absence of FMD in the EU and the mitigation measures for CSF and SVD imposed through EC and transposed national legislation.

Veterinary Control of Passenger Traffic: Estonia shares a land border with only one non-EU country, Russia. Customs officials, rather than veterinary officers, control the majority of border crossings. Cars and buses are subject to inspections and random luggage checks; not all buses or pieces of luggage, therefore, are inspected. Cleaning and disinfection procedures are enforced for all transport vehicles carrying live animals; disinfection barriers also exist for vehicles and pedestrians at each BIP and point of entry.

Informational posters are hung at border crossing points, press releases are distributed, and information is disseminated to customs officers and customs clients to publicize regulations regarding prohibitions and restrictions on personal imports of meat. During visits by APHIS to two Estonian BIPs in 2005, APHIS found that prohibited food items were not often found in the luggage of individuals entering Estonia. However, at one of these BIPs, there was a high volume of road traffic from Estonia into Russia due to the comparatively low price of basic commodities in Russia.

In Hungary, BIP veterinary staff, employed by the county Agricultural Offices but under the direct supervisory and administrative responsibility of the central Ministry of Agriculture and Rural Development office in Budapest, oversee the operations of each BIP. These inspectors conduct searches, may seize prohibited goods, segregate live animals through a separate point of entry, and enforce cleaning and disinfection procedures.

There is, however, significant movement of passengers who do not pass through these BIPs from countries that are not part of the EU. The Hungarian Frontier Guard, which controls the frontier borders of Hungary, conducts random checks and other control activities at these points of entry in conjunction with customs officials. During our site visits, both the Frontier Guards and customs officials appeared familiar with EU requirements and prohibitions regarding importation of meat and dairy products transported in personal consignments.

In addition, while informational posters informing travelers of prohibitions on the importation of certain meat and dairy products were reported to be present at BIPs and other border crossings at the time of accession, APHIS found no such posters during our site visit.

The State Veterinary and Food Administration controls all border crossing points in Slovakia, including all BIPs. There are, however, several crossings for passenger traffic that do not have official veterinary inspection. All individuals attempting to enter the country with agricultural products are redirected to a BIP with veterinary inspection. Customs officials visually check all passenger luggage at BIPs on the Ukrainian border, and selected passenger luggage at Slovakia's airport BIP. Moreover, during our site visit, APHIS noticed wall notices informing travelers of prohibitions on the importation of certain meat and dairy products were present in many, but not all, BIPs.

The Veterinary Administration of the Republic of Slovenia (VARS) includes both an Internal Veterinary Inspection Sector (10 regional offices and 2 branch offices) and the Border Veterinary Inspection Service (BVIS). The annual disease control program issued by VARS outlines the frequency and location of inspections for the Regional Offices to undertake within Slovenia itself. The BVIS has administrative and supervisory responsibility for the 6 BIPs in Slovenia. BVIS veterinary inspectors are present at the BIPs during working hours, but do not conduct inspections outside normal working hours without prior notice.

Slovenian road border crossings are also staffed by customs officials from the Customs Administration of the Republic of Slovenia (CARS). Customs officials conduct searches of personal luggage at border crossings for prohibited meat and dairy products. The customs officials are not themselves veterinarians, but work in close coordination with the veterinary inspectors of VARS: VARS inspectors conduct their training and meet with them monthly to discuss areas for improvement. CARS produces posters, brochures, and Web site information to promote awareness of prohibitions on the importation of meat and other animal products.

Accordingly, the analyses conclude that there is a risk of introduction of CSF, FMD, SVD, or rinderpest into Slovakia or Slovenia, CSF or SVD into Estonia, and CSF into Hungary via passenger traffic, but that this risk is significantly mitigated by the control measures in place at points of entry to the countries.

As stated above, Estonia, Hungary, Slovakia, and Slovenia adopted EC legislation with regard to animal identification at the time of their accession. Each country has in place herd registration and animal identification requirements for ruminants and swine that include movement tracking through a centralized database or register. Health certificates and/or movement authorization certificates are required for all internal movements of ruminants and swine. We will discuss livestock demographics for swine first, then discuss demographics for ruminants, as warranted.

Between 2002 and 2004, the total number of swine holdings in Estonia was approximately 3,835. However, 30 large-scale confinement facilities, each with holdings of at least 2,000 swine, account for the majority of all swine production in the country. Outdoor production facilities are rare, although some small backyard farms do keep swine outdoors in the summer months.

In 2007, the domestic swine population in Hungary was 3.3 million. Approximately 70 percent of all pigs slaughtered in any given year, as well as the majority of pigs destined for commercial export, originate from large-scale facilities of more than 100 pigs. However, it was once common for Hungarians to raise swine for personal consumption, and, although such small-scale farms have declined greatly in number in recent years, they still are more numerous than the large-scale facilities within the country.

In 2006, there were 921,723 pigs on 6,806 holdings in Slovakia. The majority of holdings have between 1 and 450 pigs, although there are several large commercial confinement facilities of 7,000 to 10,000 pigs in the eastern and southwestern parts of the country.

In Slovenia, there were approximately 26,000 swine holdings and 608,000 pigs in 2004. Eight large-scale confinement facilities, each with between 500 and 5,700 sows, account for half of commercial pig production.

In all four countries, there is some overlap between the distribution of swine holdings and areas of concentration of wild boars; however, the majority of swine in Estonia, Hungary, and Slovenia are housed in confinement facilities, with minimal to no outdoor access, and are moved only for slaughter or export. This is not the case with Slovakia, where small to medium holdings constitute the majority of the industry; however, many of these facilities either do not move swine or move them only for custom slaughter for personal consumption.

As part of our evaluations, APHIS conducted site visits of production facilities in Hungary and Slovakia and a rendering plant in Estonia, and determined that they adhered to State-mandated biosecurity measures that are adequate to prevent wild animal incursions into the facilities and the spread of communicable swine diseases by other routes. The risk analyses for Estonia, Hungary, and Slovenia therefore conclude that the prevalence of large commercial confinement facilities in these countries, the distribution of the wild boar population in each country in relation to these facilities, mandatory animal identification requirements, movement controls, and other biosecurity measures adequately mitigate the export risk to the United States. The risk analysis for Slovakia finds that the risk posed by the prevalence of smaller, outdoor production facilities is often mitigated by the lack of movement of swine from the facilities, or their movement only for custom slaughter.

In 2006, there were 524,247 cattle on 19,904 holdings, 326,322 sheep on 4,949 holdings, and 5,507 goats on 918 holdings in Slovakia. Ruminant holdings tend to be constructed in a manner that allows the animals space to graze, and rely on biosecurity measures, such as perimeter fencing and cleaning and disinfection techniques, that minimize but do not prevent contact with wildlife or disease introduction. That said, Slovakia has in place movement restrictions, isolation parameters, and assembly center requirements that APHIS considers sufficient to mitigate the risk that meat derived from FMD-infected ruminants could be exported to the United States.

Cattle are distributed throughout Slovenia, primarily on small- to medium-sized family farms. Family farms frequently maintain cattle for dairy production or breeding. There are large commercial breeding operations (of approximately 600 head apiece) in Slovenia, but most large commercial operations specialize in fattening and meat production. The majority of cattle or products from cattle that are exported from Slovenia originate from cattle held on large-scale commercial operations.

In 2006, there were 144,000 sheep and goats in Slovenia, on 8,600 sheep and goat holdings. As for cattle and swine, Slovenia has in place mandatory animal identification and registration for sheep and goats, which facilitates traceability. In addition, APHIS' regulations governing bovine spongiform encephalopathy currently prohibit the importation of ruminant-derived products from Slovenia. These safeguards address the risk of FMD being introduced into the United States through the importation of ruminant-derived products from Slovenia.

CSF: Estonia, Hungary, Slovakia, and Slovenia all have national surveillance programs in place for CSF in domestic swine and wild boar. Active surveillance is primarily based on serology for antibodies to the CSF virus, as is common throughout the world. Since antibodies usually occur late in CSF infection, serological surveillance would likely miss an early infection ( e.g., in the first 21 days). In each country, training, the distribution of informational literature, and national surveillance exercises aid in passive surveillance for CSF by developing and maintaining the ability to quickly detect this disease. APHIS considers passive surveillance to be sufficient to detect overt clinical signs of CSF, but detection may be delayed in the case of moderate- or low-virulence strains.

SVD: Estonia conducts serological surveillance for SVD in domestic swine. Slovakia does not conduct active surveillance for SVD, but instead relies on passive surveillance similar to that employed to detect CSF. Due to the absence of SVD in the country, Slovenia relies primarily on passive surveillance strategies. Consequently, detection of SVD in Slovakia or Slovenia may be delayed in some instances based on the absence of overt clinical signs.

FMD: Slovakia and Slovenia conduct passive surveillance for FMD. As noted above, passive surveillance may delay the detection of the disease in some instances based on the absence of clinical signs of infection.

Estonia, Hungary, Slovakia, and Slovenia have established accredited national reference laboratories (NRLs) for animal diseases, including CSF, SVD, and FMD. In Slovenia, the National Veterinary Institute (NVI) at the University of Ljubljana is the NRL for a number of diseases, although there are nine regional laboratories that perform initial diagnostic and screening tests. Overall, the laboratories are well organized and equipped, with experienced scientific and technical staff. Standard operating procedures and quality control measures are in place throughout.

CSF: In each country, the NRL provides a range of tests for the diagnosis and confirmation of CSF. Testing includes the virus isolation and antigen enzyme-linked immunosorbent assay (ELISA) tests, as well as the nested polymerase chain reaction, immunofluorescence, and immunoperoxidase methods.

During APHIS' site visit to the NRL in Hungary, we had some concerns regarding the lack of sensitivity of one of the assays employed, a fluorescent antibody test for wild boars. In response, Hungary implemented more sensitive assays that are consistent with OIE specifications. Moreover, APHIS notes that Slovenia's NVI Biohazard Level 3 containment center is not yet completed. Because the NVI cannot handle live CSF virus until this is constructed, it cannot perform all CSF diagnostic tests, and thus it has not yet been accredited by VARS and the EU. (Similar restrictions apply to FMD testing.) Finally, the NRLs of both Estonia and Slovenia rely in certain instances on corroborative testing that takes place outside of each country.

We do not believe that any of these issues decisively compromises the ability of Estonia, Hungary, or Slovenia to detect CSF in samples from domestic swine and wild boars in a timely manner; we have determined that, in each instance, other factors mitigate the risk associated with the issue of concern; and we have therefore concluded that the laboratory systems of Estonia, Hungary, Slovakia, and Slovenia, on the whole, have adequate diagnostic capabilities for CSF.

SVD: The NRL of Estonia currently conducts both serological and nucleic acid testing for SVD. Slovakia does not employ active surveillance for SVD, hence there is no required testing for the disease. However, the NRL of Slovakia does provide a partial range of diagnostic tests for the detection of SVD, as such testing is requested. The NRL of Slovenia has historically conducted limited ELISA testing for SVD: In 2004, there were 30 samples tested, each of which tested negative for SVD, while there were no samples tested in either 2005 or 2006. A monitoring program was designed for 2008. The NRL can, however, process up to 500 samples by ELISA each day.

FMD: The NRLs of Slovakia and Slovenia are capable of performing ELISA tests for FMD antigens. However, because the NRL of Slovakia cannot perform virus isolation tests, confirmatory testing is currently conducted in Riems, Germany. Similarly, because the NRL of Slovenia lacked accreditation for handling live FMD virus at the time of our analysis, samples were being sent instead to Pirbright, United Kingdom, for virological testing. Should either of these procedures continue, they could result in a slight delay in confirming an outbreak in the two countries.

Estonia, Hungary, Slovakia, and Slovenia all have contingency plans in place and supporting legislation to control and eradicate CSF outbreaks in domestic swine. In addition, Estonia has in place a contingency plan to control and eradicate SVD; Slovakia, SVD and FMD; and Slovenia, FMD. These contingency plans conform closely to the provisions of EC legislation. The EC has a stamping out policy with regard to CSF, SVD, and FMD. Eradication is carried out by compulsory depopulation of all animals on the affected premises with burial or incineration of the carcasses, as well as certain cleaning and disinfection protocols. All live animals, animal products, and genetic material moved from affected premises during the time between disease introduction and detection of the outbreak must be destroyed. Additionally, surveillance zones of at least a 10-kilometer radius from the affected premises are established, and the movement of live animals, animal products, and genetic material is suspended until the restrictions are lifted.

While Slovenia currently has no contingency plan for the control and eradication of SVD, the disease has never been reported to have occurred in that country. Furthermore, APHIS recognizes Slovenia's thorough contingency plans for CSF and FMD. In particular, the FMD contingency plan encourages the detection and reporting of vesicular diseases that could lead to an SVD diagnosis.

APHIS found no evidence to suggest CSF or SVD exists within Estonia. Moreover, we determined that there are measures or factors in place which mitigate the pathways through which these diseases could be introduced into Estonia: Migration of wild boar, trade of swine and swine products, vehicle and human traffic, and importation of swine products for personal consumption. APHIS concludes that the risk of introduction of these diseases into Estonia is therefore low. Moreover, APHIS concludes that the risk of introduction of CSF or SVD into the United States from products imported from Estonia is mitigated by additional import restrictions already specified in the regulations.

APHIS found that CSF exists in the wild boar population living within Hungary, as evidenced by a 2009 outbreak of CSF in wild boar. Moreover, APHIS has determined that, even if CSF were eradicated in wild boar within the country, there is a risk of reintroduction of the disease because the wild boar populations in neighboring countries are known to be affected with CSF. However, as noted earlier, APHIS does not consider the presence of CSF in wild boar within a country grounds for precluding that region's inclusion in the APHIS-defined EU CSF low-risk region. Moreover, APHIS has determined that swine operations within Hungary, especially larger commercial ones, adhere to biosecurity measures intended to preclude the introduction of CSF into their holdings.

Upon being added to the EU CSF region, Hungary would be subject to the requirement, under the existing regulations in § 94.24, that its veterinary authorities certify that live swine and swine products exported to the United States did not originate from the restricted zone in Hungary and have never been commingled with swine or swine products from that area. We consider this requirement, in conjunction with the risk mitigation measures imposed by Hungary and the EC, sufficient to mitigate the CSF risk associated with the importation of pork and pork products from Hungary.

APHIS found that CSF exists within Slovakia in wild boar in the EC-designated eradication zone. While surveillance and vaccination within this area have reduced the incidence of CSF in recent years, there is a clear risk of disease introduction to domestic swine via contact with such boars, although the risk of exposure to infected boars is substantially mitigated by commercial production and biosecurity practices on swine confinement operations. Exposure to wild boar is more likely on small farms without such measures; however, such farms often raise pigs only for personal consumption.

Upon being added to the EU CSF region, Slovakia would be subject to the requirement, under the existing regulations in § 94.24, that its veterinary authorities certify that live swine and swine products imported into the United States did not originate from the CSF-restricted zone in Slovakia, and have never been commingled with swine or swine products from that area. We consider this requirement, in conjunction with the risk mitigation measures imposed by Slovakia and the EC, sufficient to mitigate the CSF risk associated with the importation of pork and pork products from Slovakia.

APHIS has no evidence that SVD, FMD, or rinderpest currently exists in Slovakia. The most likely sources of introduction of these two diseases into Slovakia are migration of wild boar or smuggled agricultural products. Slovakia has adequate mitigation measures in place to detect the smuggling of agricultural products. It is possible that infected wild boar could enter Slovakia and come in contact with domestic swine; this risk is somewhat mitigated, but not altogether removed, by the biosecurity measures of commercial confinement facilities within Slovakia. However, the introduction of SVD, FMD, or rinderpest into the domestic herd in Slovakia would only pose a risk of disease introduction into the United States if diseased swine or animal products derived from diseased swine were not detected prior to export. APHIS regards the risk of this occurring to be low.

APHIS found no evidence to suggest that CSF, SVD, FMD, or rinderpest exists in Slovenia. The most likely source of introduction of CSF, SVD or FMD into Slovenia is wild boar from neighboring countries affected with the diseases. However, the introduction of these diseases into Slovenia's domestic herd would only pose a risk of disease introduction into the United States if diseased swine or animal products derived from diseased swine were not detected prior to export. APHIS regards the risk of this occurring to be low. Furthermore, should these diseases be introduced, APHIS has evaluated EC control measures and found them efficacious in detecting and controlling outbreaks of CSF, SVD, and FMD in domestic livestock.

As a result of our analyses, we have concluded that the risk profiles for Estonia, Hungary, Slovakia, and Slovenia are equivalent in CSF risk to the APHIS-defined EU CSF region. The region is defined in §§ 93.500, 94.0, and 98.30, and is recognized as a single region of low-risk for CSF in §§ 94.9 and 94.10. The region is subject to the import restrictions specified in § 94.24 for live swine, pork, and pork products, and § 98.38 for swine semen. Therefore, we are proposing to amend the definition of the APHIS-defined EU CSF region §§ 93.500, 94.0, and 98.30 in order to include Estonia, Hungary, Slovakia, and Slovenia in the region, and, accordingly, to allow the importation of live swine, swine semen, pork, and pork products into the United States from these four countries under the restrictions listed in the regulations.

We are proposing to recognize Estonia, Slovakia, and Slovenia as free of SVD, and Slovakia and Slovenia as free of FMD and rinderpest. In addition to proposing to include Estonia, Slovakia, and Slovenia in the list in § 94.12(a) of regions declared free of SVD, and Slovakia and Slovenia to the list in § 94.1(a)(2) of regions declared free of both rinderpest and FMD, we are also proposing to add Estonia, Slovakia, and Slovenia to the list in § 94.13 of regions declared free of SVD whose exports of pork and pork products are also subject to restrictions and to add Slovakia and Slovenia to the list in § 94.11(a) of regions declared free of rinderpest and FMD whose exports of meat and other animal products to the United States are nevertheless subject to certain restrictions.

Currently, the requirements for the importation of swine semen from the APHIS-defined EU CSF region, which are found in paragraphs (a) through (i) of § 98.38, provide, among other things, that semen must come from an approved semen collection center, that it must come from a donor boar that has never been in or transited a region where CSF is known to exist or a restricted zone for CSF, that it must come from a donor boar that has never commingled with swine that have been in such regions or zones, that the donor boar must be held in isolation for 30 days prior to semen collection, and that the boar must be tested for CSF prior to being held in isolation with negative results. In addition, paragraph (h) of the section currently requires that, except for semen collected from swine in Denmark, Finland, Sweden, the Republic of Ireland, and the United Kingdom, before the semen is exported to the United States, the donor boar must be held at the semen collection center for at least 40 days following collection of the semen, and, along with all other swine at the semen collection center, exhibit no clinical signs of CSF.

After reviewing relevant information, we are proposing to remove paragraph (h) from the regulations.

Three considerations, which are documented in a risk assessment titled “APHIS Risk Considerations on the Necessity of the 40-Day Post-Collection Holding Period for Swine Semen Imported from the European Union” (June 2008) that accompanies this proposed rule, led us to this conclusion. First, in recognizing the APHIS-defined EU CSF region, we decided that EC quarantine regulations with respect to areas affected by CSF would form the basis for the additional restrictions or mitigation measures that we would impose upon imports of swine and swine products from that region. We will only impose additional restrictions in circumstances where we have determined that, in the absence of such restrictions, EC regulations would prove insufficient to adequately mitigate the risk of CSF being introduced into the United States by such animals and animal products. In other words, the restrictions that our regulations impose upon the EU CSF region are dependent on the restrictions in the EC regulations themselves; as the latter become more or less restrictive, our regulations should change accordingly.

Since we recognized the EU CSF region, significant changes have been made to the EC regulations to strengthen its controls for CSF introduction or dissemination via infected swine germplasm. These include additional controls on the intra-community trade of swine semen, the immediate halt of the movement of swine semen from collection centers within all restricted zones established during an outbreak of CSF, and additional testing requirements for all animals in swine semen centers prior to releasing an area from restrictions following an outbreak.

Second, since we conducted the 1999 risk analysis that suggested the need for the 40-day holding period, we have strengthened our regulations governing the importation of swine semen from a CSF-affected area within the EU CSF region and added additional mitigation measures for products imported from that region. For example, we have since added a 6-month restriction on the importation into the United States of swine and swine products from a restricted zone within the EU CSF region following an outbreak.

Finally, at the time we put the 40-day holding period in place, we believed that it would not be overly burdensome for exporters of swine semen or otherwise inhibit trade. However, we have since learned that artificial insemination of sows relies overwhelmingly on fresh boar semen or semen that has been chilled for no more than 5 days; indeed, such semen accounts for approximately 99 percent of all artificial insemination worldwide. Methods, such as freezing, exist to preserve swine semen for longer periods of time; however, swine semen is extremely sensitive to freezing and thawing, losing both potency and fertility in the process. Given the other increased restrictions on the importation of swine semen from the EU CSF region, continuing to require the 40-day hold, and thus to interfere with trade in swine semen, no longer appears necessary. Accordingly, we are proposing to remove § 98.38(h), which requires the 40-day hold, from the regulations.

On October 28, 1997, we published in the Federal Register a final rule (62 FR 56000-56026, Docket No. 94-106-9) and a policy statement (62 FR 56027-56033, Docket No. 941068) that established procedures for recognizing regions and levels of risk for the purpose of regulating the importation of animals and animal products. With the establishment of those procedures, APHIS can consider requests to allow importations from regions based on levels of risk, as well as to recognize entire countries as free of a disease. In subsequent rules, we identified the smallest administrative jurisdictions, referred to as administrative units (AUs), in the APHIS-defined EU CSF region that we would use to regionalize those Member States in the event of future animal disease outbreaks. As discussed in those documents, we believe that each of those jurisdictions is the smallest that can be demonstrated to have oversight of normal animal movements into, out of, and within that Member State, and that, in association with national authorities, if necessary, has effective control over animal movements and animal diseases locally.

We have identified the following AUs for each country addressed in this proposal: For both Estonia and Hungary, the AU would be the county; for Slovakia, the district; and for Slovenia, the region.

We have also reevaluated the AUs that we currently recognize for other countries in the EU to determine whether any modifications to these recognitions were necessary. Prior to July 29, 2005, the AU for Italy was the region. In a notice that we published in the Federal Register (70 FR 43838-43839, Docket No. 04-081-2) on that date, we advised the public that, among other things, we considered the aziende sanitarie locali (local health unit), a smaller administrative unit, the AU for Italy. Since that time, we have determined that this unit does not have sufficient control over local animal movements to fulfill the criteria established for an AU. Therefore, we intend to once again identify the region as the AU for Italy. We invite comments on that determination.

Accordingly, these AUs would be used to regionalize those Member States in the event of future animal disease outbreaks.

This proposed rule has been determined to be not significant for the purposes of Executive Order 12866, and has therefore not been reviewed by the Office of Management and Budget.

In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available by contacting the person listed under FOR FURTHER INFORMATION CONTACT or on the Regulations.gov Web site ( see ADDRESSES above for instructions for accessing Regulations.gov).

The analysis identifies hog and pig producers as the small entities most likely to be affected by this action and considers the effects on domestic prices associated with increased imports of swine, swine semen, pork, and pork products. Based on the information presented in the analysis, we expect that domestic pork producers would experience only a minimal loss in welfare as a result of this action. The analysis provides a basis for the APHIS Administrator's determination that this action would not have a significant economic impact on a substantial number of small entities.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. If this proposed rule is adopted: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings will not be required before parties may file suit in court challenging this rule.

To provide the public with documentation of APHIS' review and analysis of any potential environmental impacts associated with the proposed addition of Estonia, Hungary, Slovakia, and Slovenia to the list of EU countries considered to be a low risk CSF, Estonia, Slovakia, and Slovenia to the list of regions recognized as free of SVD, but that are subject to certain import restrictions, and Slovakia and Slovenia to the list of regions recognized as free of FMD and rinderpest, but that are subject to certain import restrictions, we have prepared environmental assessments for each country.

The environmental assessments were prepared in accordance with: (1) The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 et seq. ), (2) regulations of the Council on Environmental Quality for implementing the procedural provisions of NEPA (40 CFR parts 1500-1508), (3) USDA regulations implementing NEPA (7 CFR part 1b), and (4) APHIS' NEPA Implementing Procedures (7 CFR part 372).

The environmental assessments may be viewed on the Regulations.gov Web site or in our reading room. We invite the public to comment on those environmental assessments. Comments on the environmental assessments may be submitted using the same process as comments on the proposed rule. Instructions for accessing Regulations.gov and for submitting comments and information on the location and hours of the reading room are provided under the heading ADDRESSES at the beginning of this proposed rule. In addition, copies may be obtained by calling or writing to the individual listed under FOR FURTHER INFORMATION CONTACT .

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

Accordingly, we propose to amend 9 CFR parts 93, 94, and 98 as follows:

The Dodd-Frank Act, enacted on July 21, 2010, establishes the Council, which is composed of ten voting members and five non-voting members. 1 Among other authorities and duties, the Council may require that a “nonbank financial company” become subject to consolidated, prudential supervision by the Board if the Council determines that material financial distress at the company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the company's activities, could pose a threat to the financial stability of the United States. 2 Section 113 of the Dodd-Frank Act specifies a number of criteria that the Council must consider in determining whether to designate a nonbank financial company for supervision by the Board. These factors include the size and leverage of the company, as well as the extent and nature of the company's transactions and relationships with other “significant nonbank financial companies” and “significant bank holding companies.”  3 Nonbank financial companies that are designated by the Council under section 113 of the Dodd-Frank Act are referred to as “nonbank financial companies supervised by the Board.”  4

The authority of the Council to require that a nonbank financial company become subject to consolidated prudential supervision by the Board is an important component of the legislative and regulatory changes designed to address gaps and weaknesses in the financial regulatory system that became evident during the financial crisis. These gaps allowed certain large, interconnected financial firms whose failure could pose substantial risks to the financial stability of the United States to avoid the type of prudential, consolidated supervision applicable to bank holding companies.

Besides being used in section 113 of the Dodd-Frank Act, the terms “nonbank financial company” and “significant” nonbank financial company and bank holding company also are used in several other provisions of Title I of the Act. For example, under section 112(d)(3) of the Dodd-Frank Act (12 U.S.C 5322(d)(3)), the Council, acting through the Office of Financial Research (“OFR”), may require a nonbank financial company to submit reports to the OFR and the Council to assist the Council in assessing the extent to which a financial activity or financial market in which the nonbank financial company participates, or the nonbank financial company itself, poses a threat to the financial stability of the United States. In addition, the Dodd-Frank Act requires nonbank financial companies supervised by the Board and bank holding companies with total consolidated assets of $50 billion or more to submit reports to the Board, the Council, and the FDIC on the nature and extent of (i) the company's credit exposure to other significant nonbank financial companies and significant bank holding companies; and (ii) the credit exposure of such significant entities to the company. 5

Title I of the Dodd-Frank Act defines a “nonbank financial company” to include both a U.S. nonbank financial company and a foreign nonbank financial company. The statute, in turn, defines a U.S. nonbank financial company as a company (other than a bank holding company and certain other specified types of entities)  6 that is (i) incorporated or organized under the laws of the United States or any State; and (ii) predominantly engaged in financial activities. A foreign nonbank financial company is defined as a company (other than a bank holding company or foreign bank or company that is, or is treated as, a bank holding company) that is (i) incorporated or organized outside the United States; and (ii) predominantly engaged in financial activities. 7 The proposed rule incorporates these definitions. 8 Thus, the term “nonbank financial company” applies to financial firms that are not already supervised and regulated by the Federal Reserve System as bank holding companies.

The Act defines financial activities by reference to those activities that have been determined—by statute, regulation, or order—to be financial in nature under section 4(k) of the BHC Act (as amended by the Gramm-Leach-Bliley Act)  9 and, thus, are permissible for a financial holding company to conduct. 10 For purposes of Title I of the Dodd-Frank Act, a company is considered to be “predominantly engaged” in financial activities if either (i) the annual gross revenues derived by the company and all of its subsidiaries from financial activities, as well as from the ownership or control of an insured depository institution, represent 85 percent or more of the consolidated annual gross revenues of the company; or (ii) the consolidated assets of the company and all of its subsidiaries related to financial activities, as well as related to the ownership or control of an insured depository institution, represent 85 percent or more of the consolidated assets of the company.

The Dodd-Frank Act requires the Board to issue regulations that establish the requirements for determining if a company is “predominantly engaged in financial activities” for purposes of Title I of the Act and that define the terms “significant nonbank financial company” and “significant bank holding company.”  11 Accordingly, the Board is requesting comment on a proposed rule that would establish these criteria and define these terms. 12 The Board is requesting comment on the proposed rule at this time because the proposals are relevant to the authority of the Council to designate nonbank financial companies for supervision by the Board under section 113 of the Dodd-Frank Act. As noted previously, the Council recently requested comment on a proposed rule to implement the designation standards and process for nonbank financial companies under section 113. 13 The Board believes soliciting comment on the proposed rule at this time should facilitate public understanding of, and comment on, the Council's proposal, and allow the Council to consider potential designations of nonbank financial companies under section 113 promptly after the Council's rule is finalized.

In developing the proposed rule, the Board considered the language and purposes of the relevant statutory provisions. In addition, the Board consulted with the other voting member agencies of the Council in developing this proposed rule.

The proposed rule provides that a company is predominantly engaged in financial activities if:

The proposed test is based on the relevant company's annual financial revenue in, or financial assets at the end of, either of its two most recent fiscal years. This methodology is designed to allow the Council to effectively fulfill its important responsibilities of designating (and reviewing existing designations of) those nonbank financial companies whose failure could pose a threat to the financial stability of the United States, and to allow the Board to effectively fulfill its responsibilities for supervising such firms. While the Act provides that a company's consolidated annual gross revenues and consolidated assets are to be used in determining whether the company is predominantly engaged in financial activities, the Act does not specify over what time period ( e.g., one year, two years, etc. ) the annual gross revenues or consolidated assets of a company should be considered in making this determination.

The two-year test would, for example, allow the Council to designate a systemically important firm whose financial assets and revenues traditionally have met or exceeded the required 85 percent threshold, but that experienced a temporary decline in financial revenues or assets (such as, for example, due to declining financial asset prices caused by distress in the financial markets) during its last fiscal year. Similarly, the two-year test would provide the Council a period of time to reevaluate—as contemplated by the Dodd-Frank Act  15 —an existing designation with respect to a systemically important nonbank financial company should the company's level of financial revenues or assets fall below the 85 percent threshold at the end of a single year.

At the same time, however, a company would not be considered to be predominantly engaged in financial activities under the two-year test set forth in § 225.301(a)(1) or (2) of the proposed rule, and would not qualify as a nonbank financial company under this test, if the company's level of financial revenues or assets were below the 85 percent threshold in both of its two most recent fiscal years. Thus, companies that are and remain substantially engaged in nonfinancial activities would not be subject to potential designation by the Council under section 113 of the Dodd-Frank Act or to consolidated supervision by the Board as a result of such a designation.

The proposed rule defines the “consolidated annual gross financial revenues” of a company as that portion of the company's consolidated annual gross revenues, as determined in accordance with applicable accounting standards, that were derived, directly or indirectly, by the company or any of its subsidiaries from (i) activities that are financial in nature under section 4(k) of the BHC Act; or (ii) the ownership, control, or activities of an insured depository institution. 16 Similarly, the “consolidated total financial assets” of a company is defined as that portion of the company's consolidated total assets, as determined in accordance with applicable accounting standards, that are related to (i) activities that are financial in nature under section 4(k) of the BHC Act, or (ii) the ownership, control, or activities of an insured depository institution. 17 The Dodd-Frank Act specifically provides that revenues or assets attributable to an insured depository institution are to be considered as “financial” revenues or assets for purposes of determining whether a company is predominantly financial. 18 The proposed rule clarifies that revenues and assets attributable to a subsidiary of an insured depository institution also are considered to be financial in nature. This ensures that such revenues and assets are consistently treated as financial regardless of whether a company holds an interest in such a subsidiary directly or indirectly through an insured depository institution. Moreover, under the Federal banking laws, a subsidiary of an insured depository institution generally may engage only in the types of banking activities permissible for its parent insured depository institution and other financial activities as expressly authorized by Federal law.

Under the proposed two-year test, the amount of a company's financial revenues and financial assets would be determined as a percentage of the company's consolidated annual gross revenues and consolidated total assets, respectively, as determined under and in accordance with U.S. generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS). 19 To reduce the potential for companies to arbitrage the 85 percent financial test by changing the accounting standards used for these purposes, the rule specifically provides that the accounting standards used for the predominantly financial test must be the same standards that the company uses in the ordinary course of its business in preparing its consolidated financial statements.

The Board proposes to allow companies to use their consolidated, year-end financial statements prepared in accordance with GAAP or IFRS as the basis for determining their annual gross revenue and consolidated assets for purposes of the two-year test because this methodology is likely to provide a transparent, accurate, and comparable basis for determining such amounts across companies and, thus, should facilitate the ability of companies and, if necessary, the Board or the Council to determine whether they are a nonbank financial company for purposes of Title I of the Dodd-Frank Act. Moreover, allowing companies to use the year-end consolidated financial statements that they already prepare for financial reporting or other purposes should help reduce potential regulatory burden.

To further help facilitate compliance with the proposed rule and reduce burden, the proposed rule includes two rules of construction governing the application of the two-year test to revenues and assets attributable to a company's minority, less-than-controlling equity investments in unconsolidated entities. Under the first rule of construction, the revenues derived from, and assets related to, a company's equity investment in another company (the “investee company”) the financial statements of which are not consolidated with those of the company under applicable accounting standards would be considered as financial revenues or assets if the investee company itself is predominantly engaged in financial activities under the 85-percent, two-year test set forth in § 225.301(a)(1) or (2) of the proposed rule. 20 Treating the revenues and assets attributable to such an investment as financial based on the aggregate mix of the investee company's revenues and assets is consistent with the statutory definition of a nonbank financial company generally, which treats an entire nonbank company as financial if 85 percent or more of the company's revenues or assets are attributable to financial activities. 21 This approach also avoids requiring a company to determine the precise percentage of an investee company's activities that is financial in order to determine the portion of the company's revenues or assets related to the investment that should be treated as financial. Companies tend to have less access to detailed business information from other companies in which they have a non-controlling, minority investment than companies that are consolidated in the company's financial statements.

The second rule of construction would permit (but not require) a company to treat as nonfinancial the revenues and assets attributable to a limited amount of de minimis equity investments in investee companies without having to separately determine whether the investee company is itself predominantly engaged in financial activities. 22 This rule of construction is subject to several conditions designed to limit the potential for these de minimis investments to substantially alter the character of the activities of a company.

Specifically, this rule of construction provides that a company may treat revenues derived from, or assets related to, an equity investment by the company in an investee company as revenues or assets not derived from, or related to, activities that are financial in nature (regardless of the type of activities conducted by the other company), if (i) the company owns less than five percent of any class of outstanding voting shares, and less than 25 percent of the total equity, of the investee company; (ii) the financial statements of the investee company are not consolidated with those of the company under applicable accounting standards; (iii) the company's investment in the investee company is not held in connection with the conduct of any financial activity (such as, for example, investment advisory activities or merchant banking investment activities) by the company or any of its subsidiaries; (iv) the investee company is not a bank, bank holding company, broker-dealer, insurance company, or other regulated financial institution; and (v) the aggregate amount of revenues or assets treated as nonfinancial under the rule of construction in any year does not exceed five percent of the company's annual gross financial revenues or consolidated total financial assets of the company. 23

The proposed rule also allows the Board, on a case-by-case basis and based on all the facts and circumstances, to determine that a company is predominantly engaged in financial activities because either (i) 85 percent or more of the consolidated annual gross revenues of the company are derived from activities that are financial in nature under section 4(k) of the BHC Act or from the ownership, control, or activities of an insured depository institution or a subsidiary of such an institution; or (ii) 85 percent or more of the consolidated assets of the company are related to activities that are financial in nature under section 4(k) of the BHC Act or to the ownership, control, or activities of an insured depository institution or a subsidiary of such an institution. 24

This provision of the proposed rule is designed to provide the Board the flexibility, in appropriate circumstances, to consider whether a company meets the statute's 85 percent financial revenue or asset test based on the full range of information that may be available concerning the company's activities and assets (including information obtained from other Federal or State financial supervisors or agencies) at any time. For example, the Board notes that the mix of a company's revenues or assets, as well as the risks the company may pose to the U.S. financial system, may change significantly and quickly as a result of various types of transactions or actions, such as a merger, consolidation, acquisition, establishment of a new business line, or the initiation of a new activity. Moreover, these transactions and actions may occur at any time during a company's fiscal year and, accordingly, the effects of the transactions or actions may not be reflected in the year-end consolidated financial statements of the company for several months. Section 225.301(a)(3) of the proposed rule would allow the Board to promptly consider the effect of changes in the nature or mix of a company's activities as a result of such a transaction or action where such changes may affect the judgment of the Council as to whether the company should be designated and subject to consolidated supervision by the Board under section 113 of the Dodd-Frank Act to help protect the financial stability of the United States. The Board would expect to conduct such a case-by-case review of whether a company is predominantly financial only when justified by the circumstances.

As noted above, the Dodd-Frank Act defines financial activities by reference to those activities that have been determined to be financial in nature under section 4(k) of the BHC Act (as amended by the Gramm-Leach-Bliley Act). Existing § 225.86 of the Board's Regulation Y (12 CFR 225.86) references all of the activities that already have been determined—by statute, regulation or order—to be financial in nature under section 4(k) of the BHC Act. In order to assist nonbank companies in determining whether they are predominantly engaged in financial activities, the proposed rule specifies that these activities are “financial in nature” for purposes of the proposed rule and provides cross-references to the individual parts of § 225.86 of the Board's Regulation Y that identify these activities. These activities also are summarized below. 25

Section 4(k) of the BHC Act also authorizes the Board, in consultation with the Secretary of the Treasury, to determine in the future that additional activities are “financial in nature.”  26 The proposed rule expressly recognizes that additional activities, beyond those already determined to be financial in nature and identified in § 225.86(a), (b), or (c) of the Board's Regulation Y, may be determined to be financial in nature under section 4(k). 27 Upon such a determination with respect to an activity, nonbank companies must include any revenues or assets attributable to the activity as financial revenues and assets for purposes of determining whether they are predominantly engaged in financial activities and, thus, a “nonbank financial company” for purposes of Title I of the Dodd-Frank Act.

a. Closely Related to Banking Activities. Among the activities that section 4(k) of the BHC Act defines as being “financial in nature” are all of the activities that the Board had determined, by regulation or order, prior to November 12, 1999, to be “so closely related to banking as to be a proper incident thereto” under section 4(c)(8) of the BHC Act. 28 These activities are listed in § 225.28(b) and § 225.86(a)(2) of the Board's Regulation Y (12 CFR 225.28(b) and 225.86(a)(2)) and include, among other activities—

b. Activities determined to be usual in connection with the transaction of banking abroad. Section 4(k) also provides that “financial in nature” activities include those activities that the Board had determined by regulation in effect on November 11, 1999, to be usual in connection with the transaction of banking or other financial operations abroad. These activities are listed in § 225.86(b) of the Board's Regulation Y (12 CFR 225.86(b)) and include, among other activities:

c. Activities defined as financial in nature by the GLB Act. The GLB Act itself also defined a number of important activities as being financial in nature. These activities, which are referenced in § 225.86(c) of the Board's Regulation Y (12 CFR 225.86(c)), include, among other activities:

The proposed rule provides that a company may request a determination by the Board as to whether a particular activity is financial in nature for purpose of section 4(k) of the BHC Act. This procedure is substantially similar to the procedure outlined in § 225.88 of Regulation Y under which a financial holding company or other interested entity may request a determination from the Board that an activity is financial in nature or incidental to a financial activity. The Board expects this procedure might be used by those large or interconnected nonbank companies that may potentially be subject to designation by the Council under section 113 and that have questions concerning whether certain of their activities are financial in nature.

Section 102(a)(6) of the Dodd-Frank Act specifically provides that, if an activity is “financial in nature” under section 4(k) of the BHC Act, the activity is considered a financial activity for purposes of determining whether a nonbank company is predominantly engaged in financial activities. The Dodd-Frank Act does not impose any additional conditions, beyond those that may apply under section 4(k) or the Board's Regulation Y, for an activity to be considered a financial activity for purposes of the predominantly financial test.

Accordingly, the proposed rule broadly defines “financial activities” to include all activities that have been, or may be, determined to be “financial in nature” under section 4(k) regardless of where the activity is conducted by a company, regardless of whether a bank holding company or a foreign banking organization could conduct the activity under some legal authority other than section 4(k) of the BHC Act, and regardless of whether any Federal or State law other than section 4(k) of the BHC Act may prohibit or restrict the conduct of the activity by a bank holding company. 29 For example, all investment activities that are permissible for a financial holding company under the merchant banking authority in section 4(k)(4)(H) of the BHC Act and the Board's implementing regulations ( see 12 CFR 225.170 et seq. ) are considered financial activities even if some portion of those activities could be conducted by a financial holding company under another or more limited investment authority (such as the authority in section 4(c)(6) of the BHC Act, 30 which allows bank holding companies to make passive, non-controlling investments in any company if the bank holding company's aggregate investment represents less than five percent of any class of voting securities and less than 25 percent of the total equity of the company). 31 Likewise, all securities underwriting and dealing activities are considered financial activities for purposes of the proposed rule even if a bank holding company or other company affiliated with a depository institution may be limited in the amount of such activity it may conduct or may be prohibited from broadly engaging in the activity under the “Volcker Rule.”  32

Finally, the Board notes that section 113(c) of the Dodd-Frank Act gives the Council the authority to subject the financial activities of any company to supervision by the Board if the Council determines that: (i) The company is organized and operates in such a manner to evade application of Title I of the Dodd-Frank Act; and (ii) material financial distress related to, or the nature, scope, size, scale, concentration, interconnectedness, or mix of, the company's financial activities would pose a threat to the financial stability of the United States. 33 Companies that are engaged in activities that are financial in nature, but that alter the manner in which they conduct those activities for purposes of evading designation by the Council under section 113 and supervision by the Board, may be subject to designation by the Council under the special anti-evasion authority in section 113(c). Such an attempt to evade section 113 might occur, for example, if a large, interconnected company that is predominantly engaged in financial activities slightly alters the manner in which it conducts an activity that is financial in nature so that the activity does not comply with one of the restrictions that govern the conduct of the activity by a bank holding company for the purpose of reducing the company's financial revenues and assets under section 102(a)(6) and avoiding designation under section 113 of the Dodd-Frank Act.

As discussed above, the proposed rule also defines the terms “significant nonbank financial company” and “significant bank holding company,” which are used in connection with the criteria the Council must consider in determining whether to require that a nonbank financial company become supervised by the Board under section 113 of the Dodd-Frank Act. A firm that is defined as a significant nonbank financial company or a significant bank holding company does not become subject to any additional supervision or regulation by virtue of that definition. Rather, relationships between firms and these significant nonbank financial companies and significant bank holding companies become a relevant factor in other determinations and additional information is collected about these relationships.

Specifically, the proposed rule defines a “significant nonbank financial company” to mean (i) any nonbank financial company supervised by the Board; and (ii) any other nonbank financial company that had $50 billion or more in total consolidated assets as of the end of its most recently completed fiscal year. 34 The proposed rule defines a “significant bank holding company” as any bank holding company, or foreign bank that is treated as a bank holding company, that had $50 billion or more in total consolidated assets as of the end of the most recently completed calendar year (as reported by the bank holding company or foreign bank on the appropriate Federal Reserve form). 35

In establishing these definitions, the Board considered its supervisory experience with bank holding companies as well as the fact that Congress established $50 billion in total consolidated assets as the threshold at which bank holding companies should be subject to enhanced prudential supervision without any special determination by the Council that the bank holding company's failure would pose a threat to financial stability. 36 The proposed definition is designed to provide a transparent standard that the Council may use in meeting its statutory obligation to consider the relationships of a nonbank financial company under consideration for designation with other “significant” firms. The Board notes that section 113 also permits the Council to consider a nonbank financial company's relationships with one or more other nonbank financial companies or bank holding companies that are not considered, by rule, to be significant whenever the Council determines that such risk-related information would be useful in assessing the potential for the company to pose systemic risks. 37

In addition to being relevant to the Council's determinations regarding whether to subject a nonbank financial company to Board supervision, the terms “significant nonbank financial company” and “significant bank holding company” are used in connection with the credit exposure reports that nonbank financial companies supervised by the Board and bank holding companies and foreign banks treated as bank holding companies with $50 billion or more in assets must prepare and file under section 165(d)(2) of the Dodd-Frank Act. 38 The Board and the FDIC are jointly responsible for developing rules to implement these credit exposure reporting requirements. The Board expects to review the definition of “significant” nonbank financial companies and bank holding companies as part of the rulemaking to be conducted under section 165(d)(2) of the Dodd-Frank Act.

The Board is interested in receiving comments on all aspects of the proposed rule. Comments also are specifically requested on the following matters:

1. With respect to the portions of the rule pertaining to whether a company is predominantly engaged in financial activities:

2. With respect to the proposed definitions of significant entities:

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Ch. 3506; 5 CFR 1320 Appendix A.1), the Board reviewed the proposed rule under the authority delegated to the Board by the Office of Management and Budget (“OMB”).

The collections of information that are proposed by this rulemaking are found in 12 CFR 225.301(f). Under this section, a company may request a determination from the Board as to whether a particular activity is financial in nature for purposes of this section. The request must be in writing and must include specific information as described in section 225.301(f)(2). Submission of such a request by a company is voluntary. Submitters of such requests are expected to be nonbank companies that believe the nature, scope, size, scale, concentration, interconnectedness or mix of its activities might cause the firm to be considered for designation by the Council under section 113 of the Dodd-Frank Act and that seek guidance as to whether the company is predominantly engaged in financial activities and, thus, eligible for such designation.

The Board may not conduct or sponsor, and an organization is not required to respond to, this information collection unless it displays a currently valid OMB control number. The OMB control number will be assigned. It is estimated that the burden per response would be four hours and that there would be three respondents providing this information annually. Therefore, the total amount of annual burden is estimated to be twelve hours.

Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility; (b) the accuracy of the Federal Reserve's estimate of the burden of the proposed information collection, including the cost of compliance; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collections of information should be sent to Secretary, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments to be sent to the Office of Management and Budget, Paperwork Reduction Project, Washington, DC 20503.

In accordance with Section 3(a) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (“RFA”), the Board is publishing an initial regulatory flexibility analysis of the proposed rule. The RFA requires an agency either to provide an initial regulatory flexibility analysis with a proposed rule for which a general notice of proposed rulemaking is required or to certify that the proposed rule will not have a significant economic impact on a substantial number of small entities. Based on its analysis and for the reasons stated below, the Board believes that this proposed rule would not have a significant economic impact on a substantial number of small entities. Nevertheless, the Board is publishing an initial regulatory flexibility analysis. A final regulatory flexibility analysis will be conducted after consideration of comments received during the public comment period.

In accordance with sections 102(b) and 102(a)(7) of the Dodd-Frank Act, the Board is proposing to amend Regulation Y (12 CFR 225 et seq. ) to establish the criteria for determining if a company is “predominantly engaged in financial activities” and to define the terms “significant nonbank financial company” and “significant bank holding company.”  39 The reasons and justifications for the proposed rule are described in the Supplementary Information . As discussed in the Supplementary Information , the criteria and definitions that would be established by the proposed rules are relevant to the authority of the Council to require that a nonbank financial company become subject to consolidated prudential supervision by the Board because material financial distress at the company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the company's activities, could pose a threat to the financial stability of the United States.

Although asset size may not be the determinative factor of whether a company may pose systemic risks, it is an important consideration. 40 Under regulations issued by the Small Business Administration (“SBA”), firms within the “Finance and Insurance” sector are considered “small” if they have asset sizes that vary from $7 million or less in assets to $175 million or less in assets. 41 The Board believes that the Finance and Insurance sector constitutes a reasonable universe of firms for these purposes because such firms generally engage in activities that are financial in nature. A financial firm that is at or below these size thresholds is not likely to be designated by the Council under section 113 of the Dodd-Frank Act because material financial distress at such a firm, or the nature, scope, size, scale, concentration, interconnectedness, or mix of its activities, is not likely to pose a threat to the financial stability of the United States. 42

In addition, as described in the Supplementary Information, the Board also has taken several steps to reduce the potential burden of the proposed rule on all companies that may be affected by the rule. These steps include allowing companies to use their consolidated, year-end financial statements prepared in accordance with GAAP or IFRS as the basis for determining whether they are predominantly engaged in financial activities, and the establishment of two rules of construction governing the application of the two-year test to revenues and assets attributable to a company's minority, less-than-controlling equity investments in other unconsolidated entities.

For the reasons stated in the preamble, the Board proposes to amend Regulation Y, 12 CFR part 225, as follows:

FDIC regulations currently do not require employees at IDIs to be trained in the basic principles of FDIC deposit insurance coverage or to assist customers in ascertaining whether their deposits are fully covered by Federal deposit insurance. The FDIC receives tens of thousands of telephone calls, e-mails and correspondence annually from depositors and IDI employees seeking information and advice about FDIC deposit insurance coverage. These inquiries reveal that many depositors do not know whether their deposits are fully insured and that bank employees often are unfamiliar with the scope of deposit insurance coverage. In addition, the FDIC regularly receives complaints from IDI customers, asserting that their banks were unable to answer their deposit insurance questions or, in some cases, may have provided inaccurate deposit insurance guidance. The FDIC is concerned that these situations could cause financial harm to depositors and have the potential to undermine customer confidence in depository institutions and the Federal deposit insurance system.

To address the issues described above, the FDIC is proposing to add a new section to its insurance regulations, which appear at 12 CFR Part 330. This new section would establish three new requirements for IDIs.

First, IDIs would be required to have employees with the authority to open deposit accounts and/or respond to customer questions about FDIC deposit insurance coverage complete a computer-based instructional (“CBI”) program provided to IDIs by the FDIC. This program would provide users with an introduction to FDIC deposit insurance coverage, with specific focus on the general principles of insurance coverage and the rules and requirements for the account ownership categories. It would also introduce users to the information resources available from the FDIC, including EDIE, deposit insurance guides and on-demand videos. Further, this self-paced training module would include frequent knowledge checks to help the user evaluate his or her understanding of the information presented.

This self-administered training program would require less than two hours for most employees to complete. All employees would be required to complete the training once in every 12-month period. Each new employee with the duties previously described would be required to take the training within 30 days of commencing employment. Current employees at the time of the effective date of the final rule would be required to take the training within 60 days of the effective date.

Further, IDIs are encouraged to provide additional training, using a range of media, to help employees understand the FDIC's deposit insurance rules. The FDIC provides multiple, cost-free training resources on the deposit insurance rules to the industry, for use on a voluntary basis, including in-person training sessions, written materials, videos, EDIE and telephone seminars presented by FDIC personnel.

Second, IDIs would be required to institute procedures ensuring that, regardless of the manner in which a customer opens a new account, the employee opening the account must inquire as to the existence of other deposit accounts at the same IDI and whether the aggregated account balance exceeds the SMDIA, currently $250,000. Thus, for an account opened in person or by telephone, the employee opening the account would ask the customer whether the customer maintains any other accounts at the IDI (including accounts opened at other IDI branch locations) and, if so, whether the combined balances of all the accounts exceed the SMDIA. If the response is in the affirmative, the IDI employee would provide the customer with a copy of the FDIC's Deposit Insurance Summary publication. In the case of deposit accounts opened by mail, via the Internet or by means of other technology, these inquiries can be included in the paper or electronic application form, with a link to the Deposit Insurance Summary publication supplied. The rule would not require an IDI to provide counsel or advice to the customer regarding how to structure multiple deposit accounts to maximize deposit insurance coverage.

The rule would apply to all types of deposit accounts opened by a customer, with the exception of pass-through accounts as to which the IDI does not, in the normal course of business, keep records of the beneficial owners. The rule would not impose a deposit insurance training requirement on third parties ( e.g., deposit brokers or affinity groups) that directly or indirectly promote the deposit of funds in a specified IDI. However, the FDIC makes ample deposit insurance resources publicly available, and the Corporation urges any entity that encourages or facilitates the placement of deposits in IDIs to provide appropriate information in response to client inquiries regarding FDIC deposit insurance coverage.

Third, the proposed rule would require an IDI to provide a link to EDIE on any Web site it maintains for use by customers. IDIs can link to EDIE, at no cost, in two ways—via Online EDIE or Brandable EDIE. Online EDIE is available directly from the FDIC's Web site at http://www.fdic.gov/edie. With Online EDIE, IDIs link to the application, which resides on the FDIC's Web site, and IDI customers are then taken from the IDI's Web site to the FDIC's Web site. Brandable EDIE, which can be accessed free from FDIC Connect, allows an IDI to customize and integrate the EDIE application into the IDI's own Web site, so customers can access EDIE without leaving the IDI's Web site.

The FDIC believes the implementation of this rule would not impose a significant regulatory burden on the industry. The proposed rule is circumscribed and modest in its requirements. First, IDI employees with authority to open accounts and/or respond to a customer's deposit insurance question would be required to complete a short training program annually. The training program would be provided to IDIs by the FDIC at no cost. Second, when opening a new account, employees would simply inquire (1) whether the customer has other deposits at the same IDI and (2) whether such deposits, including the new account, exceed the SMDIA. The rule would not require IDI employees to advise customers on how to maximize deposit insurance coverage. The proposed rule would require IDI employees to provide the customer with the FDIC's publication, Deposit Insurance Summary. Lastly, the rule would require an IDI to maintain a link to EDIE on its Web site.

The Corporation believes it is reasonable to expect employees at IDIs to have sufficient familiarity with basic rules for Federal deposit insurance coverage so employees can provide accurate information to customers who wish to confirm their deposit insurance coverage. To the extent that compliance with the proposed rule imposes an obligation on the industry, it must be weighed against the benefit to depositors by reinforcing their confidence in Federal deposit insurance and preventing unnecessary financial losses to customers if their IDI should fail.

The FDIC requests comment on all aspects of the proposed rule, including cost, regulatory burden and benefits to consumers. In particular, the FDIC seeks comments with respect to the following questions:

• Does the proposed rule strike the right balance between meeting depositors' need for accurate deposit insurance information and the potential cost to and regulatory burden on IDIs?

• Is the scope of the proposed rule appropriate? In its present form, the rule would require training for all IDI employees with authority to open accounts and/or respond to customers' inquiries on deposit insurance coverage. Should the training extend to all IDI employees who work in bank retail offices, not just the employees with these specific responsibilities?

• The rule would require IDI employees to inquire whether the customer has an ownership interest in any other deposit accounts at the IDI and, if so, whether the customer's total ownership interest in deposit accounts, including the new account, exceeds the Standard Maximum Deposit Insurance Amount. Should the inquiry only apply to aggregated deposits that exceed the SMDIA of $250,000 or to aggregated deposits that may approach the SMDIA? And if so, what dollar amount or percentage of the SMDIA should trigger the obligation to provide depositors with the FDIC's Deposit Insurance Summary publication?

• In addition to requiring IDIs to make EDIE available on their Web sites, should the FDIC require IDIs to maintain, in their retail office lobbies, a dedicated computer terminal containing the EDIE application, which all customers could use on their own, or with assistance from IDI employees, to generate reports on the customer's deposit insurance coverage?

• In addition to requiring IDIs to provide the FDIC's Deposit Insurance Summary publication to depositors whose combined deposits at the IDI exceed the SMDIA, should IDIs be required to make this publication available in their retail office lobbies so all depositors have access to this important information?

• Should the CBI software program include a feature that would allow IDIs to confirm that training has been completed by covered employees?

Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. We invite your comments on how to make this proposal easier to understand. For example, have we organized the material to suit your needs? If not, how could this material be better organized? Are the requirements in the proposed regulation clearly stated? If not, how could the regulation be more clearly stated? Does the proposed regulation contain language or jargon that is not clear? If so, which language requires clarification? Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes to the format would make the regulation easier to understand? What else could we do to make the regulation easier to understand?

In accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. Ch. 3501 et seq. ), the FDIC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.

The proposed rule requires IDIs to implement procedures so that, whenever a customer opens a new deposit account at an insured depository institution, the employee opening the account shall inquire whether the customer has an ownership interest in any other accounts at the IDI and, if so, whether the customer's aggregate ownership interest in deposit accounts, including the new account, exceeds the Standard Maximum Deposit Insurance Amount. If the customer responds affirmatively, then the IDI employee shall provide the customer with the FDIC's publication, Deposit Insurance Summary. Since this is an FDIC-prepared publication, there is no paperwork burden involved. In the case of deposit accounts opened by mail or via the Internet or other technology, the publication can be provided in paper form or through a link to the electronic version.

Commenters may submit comments on aspects of this notice that may affect reporting and disclosure requirements to the addresses listed in the ADDRESSES section of this NPR. Paperwork Burden comments should reference “Part 330—Deposit Insurance Education, OMB Control No. 3064-NEW.”

The Regulatory Flexibility Act (“RFA”) requires a Federal agency publishing a notice of proposed rulemaking to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of the proposed rule on small entities. 5 U.S.C. 603(a). Pursuant to regulations issued by the Small Business Administration (13 CFR 121.201), a “small entity” includes a bank holding company, commercial bank or savings association with assets of $175 million or less (collectively, small banking organizations). The RFA provides that an agency is not required to prepare and publish a regulatory flexibility analysis if the agency certifies that the proposed rule would not have a significant impact on a substantial number of small entities. 5 U.S.C. 605(b). Pursuant to section 605(b) of the RFA, the FDIC certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities.

The FDIC has determined that the proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 268).

For the reasons set forth in the preamble, the Board of Directors of the Federal Deposit Insurance Corporation proposes to amend part 330 of Title 12 of the Code of Federal Regulations as follows:

As used in this document:

ACE inhibitor means angiotension-converting enzyme inhibitor; a prescription drug for hypertension.

Acute phosphate nephropathy means a type of nephrocalcinosis attributed to the use of oral sodium phosphate products.

Acute kidney failure means sudden inability of the kidney to remove wastes, concentrate urine, and conserve electrolytes.

ARB is an abbreviation for angiotension receptor blocker, a prescription drug for hypertension.

Biologic plausibility means a causal association (or relationship between two factors) that is consistent with existing medical knowledge.

Bowel cleansing means clearing the lower digestive tract in preparation for a colonoscopy.

Bowel cleansing system means a laxative product containing a combination of several different laxative ingredients for sequential administration at specified intervals for use in cleansing the bowel prior to surgery, colon x-ray, or endoscopic examination.

Electrolyte disturbance means abnormal levels of electrolytes such as sodium, potassium, calcium, or phosphorous found in the blood and other body fluids.

End stage kidney disease means complete or near complete failure of the kidneys to function.

GFR is an abbreviation for glomerular filtration rate; is a measure of kidney function. GFR can be obtained by measuring creatinine clearance or by estimating creatinine clearance. The creatinine clearance is measured by using the values of urine creatinine concentration, urine flow rate, and plasma creatinine concentration, while the estimated creatinine clearance is calculated by using a formula that uses measured serum creatinine. Creatinine clearance is not a precise GFR measurement, but rather an accepted surrogate for GFR.

Nephrocalcinosis means a condition characterized by precipitation of calcium phosphate in the tubules of the kidney resulting in kidney injury.

NSAID is an abbreviation for nonsteroidal anti-inflammatory drug; OTC and prescription drugs that relieve pain and inflammation.

OSP is an abbreviation for oral sodium phosphates, the combination of dibasic sodium phosphate and monobasic sodium phosphate salts in a tablet or solution dosage form.

PEG is an abbreviation for polyethylene glycol, a prescription drug used for bowel cleansing.

Oral sodium phosphates (OSP) products are frequently recommended by physicians for bowel cleansing prior to a colonoscopy and other medical procedures. Both prescription tablet dosage forms and OTC OSP solution have been used for this purpose. This document addresses the use of OTC OSP solutions for bowel cleansing. The customary dose of OTC OSP solution used in medical practice for bowel cleansing is approximately 60 g of sodium phosphates (dibasic sodium phosphate and monobasic sodium phosphate salts) solution taken orally as two 45-mL doses 12 hours apart or approximately 50 g of sodium phosphates taken as a 45-mL dose followed by a 30-mL dose 12 hours later. In the tentative final monograph for OTC laxative drug products published January 15, 1985 (50 FR 2124), FDA proposed labeling for healthcare professionals for the use of OTC sodium phosphates solution for bowel cleansing. Subsequently, FDA approved sodium phosphates tablets for prescription use for bowel cleansing through the new drug application (NDA) approval process. However, over the years concerns have been raised about the safety of all OSP, both solutions and tablets, for bowel cleansing.

Most recently, FDA received a petition requesting that FDA either withdraw the marketing authorization of OSP for bowel cleansing or limit the marketing of these products to prescription only and require a “black box” warning (Ref. 1). The petition presented the following arguments to support these requests:

• Trend data on adverse events demonstrate an increase in the number of reports of acute renal failure and nephrocalcinosis associated with the use of OSP for bowel cleansing.

• The available published data suggest that the problem is larger in scope than initially believed.

• The occurrence of nephrocalcinosis in individuals with no identifiable risk factors renders screening insufficient.

• There are equally effective and safer alternative bowel preparation agents that are available.

FDA concluded that the currently available information was not sufficient to warrant the withdrawal of OSP products from the market. However, FDA also concluded that the use of OSP for bowel cleansing poses a serious risk of adverse events in some patients and that current measures of mitigating these risks have been unsuccessful. Therefore, on December 11, 2008, FDA granted the petition's request to limit the marketing of OSP products for bowel cleansing to prescription only and to require a boxed warning in product labeling (Ref. 2). We also concluded that additional measures were necessary to manage the potential risks associated with the use of prescription OSP products for bowel cleansing. Under new authority granted by the Food and Drug Administration Amendments Act of 2007, FDA stated that it had notified the NDA holder of prescription OSP products that it must develop a risk evaluation and mitigation strategy (REMS) that includes the development of a Medication Guide and a communication strategy targeted at healthcare providers who are likely to prescribe or dispense OSP products and/or perform followup assessments of patients following bowel cleansing. We also determined that prospective clinical trials are necessary to assess the risk of acute kidney injury in patients using prescription OSP products for bowel cleansing, and to better define the risk factors that predispose patients to such injury.

Specifically, this document addresses the proposed professional labeling for OTC sodium phosphate salts for bowel cleansing described in § 334.80 of the 1985 TFM. Under the 1985 TFM, this additional labeling would have been provided only to healthcare professionals and not the general public, and the labeling would not have been included as part of the OTC drug product label. Professional labeling may be provided to health professionals in separate labeling distributed by pharmaceutical sales representatives. The proposed labeling would have provided certain information to healthcare professionals about the use of sodium phosphate products for bowel cleansing use. In this document we are proposing that the professional labeling for the use of sodium phosphates salts for bowel cleansing use be removed from the 1985 TFM because of our safety concern with the bowel cleansing use of OSP products. This proposed rule does not address the proposed professional labeling for bowel cleansing for other active ingredients included in § 334.80. FDA intends to address the proposed professional labeling of these active ingredients in a future Federal Register publication.

This proposed rule is consistent with the agency's determination that OSP products indicated for bowel cleansing should be limited to prescription only. In this document FDA also proposes to classify, the individual sodium phosphate salts ( i.e., dibasic sodium phosphate and monobasic sodium phosphate), as not GRAS ( i.e., nonmonograph) for the professional labeling indication proposed in the 1985 TFM, i.e., “For use as part of a bowel cleansing regimen in preparing the patient for surgery or for preparing the colon for x-ray endoscopic examination.” Thus, this proposed rule would amend § 310.545 (21 CFR 310.545) to include sodium phosphate salts, singly and in combination for bowel cleansing use as described in § 334.80 of the 1985 TFM.

In addition, the safety issues raised by the prescription and professional use of OSP for bowel cleansing has led FDA to reconsider the appropriateness of bowel cleansing, as described in § 334.66, as an OTC indication. FDA will address the status of bowel cleansing as an OTC indication in a future Federal Register publication.

The current proposal is part of FDA's ongoing review of OTC drug products. There are earlier Federal Register publications relevant to the use of OTC sodium phosphate salts for bowel cleansing. A summary of relevant Federal Register publications is provided in table 1 of this document as follows:

In the 1985 TFM, FDA proposed that certain combination bowel cleansing systems could be considered generally recognized as safe and effective (GRASE) for OTC use as bowel cleansers (50 FR 2124 at 2153). The proposed combinations did not include sodium phosphate ingredients. In a petition dated November 12, 1987, and a subsequent supplemental submission to the petition, a manufacturer requested that FDA amend the 1985 TFM to include six bowel cleansing systems (Refs. 3 and 4). In a letter dated October 26, 1989, FDA responded to the petition and found that two of the six requested kits could be GRASE for OTC use for bowel cleansing (Ref. 5). Both kits include sodium phosphates oral solution as a component. One kit contains three laxatives for sequential administration as follows: sodium phosphates oral solution (7.56 g sodium phosphate and 20.2 g sodium biphosphate as a 45-mL solution), followed by bisacodyl (20 mg) in an oral dosage form taken at least 3 hours after the sodium phosphates oral solution, followed by a bisacodyl suppository (10 mg) taken at least 9 hours after the oral bisacodyl and at least 1 hour before the scheduled procedure. The other kit substitutes a bisacodyl enema (10 g) for the bisacodyl suppository. In its response, FDA indicated that the Agency intended that both kits would be added as GRASE OTC bowel cleansing systems in § 334.32 of the final monograph. In a letter dated December 27, 2010, FDA subsequently informed the manufacturer of its intention to withdraw its proposal to include § 344.66 Bowel Cleansing Systems in the OTC laxative final monograph based on concerns about the safety of bowel cleansing in the OTC setting (Ref. 6).

In response to the 1985 TFM, one manufacturer filed a petition dated March 23, 1993, and supplements to the petition, requesting that the professional labeling (§ 334.80) be amended to include a bowel cleansing regimen consisting of two 45-mL doses of sodium phosphates oral solution, administered sequentially 10 to 12 hours apart (Refs. 7 through 12). A comment on the petition dated September 23, 1993, expressed concern about the March 23, 1993, petition request, stating that there is a potential for sodium phosphates to induce electrolyte and hemodynamic changes when ingested in two sequential doses within 24 hours (Ref. 13).

On March 1, 1996, FDA responded to the citizens petition mentioned previously, stating that the available data supported the effectiveness of the proposed bowel cleansing regimen of two 45-mL doses 10 to 12 hours apart (Ref. 14). However, FDA emphasized it was concerned about the safety of this dosage regimen because of the electrolyte and vascular volume changes that could occur. FDA explained that, should adequate safety data to support the proposed regimen become available, it might be possible for the Agency to consider this dosage regimen of two 45-mL doses, administered 10 to 12 hours apart, for inclusion in the monograph by professional labeling only. FDA ultimately denied this petition (Ref. 7) in a letter dated August 22, 1997, because we remained concerned about the safety of that dosing regimen (Ref. 15).

Subsequently, FDA received another citizen petition dated August 23, 2000, requesting that FDA limit the marketing of sodium phosphates oral solution for bowel cleansers to prescription status and to require a boxed warning (Ref. 16). On July 19, 2001, FDA denied the petition, stating that based on the available data and information; there was insufficient evidence at that time to support the petition's request (Ref. 17). However, FDA stated that it intended to propose in a future issue of the Federal Register to limit the package size of sodium phosphates oral solution to 45 mL and to require revised labeling to include more information on the safe use of these products by consumers and health professionals.

FDA received another citizen petition dated June 25, 2003, requesting that the Agency amend the 1985 TFM to include professional labeling for two 30-mL to two 45-mL doses of sodium phosphates oral solution given sequentially at a 10- to 12-hour dosing interval for bowel cleansing prior to diagnostic procedures (Refs. 18 and 19). The petition also included recommendations for amending the proposed professional labeling (§ 334.80).

FDA also received a number of comments objecting to the petition's requested dosing regimen (Refs. 21, 22, and 23). One comment stated that the regimen of two doses in 24 hours is not safe, primarily because it can cause dangerous electrolyte shifts. The comment asserted that the problem is exacerbated because a patient's susceptibility to electrolyte changes is not adequately evaluated prior to administration for bowel cleansing use, in spite of labeling (Ref. 21). Another comment stated that sodium phosphates oral solution should be subject to prescription control when used for bowel cleansing (Ref. 22). As an alternative to prescription status for sodium phosphates oral solution, the comment recommended that FDA limit the bowel cleansing indication to situations where sodium phosphates oral solution is included in a bowel cleansing system to be administered at a total dose of not more than 7.56 g sodium phosphate and 20.2 g sodium monobasic sodium phosphate (45 mL). The third comment stated that the sodium phosphate bowel cleansing labeling is inadequate to address the continuing problems resulting from the electrolyte derangements and volume depletion caused by these products (Ref. 23).

On December 11, 2008, FDA denied this petition (Ref. 20). Based on a review of the available data and the lack of data establishing a safe dose of OSP for bowel cleansing in the OTC setting, FDA concluded that the use of sodium phosphates oral solution for bowel cleansing in the OTC setting according to professional labeling in an OTC monograph poses an unacceptable risk of serious adverse events. FDA also concluded that the use of sodium phosphate oral solution products for bowel cleansing meets the statutory standard for prescription products set forth in the Federal Food, Drug, and Cosmetic Act (FD&C Act).

FDA has made a number of attempts outside the rulemaking process to educate healthcare professionals and consumers about the potential risks associated with the use of sodium phosphates oral solution for bowel cleansing. In September 17, 2001, a Science Background Paper was issued on the “Safety of Sodium Phosphates Oral Solution” (Ref. 24), in which FDA stated that physicians need to be aware that people at increased risk for electrolyte disturbances ( e.g., those with congestive heart failure, ascites, renal insufficiency, and dehydration) may experience serious adverse events if they use a sodium phosphates oral solution for bowel cleansing ( see section III of this document).

In 2006, FDA issued a health alert and a second Science Background Paper stating that a rare but serious form of kidney failure has been associated with the use of OSP products for bowel cleansing (Refs. 25 and 26). In 2008, FDA issued another health alert and provided healthcare professionals with updated information on the risks associated with the use of OSP for bowel cleansing (Refs. 27 and 28). The alert stated that as a result of new safety information, FDA would require a Boxed Warning on prescription OSP products as well as the development of a REMS for these products (Ref. 27). FDA also stated its intention to publish a proposed rule to remove professional labeling for OTC OSP for bowel cleansing from the 1985 TFM (50 FR 2124 at 2157). FDA posted this information on its Web site at http://www.fda.gov/cder/drug/infopage/osp_solution/default.htm.

As described previously, FDA has previously made a number of attempts to educate healthcare professionals and consumers about the risk of adverse effects on the kidneys that have been associated with the use of OSP products for bowel cleansing. In addition to measures taken by FDA, in 2005 a major manufacturer of OTC sodium phosphates oral solution products distributed updated professional labeling containing detailed safety information and dosing instructions (60 g of sodium phosphates (dibasic sodium phosphate and monobasic sodium phosphate salts) solution taken orally as two 45-mL doses 12 hours apart or approximately 50 g of sodium phosphates taken as a 45-mL dose followed by a 30-mL dose 12 hours later) (Ref. 29). Despite these measures and the development of products with a reduced sodium phosphate dose, FDA's Adverse Event Reporting System (AERS) continues to receive reports of acute kidney injury that have been associated with the customary dose of these products for bowel cleansing.

To date, AERS has received over 100 serious adverse event reports associated with the use of prescription and nonprescription OSP products for bowel cleansing at the customary dose. Acute renal injury associated with this use of OSP for bowel cleansing has led to kidney transplant, dialysis, long term renal failure and, in rare instances, death. The majority of these cases occurred in patients with additional risk factors for kidney injury as identified in the May 2006 Health Alert ( see section II.C.5 of this document). There were cases, however, that occurred in patients without additional risk factors.

From 1969 to 2005, FDA received 33 reports of acute kidney injury reported to be associated with the use of OTC sodium phosphates oral solution for bowel cleansing. Among the 33 reports, 4 cases developed end-stage kidney disease with one case requiring a kidney transplant. At least 22 of the 33 cases developed chronic kidney failure, with at least 9 cases requiring hospitalization and 7 requiring dialysis. Only 5 of the 33 cases of acute kidney injury involved a dose of sodium phosphate in excess of 59.4 g. 1 In addition to the cases of acute kidney injury, there were reports of 11 fatalities, 2 cases of seizure, and 12 serious cardiac events. Most of the cases with cardiac events had electrolyte abnormalities. However, the dose of sodium phosphates involved in most of these cases was well in excess of 59.4 g.

Since 2005, there have been an additional 46 reports of acute kidney failure that have been associated with the use of OTC sodium phosphates oral solution for bowel cleansing. Twelve of these cases were reported in a published abstract (Ref. 30) with only limited information. The remaining 34 cases were reported in the AERS data base. Of the AERS cases, one required a kidney transplant, one was placed on a kidney transplant list, six required dialysis, and four cases had long term decreased kidney function. More recently (January 2008), FDA received two reports of acute kidney injury associated with a lower dose sodium phosphate oral solution regimen, i.e., a 45-mL dose followed by 30-mL dose administered 10 to 12 hours apart. Both of these cases resulted in hospitalization.

An OSP in a tablet dosage form has been approved for prescription use as a bowel cleanser since 2000. The sodium phosphate dose of this product is 60 g. In 2006, FDA approved a sodium phosphate tablet with a lower sodium phosphate dose (48 g) for the same indication. There have also been a number of reports of acute kidney injury associated with the use of both of these products.

Since 2001, FDA has received 16 cases of acute kidney injury that were likely associated with the use of the 60-g prescription product. Ten of these cases required hospitalization, and at least two required dialysis. Direct evidence of calcium phosphate precipitation in kidney tubules was obtained by biopsy in one case. There were also 10 cases of seizure. In at least nine of these cases there was no previous history of seizure, and seizures began between 2 to 16 hours after use of OSP. In all 10 seizure cases, the patient had low blood sodium levels, and required hospitalization. Five of the cases of renal failure and two of the cases of seizure did not follow labeled directions for use, which may have contributed to the adverse event.

Since approval of the 48-mg dosage form of sodium phosphate tablets in 2006, 20 unique cases of kidney injury associated with the use of this lower dose product have been reported to AERS through September 12, 2008. The onset of the kidney injury occurred from several hours to 21 days after taking the product. Three of these patients had a kidney biopsy, the results of which revealed acute phosphate nephropathy. The concomitant use of an ACE inhibitor or ARB was noted in 11 cases, diuretic use in 6 cases, NSAID use in 4 cases; and 1 patient received a contrast dye. Five cases were reported to be life-threatening and 10 resulted in hospitalization. Of these 20 cases, 4 patients required dialysis for an unspecified period of time and 1 patient died from complications of pneumonia. Nine patients were reported to have kidney impairment that continued for at least 2 to 4 weeks. The status of renal impairment is unknown for seven patients. 2

In addition to the FDA AERS cases described previously, there are also reports of acute kidney injury associated with the use of sodium phosphate products for bowel cleansing in the published literature. It is not clear from the reports whether these adverse events were associated with the use of an OTC or prescription product.

The 21 cases of acute phosphate nephropathy cited in the May 2006 Health Alert were identified by Markowitz et al. (Ref. 31) from kidney biopsy archives at the Columbia University Renal Pathology Laboratory. From 2000 to 2004, the laboratory processed a total of 7,349 native renal biopsies (transplanted kidneys were excluded), from which 31 cases were retrieved with findings of kidney tubule injury and abundant calcium deposits. Of these 31 cases, 21 had normal calcium levels and met the criteria for acute phosphate nephropathy and had a recent colonoscopy preceded by OSP use. The incidence of acute phosphate nephropathy reported in this study was 0.29 percent (21 of 7,349).

Clinical followups were available for all 21 cases (mean 16.7 months). All 21 cases had increased serum creatinine, an indication of decreased kidney function, (mean 3.9 mg/deciliter (mg/dL)) at a median of 1 month after colonoscopy. Four cases (19 percent) progressed to end stage kidney failure 9 to 18 months (mean 13.8 months) after colonoscopy and required dialysis. These four patients required kidney replacement therapy, and one of the four underwent successful kidney transplant. Although 16 of the remaining 17 cases (94 percent) had a subsequent improvement in kidney function, none returned to baseline creatinine levels and were left with some degree of renal impairment.

The demographic and clinical findings for these 21 cases suggest that age and the co-administration of agents that may reduce kidney circulation are risk factors for the condition. Eighteen of the 21 cases were 51 years or older, and 3 were older than 62. Sixteen of 21 cases (76.2 percent) had a history of hypertension, and 14 of the 16 patients with hypertension (87.5 percent) were being treated with either an ACE inhibitor or ARB for their hypertension. Four cases were taking diuretics and three were on non-steroidal anti-inflammatory drugs (NSAIDs). Five cases were taking more than one of these agents simultaneously. One patient who was 39 years old did not have any of the risk factors noted in the series. Also noteworthy, but of unclear significance, was that 17 (81 percent) of the 21 cases were women.

Subsequent to the report by Markowitz and the 2006 FDA Health Alert, there continued to be reports (Refs. 32 and 33) of acute kidney injury associated with the use of OSP. Ma et al. reported cases of acute kidney injury in two patients (75-year old male and an 80-year old female) who had a history of diabetes mellitus (Ref. 32). Baseline serum creatinine was within normal limits, but one patient had microalbuminuria (small amounts of protein in the urine), an early marker of diabetic kidney disease. Acute kidney injury developed within days of receiving OSP bowel prep for colonoscopy. Biopsies were not conducted, but the kidney injury was attributed to OSP because of the temporal relationship to OSP exposure. The male patient required 5 days of dialysis for the acute injury. Both cases resolved, but serum creatinine remained elevated above their baseline values. The authors noted that patients with diabetes often have decreased renal perfusion despite normal serum creatinine and may be at risk for kidney injury with OSP.

Gonlusen et al. reported the case of a 56-year-old woman with Crohn's Disease who presented with acute kidney injury approximately 2 weeks after a colonoscopy (Ref. 33). She received two doses of sodium phosphates oral solution (45 ml each dose) prior to the colonoscopy. Her baseline creatinine was 0.8 mg/dL. Serum creatinine was 3.5 mg/dL at the time of presentation. Kidney biopsy showed calcium phosphate deposition in the kidney tubules, that was likely related to the use of sodium phosphates oral solution. The acute kidney injury resolved, but her serum creatinine remained elevated at 1.6 mg/dL 10 months later.

The author reviewed the literature and speculated that there are two types of acute kidney injury associated with OSP. One type is related to the precipitation of calcium phosphate in the kidney tubules, such as the case described in this report. The other type occurs within several days and is associated with severe electrolyte abnormalities and symptoms related to these abnormalities. In the literature reviewed by Gonlusen et al., none of the cases had kidney biopsies. Some patients had residual elevation of creatinine at followup while others had normal creatinine. In some of the reviewed cases, abnormalities of blood urea nitrogen or creatinine may have reflected severe dehydration.

Recently published observational, retrospective studies have attempted to assess the incidence of subclinical (without symptoms) kidney injury after OSP use for bowel preparation (Refs. 34 through 39). It is not entirely clear how the observations in these studies relate to cases of acute phosphate nephropathy that became evident because of the development of clinical symptoms that lead physicians to conduct testing. These studies only assess changes in serum creatinine function in a cohort of people who received OSP for bowel cleansing in an attempt to determine whether lesser degrees of kidney injury occur in a population receiving OSP. Nevertheless, it is useful to review the data in light of our concerns about OSP products for bowel cleansing.

Hurst et al. found an increased risk of acute kidney injury that was associated with OSP use in an observational, retrospective, cohort study (Ref. 34). The study included 9,799 subjects over the age of 50 who had a colonoscopy using either OSP or PEG products and had serum creatinine values available within 365 days before and after their procedure. Acute kidney injury was defined as greater than or equal to a 50-percent increase in serum creatinine over the 12 months following colonoscopy.

A total of 114 patients out of 9,799 developed acute kidney injury. Of these, 83 (1.29 percent, 83/6,432) were in the OSP group and 31 (0.92 percent, 31/3,367) were in the PEG group. On univariate analysis, the risk for the developing acute kidney injury was not significantly different between the two groups (odds ratio = 1.41; 95 percent confidence interval 0.93 to 2.13, p = 0.113). The PEG group, however, included high-risk subjects who were significantly older and had a higher incidence of diabetes, hypertension, cardiovascular disease, chronic kidney disease, and were more likely to be using a diuretic, ACE inhibitor, or ARB (all p < 0.05).

After adjustment for significant covariates and risk factors such as age, diabetes, hypertension, acute cardiovascular disease, ACE inhibitor or ARB use, and other factors suspected to be associated with acute kidney injury, OSP use was found to be associated with an increased risk of acute kidney injury (odds ratio = 2.35, 95 percent confidence interval 1.51 to 3.66, p < 0.001). Using a more stringent definition of acute kidney injury (doubling of serum creatinine), an even stronger association between OSP use and acute kidney injury emerged (odds ratios = 3.52, 95 percent confidence interval 1.13 to 10.93, p = 0.03). Followup creatinine values in patients with acute kidney injury remained significantly higher, with only 16 percent of cases returning to their previous creatinine levels. The changes in creatinine levels seen in this study were less severe than those seen in the case series compiled by Markowitz et al. (Ref. 31). Hurst et al. noted, however, that even small increases in creatinine levels have been shown to be associated with increased mortality (Ref. 34).

Brunelli et al. evaluated 2,237 subjects who underwent colonoscopy with a baseline serum creatinine of less than 1.5 mg/dL and compared cases that developed acute kidney injury to those who did not in a case-controlled study (Ref. 35). Acute kidney injury was defined as either a 25-percent or a 0.5-mg/dL increase in serum creatinine from baseline (measured within 6 months before the colonoscopy) to 6 months after colonoscopy. There were 116 cases of acute kidney injury with exposure data that were compared with 349 controls. These authors found no association between acute kidney injury and the use of OSP. However, a significant interaction (p = 0.03) was found indicating an increased risk for kidney injury from OSP products in patients who were simultaneously receiving ACE inhibitors or ARBs.

Abaskharoun et al. (Ref. 36) conducted a retrospective analysis of a database of patients who underwent a colonoscopy at their institution between 2004 and 2005 in order to detect the occurrence of kidney injury in patients who received either OSP or PEG. The study was supported by a manufacturer of OSP. The study included only patients who had undergone two colonoscopy procedures and had serum creatinine measured prior to each procedure. A total of 767 patients were included in the study. OSP was used by 618 patients and PEG was used by 149 patients. The timeframe between the two colonoscopies for the patients ranged from 3 months to 9 years.

Serum creatinine and estimated creatinine clearance, calculated by the Cockroft-Gault equation, were compared between patients receiving OSP and PEG. Chronic renal failure was defined as an abnormal creatinine or creatinine clearance on the repeat measurement. The change in serum creatinine was significantly different (p = 0.005) between OSP (−2.0 micromole/liter (μmol/L)) and PEG (0.9 μmol/L), suggesting that OSP had less of an effect than PEG, but this difference was not felt to be clinically significant by the authors, and there was no significant difference in the number of patients with abnormal second creatinine values between the two groups. In addition, the results were difficult to interpret because:

1. There is a possibility that selection bias eliminated people who developed renal injury from the prep from their first colonoscopy. The study only enrolled patients who used the same bowel prep prior to each colonoscopy. If a patient received OSP or PEG before their first colonoscopy and developed kidney damage as a result, they may not receive the same prep again prior to the second colonoscopy. They would be excluded from this study because they would have had to receive the same prep prior to each procedure. Also, other patients who had only one colonoscopy were not included.

2. There was a wide range of time between measurements of serum creatinine. No analysis was provided that looked at potential differences related to the time between measurements.

3. A greater percent of the PEG patients were receiving antihypertensive therapy, nonsteroidal anti-inflammatory drugs or had a diagnosis of diabetes mellitus, coronary artery disease and hypertension. The patients in the PEG group were older than the OSP patients. Many of these factors have been reported to be risk factors for the development of kidney injury from OSP. Age and use of antihypertensives were found in this study to be predictors of renal failure.

4. Chronic renal failure is not adequately defined and may include many people who did not have significant kidney injury.

5. The study is too small to make conclusions about renal function decline related to OSP.

Khurana et al. reported a retrospective study of 286 patients (out of more than 3,000 patients) who had undergone colonoscopy or flexible sigmoidoscopy between January 1998 and February 2005 and used OSP as the bowel prep (Ref. 37). The patients had serum creatinine measured at 6 months and 12 months after the procedure. Baseline serum creatinine had to be less than 1.5 mg/dL and obtained within 6 months prior to colonoscopy. Glomerular filtration rate (GFR), a measure of kidney function, was calculated using a formula from the Modification in Diet in Renal Disease study group (Ref. 38). The formula uses age and serum creatinine in the calculation.

A control group of 125 patients was derived from their database of patients who did not have colonoscopy at any time or who had undergone colonoscopy prior to 1996 and had post-colonoscopy serum creatinine unchanged from prior to colonoscopy. There were no significant differences between the two groups regarding demographic and base line characteristics as well as the use of concomitant medications. The patients were predominately white and female and the mean age was about 68 years. In the study group, 95 percent had hypertension, 45 percent had diabetes, 61 percent were taking an ACE inhibitor and/or ARB and 47 percent were taking diuretics, which were not significantly different as compared to the control group.

Serum creatinine increased by 0.09 mg/dL in the OSP group and 0.02 mg/dL in the control group at 6 months (p < .001; 2 sample t test). At 1 year, the change from baseline was 0.12 mg/dL for OSP and 0.04 mg/dL for the controls (p < .001; 2 sample t-test). Because calculated GFR used serum creatinine, similar trends were seen when GFR values were compared between groups. The authors concluded that OSP is associated with a decline in GFR in elderly patients with normal creatinine.

It is difficult to make definitive conclusions from this study for the following reasons:

1. Less than one-tenth of the patients who had a colonoscopy were included in the study. The study size is small and sampling may not be random.

2. The control group included patients who had the same creatinine after a previous colonoscopy. This could introduce a selection bias because it picked people with stable renal function. The number of these patients in the control group, which included patients without colonoscopy, is not provided.

3. The majority of subjects had conditions that may predispose them to kidney injury ( e.g. hypertension) or were receiving drugs that may make them susceptible to toxicity with OSP. It is also unclear how these findings can be extrapolated to people without risk factors for kidney injury.

4. Serum creatinine and calculated GFR are not adequate surrogates to detect small changes in glomerular filtration rate as a function of time.

5. It would have been helpful to describe the number of patients who exceeded some percent increase in creatinine or some absolute value. The upper range of creatinine is greater than 3.0 mg/dL at 1 year in both groups.

This study, however, raises important issues that need to be addressed. Patients will undergo multiple colonoscopies over the years, and it is important to understand whether exposure to OSP can lead to small amounts of kidney damage that may be cumulative after repeated exposure.

A retrospective study by Russman et al. compared the risk of kidney impairment in patients who used OSP or PEG prior to colonoscopy based on clinical and electronic records from the Henry Ford Health System (HFHS) in Detroit, MI (Ref. 39). The base study population (7,897 patients) consisted of patients who had a colonoscopy at the HFHS Detroit Center gastroenterology clinic between November 1999 and October 2005. Patients were included if they had a creatinine determination 12 months prior to and 6 months after colonoscopy and a GFR greater than or equal to 60 (milliliter per minute (mL/min). Patients with preexisting kidney disease within 12 months of colonoscopy were excluded from further evaluation based on prespecified criteria ( e.g., undergoing dialysis, history of kidney transplant, acute as well as chronic renal failure, or GFR < 60 mL/min). Impaired renal function after colonoscopy was defined as a GFR of less than 60 mL/min and a decrease of at least 10 mL/min from the last value before colonoscopy, and/or at least a two-fold increase in creatinine from baseline within 6 months after colonoscopy. Patients with an identifiable, likely cause of renal impairment that was not clearly related to OSP or PEG use were excluded.

Of a total of 2,352 eligible patients, 269 used PEG and 2,083 used OSP. Compared to the patients receiving OSP, those receiving PEG were on average older (≥ 65 years of age), had a higher prevalence of heart failure, were using diuretics or an ARB, were more likely to have an inpatient colonoscopy procedure, and, in general, were more likely to be hospitalized during 12 months prior to the colonoscopy. The proportion of patients with mild renal impairment (GFR between 60 and 90 mL/min) at baseline was similar between the OSP and PEG groups (49 and 45 percent, respectively).

A total of 88 patients were identified as having renal impairment after colonoscopy. The proportion of patients with renal impairment after colonoscopy was similar between OSP users (79/2083 (3.8 percent)) and PEG users (9/269 (3.3 percent)). Of these 88 cases, 50 patients had a GFR decrease of 20 mL/min, and 13 had at least a twofold increase in creatinine after colonoscopy. In 21 out of those 88 cases, GFR remained < 60 mL/min 6 months after colonoscopy, and out of these 17 had used OSP and 4 had used PEG. The relative risk (RR) estimate for renal impairment comparing OSP and PEG was 1.13 (95 percent confidence interval 0.58-2.23) without adjustment, and the Odds Ratio after multivariate adjustment was 1.14 (0.55-2.39). Significant risk factors were those identified by earlier studies and include age greater than or equal to 65, African American race, low baseline GFR, hypertension and use of ACE inhibitors, ARBs, or thiazide diuretics. The authors of the study concluded that in patients without preexisting kidney disease, the risk of kidney impairment after colonoscopy appears to be similar between OSP and PEG users.

It is difficult to make definitive conclusions from this study for the following reasons:

1. A significantly greater proportion of OSP users who underwent colonoscopy were excluded from the study, which may introduce a potential selection bias.

2. There is a wide range of time between measurements of serum creatinine. Although the authors claimed that adjustment for differences in the latency time from colonoscopy to creatinine determination did not alter the risk estimates, analysis of such data was not provided.

3. PEG users tended to have a higher prevalence of co-morbid conditions ( e.g., congestive heart failure, liver cirrhosis) or used agents that potentially impair kidney perfusion.

4. Two different criteria were used for identification of patients with renal impairment post colonoscopy.

There are limitations in the design of all of the five studies discussed previously, such as the lack of a consistent definition of acute kidney injury and the exclusion of patients with baseline serum creatinine values above a threshold value. As a consequence, no definitive conclusions can be drawn from these studies, and additional studies are needed to further assess subclinical changes in kidney function.

In 2006, a Joint Task Force from the American Society of Colon and Rectal Surgeons (ASCRS), the American Society for Gastrointestinal Endoscopy (ASGE), and the Society of American Gastrointestinal and Endoscopic Surgeons (SAGES) issued a consensus statement on bowel preparation before colonoscopy (Ref. 40). The task force performed a critical scientific review of the available data, which included 21 randomized, controlled trials in the published literature. The scope of the task group consensus statement included not only the customary dose of OSP but also other treatment modalities for bowel preparation, including PEG. Both oral solutions and the tablet formulations of OSP were assessed.

In their consensus statement the Task Force acknowledges the risks associated with the customary dose of OSP for bowel cleansing. The Task Force drew the following conclusions based on its evaluation of the data:

1. The use of OSP for bowel preparation prior to a colonoscopy is associated with abnormalities in serum electrolytes and altered extracellular fluid volume, which can cause significant losses of both fluid and electrolytes in the stool, resulting in volume contraction and dehydration.

2. Rarely adverse events such as nephrocalcinosis with acute kidney failure have occurred after use of OSP.

3. OSP use has been shown to cause elevated blood urea nitrogen levels, decreased exercise capacity, increased plasma osmolality, hypocalcemia, and significant hyponatremia and seizures.

4. Although usually asymptomatic, hyperphosphatemia is seen in as many as 40 percent of healthy patients completing OSP preparations, and hypokalemia developed in as many as 20 percent of patients using OSP preparations.

The Task Force advised physicians to select a preparation for each patient based on the safety profile of the agent and the overall health of the patient, their comorbid conditions and currently prescribed medications. They further advised that in certain circumstances such as bowel preparation in children, the elderly, patients with renal insufficiency, and those with hypertension taking an ACE inhibitor or an ARB, it may be advisable to adhere to PEG-based solutions because of the risk of occult physiologic disturbances that may contraindicate the use of sodium phosphates regimens.

FDA has tentatively concluded that the customary dose of OTC sodium phosphate salts for bowel cleansing ( i.e., two 45-mL doses taken 12 hours apart or a 45-mL dose followed by a 30-mL dose of sodium phosphates oral solution 10 to 12 hours later) in an OTC setting based on professional labeling in an OTC monograph poses an unacceptable risk of serious adverse events. Some patients have experienced sudden and severe acute kidney failure which may require kidney dialysis, while others have had a less serious course that resolves with minimal intervention. The outcome has varied from complete recovery to, in rare instances, death. Some patients may have residual kidney damage and may never return to the kidney function present prior to OSP use.

Some of the retrospective studies that have reviewed the serum creatinine of large numbers of patients who underwent bowel preparation for colonoscopy at the customary OSP doses suggest that the percent of cases leading to serious injury with symptoms is relatively rare. However, there is no accurate estimate of the incidence of acute kidney injury in patients receiving these doses of OSP for bowel cleansing. Some studies have identified populations who appear to be at risk, but data from prospective studies are needed to better define the risk of acute kidney injury in patients using OSP at the current doses as preparation for colonoscopy and to determine the risk factors that may predispose patients to such injury.

The study by Hurst also raises questions about the possible effects of small changes in serum creatinine that may occur after OSP use at the customary doses for bowel cleansing (Ref. 34). This is an important question that needs to be addressed. There are about 14 million screening colonoscopies per year in the United States., for which an estimated 50 percent will use OSP for bowel cleansing (Ref. 31). Given the magnitude of the exposure, the possibility of low grade declines in GFR after exposure to OSP is troubling when one considers that many patients undergo colonoscopies more than once in their lifetime and the damage that occurs with every exposure could be cumulative for some individuals. Other studies have not supported the findings of Hurst. Thus, it is important that this issue be addressed with clinical trials using more exact measurements of glomerular filtration rate. For these reasons, FDA has required the NDA holder of prescription OSP products to conduct prospective, randomized, active-controlled clinical trials to determine the absolute and relative risk of kidney injury (including acute phosphate nephropathy) following the use of these products.

Further, because of continuing reports of acute kidney injury associated with the prescription and customary dose of OTC OSP products for bowel cleansing, despite repeated educational efforts by FDA and the detailed professional labeling provided by a drug manufacturer for these products, we have tentatively concluded that OSP for bowel cleansing at the currently used doses poses a serious risk of adverse events in some patients. Therefore, additional measures are needed to manage the risk posed by this use of OSP products for bowel cleansing to assure that the benefits outweigh the potential risks. The need for these additional measures precludes the continued use of the current regimen of sodium phosphates oral solution for bowel cleansing under the professional labeling of an OTC monograph.

Under the current professional labeling provisions of the 1985 TFM published on January 15, 1985 (50 FR 2124), consumers rely on their healthcare provider to provide information on the safe use of the sodium phosphates oral solution for bowel cleansing. This approach has not been sufficient to manage the risk that has been associated with the customary dose of OTC sodium phosphates oral solution for bowel cleansing. We believe that consumers need to have detailed information in the form of patient labeling and information from a physician regarding the safe use of the product. Risk information in patient labeling could affect patients' decisions to use these products, and thus help prevent serious adverse effects. This kind of patient labeling ( see 21 CFR 201.57 and 21 CFR part 208) cannot be accomplished with professional labeling found in an OTC monograph. Professional labeling is labeling provided only to healthcare professionals who direct patients to use OTC products in ways that differ from the consumer labeling for these products. Manufacturers marketing OTC products under the 1985 TFM cannot provide consumers with labeling information on the OTC package related to those indications or uses that are not part of the drug facts labeling allowed under the 1985 TFM. For all of these reasons, we are proposing in this document that the professional labeling for bowel cleansing use be removed from the tentative final monograph because of our safety concern with the bowel cleansing use of sodium phosphate products.

We also believe that the safe use of OSP as presently used for bowel cleansing requires the continuing involvement of a doctor to monitor its effects on kidney function. Section 503(b)(1) of the FD&C Act establishes the standards under which the marketing of a drug must be limited to prescription. Among these is the need for collateral measures for the safe use of the product and the need for the involvement of a licensed practitioner to ensure the safe use of the product. For the reasons already given, the customary dose of OSP solution for bowel cleansing meets the statutory definition of a prescription product. Thus, in this document FDA proposes to classify OTC sodium phosphate salts, singly or in combination with each other, as not GRAS ( i.e., nonmonograph) for the professional labeling indication proposed in the 1985 TFM, i.e., “For use as part of a bowel cleansing regimen in preparing the patient for surgery or for preparing the colon for x-ray endoscopic examination.” This proposed rule would amend § 310.545 to include sodium phosphate salts for bowel cleansing use, as described in § 334.80 of the 1985 TFM, as nonmonograph.

Screening colonoscopy can lead to the early detection of colon cancer and polyps, which, if not removed, can progress to cancer. Early detection of colon cancer can result in more effective treatment and a survival advantage. Inadequate preparation for colonoscopy can lead to missed lesions. OSP products have been shown to be effective in cleansing the colon, thereby allowing better visualization of cancers and polyps. FDA believes it is important to have multiple options available for bowel cleansing because no single product is tolerated by all individuals. It is important, however, to make sure that the risk for serious injury is very low and the appropriate populations are identified who can use these products safely.

FDA has previously acknowledged the effectiveness of the bowel cleansing regimen that is currently the standard of practice for OTC sodium phosphates oral solution, i.e., 60-g sodium phosphate administered in two 45-mL doses of sodium phosphates oral solution taken 10 to 12 hours apart (Ref. 14). However, the available data raise serious concerns about the safety of this regimen.

There are some data that suggest a lower sodium phosphate dose may be similar in effectiveness to the regimen currently in use. An unpublished study comparing the effectiveness of sodium phosphates oral solution at two dose levels, the standard 2 x 45-mL dose (60 g sodium phosphate) and a reduced 2 x 30-mL dose (37 g sodium phosphate), with PEG solution was included in a citizen petition from a manufacturer of sodium phosphate laxative products (Ref. 18). The study, PS-9902, was a randomized, single-blind, parallel group design. The two regimens were administered as divided doses 10 to 12 hours apart. A total of 238 subjects were randomized to one of the three treatments. Seventy-four subjects took the 2 x 45-mL dose, and 75 subjects took the 2 x 30 mL dose. There were 73 subjects who took PEG. The study excluded all patients with current labeling contraindications to OSP use and all patients for whom use is allowed with caution.

The manufacturer's evaluation of physicians' assessments of bowel preparation indicated no statistically significant differences between the 2 x 30-mL sodium phosphates oral solution group and the PEG group for any of the effectiveness endpoints: Residual stool, stool consistency, and bowel wall visualization parameters. Bowel cleansing with the two 45-mL doses was found to be superior to the lower dose OSP regimen and PEG. The observed electrolyte changes and side effects were milder with the two 30-mL doses of OSP compared to the two 45-mL dose. Elevation in serum sodium was the only significant electrolyte change between the OSP groups. Four patients on the two 45-mL dose regimen had post-prep sodium levels that exceeded the upper limit of normal but remained below 150 millimole/Liter.

While the results of this study are worth noting, they are not sufficient to demonstrate the safety and effectiveness of the reduced phosphate regimen. It is noteworthy that 32 percent (23/73) of the PEG subjects reported that they did not complete the treatment regimen. This finding may have reduced the efficacy found in the PEG group, thereby minimizing treatment effect differences between PEG and the low dose phosphate regimen. There were also irregularities in randomization. Ten patients were excluded following randomization, because they were randomized before all inclusion criteria were verified. In addition, at one study site, six patients were randomized out of order and did not receive the treatments assigned by the randomization protocol. Thus, the study results can not be considered a conclusive demonstration of the effectiveness of these products. In addition, while the electrolyte changes and side effects were milder with the two 30-mL doses of sodium phosphates oral solution, the number of subjects exposed to the proposed lower dose regimen (79 subjects) is too small to allow any conclusions about the safety of the lower dose regimen.

1. FDA is classifying sodium phosphate salts described in § 334.16(d), (e) and (f), as nonmonograph and removing them as acceptable active ingredients for the use as a bowel cleansing agent described in § 334.80(a)(2).

2. FDA is removing the warning in § 334.80(b)(2) for sodium phosphate salts. The warning will be revised and included in a proposed rule to be published at a future date.

The existing evidence is inadequate to establish the safety of OTC sodium phosphate salts (dibasic sodium phosphate, monobasic phosphate and dibasic sodium phosphate/monobasic sodium phosphate (sodium phosphates) solution) for professional use as a bowel cleansing preparation prior to surgery or endoscopic examination. Accordingly, sodium phosphate salts cannot be considered GRAS for OTC use for bowel cleansing.

If this proposal becomes a final rule, the conditions under which drug products subject to this rule are not GRASE and are misbranded will be effective 30 days after the date of the final rule's publication in the Federal Register . On or after that date, any OTC laxative products containing dibasic sodium phosphate or monobasic phosphate and dibasic sodium phosphate/monobasic sodium phosphate (sodium phosphates) marketed for bowel cleansing will be misbranded and will require an approved NDA for bowel cleansing use and marketing. Any OTC drug product subject to the final rule that is repackaged or relabeled after the effective date of the final rule must be in compliance with the final rule, regardless of the date the product was initially introduced or initially delivered for introduction into interstate commerce.

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

The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because this proposed rule only affects labeling provided to healthcare professionals for the indication of bowel cleansing and does not affect the marketing of sodium phosphates oral solution for consumer use as a laxative for the relief of occasional constipation, the agency proposes to certify that the final rule will not have a significant economic impact on a substantial number of small entities.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $135 million, using the most current (2009) Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this proposed rule to result in any 1-year expenditure that would meet or exceed this amount.

The purpose of this proposed rule is to remove the professional labeling relating to the use of sodium phosphates oral solution laxatives for bowel cleansing in the 1985 TFM (50 FR 2124 at 2157). Professional labeling is information directed to health professionals who prescribe, administer, or dispense medications, and may not be included in labeling directed to the consumer. This proposed rule amends § 334.80 to remove the bowel cleansing indication for sodium phosphates oral solution laxatives based on concerns about serious adverse reactions associated with the use of these OTC drug products in preparation for colonoscopy and x-ray before surgery.

FDA has taken a number of measures to mitigate the risk of serious adverse events associated with the use of OSP products in preparation for colonoscopy and x-ray endoscopic examination. As discussed in the preamble, FDA has limited the acceptable container sizes that can be marketed and added warnings and direction statements to OTC sodium phosphates solutions marketed for laxative and to healthcare professionals for bowel cleansing use. Separate from this proposed rule, the agency has also made several attempts to educate and alert both healthcare professionals and consumers about potential risks associated with customary dose of OSP products for bowel cleansing. Despite these measures, FDA's AERS has continued to receive reports of acute kidney injury that have been associated with the customary dose of OSP products for bowel cleansing.

For this reason, on December 12, 2008, FDA took steps to limit the marketing of OSP products for bowel cleansing to prescription only and to increase the prominence of risk information by requiring a boxed warning on prescription OSP products (Ref. 1). In addition, the continued marketing of prescription OSP products will require the development of a risk evaluation and mitigation strategy that includes the development of a Medication Guide and a communication strategy targeted at healthcare providers who are likely to prescribe OSP products. FDA has also instructed the holders of NDAs for OSP products to conduct prospective clinical trials to assess the risk of acute kidney injury in patients using sodium phosphate products for bowel cleansing and to better define the risk factors that predispose patients to such injury. FDA has taken these steps in an attempt to increase the level of risk communication for these products and thereby reduce the incidence of adverse events that has been associated with these products.

This proposed rule is consistent with the Agency's determination that the customary dose of OSP products for bowel cleansing ( i.e., approximately 60 g of sodium phosphates taken as two 45-mL doses 12 hours apart or approximately 50 g of sodium phosphates taken as a 45-mL dose followed by a 30-mL dose 12 hours later) poses a serious risk to some individuals and that the marketing of these products for bowel cleansing should be limited to prescription only. In this document FDA proposes to classify OTC sodium phosphate salts, singly or in combination with each other, as not GRAS ( i.e., nonmonograph) for bowel cleansing. Furthermore, FDA is proposing to remove professional labeling for bowel cleansing use from the monograph. Manufacturers of OTC OSP laxative products would no longer be able to promote the use of these products to healthcare professionals for bowel cleansing use. Consequently, the marketing of sodium phosphates oral solution marketed under an OTC drug monograph would be limited to laxative use at a lower sodium phosphates dose to relieve occasional constipation.

Executive Order 12866 and OMB Circular A-4 direct agencies to consider and provide a description of any important distributional effects that might be attributed to a regulation, where applicable. To the extent that OTC OSP products for bowel preparation remain on the market, this rule would shift those sales to prescription products only. Any such shift in sales represents a transfer payment between manufacturers within the industry and is not a social cost of this rule. The agency believes that most of this transfer has already occurred through voluntary withdrawal of OTC products by their manufacturers.

An informal in-store review of several national drug and mass merchandise stores found that there were no OTC liquid OSP products on those store shelves. Pharmacists indicated that OSP liquid products were removed from the shelves in response to information from FDA. Therefore, the agency believes that any shift in sales from OTC to prescription products for bowel cleansing that would have been attributed to this rule most likely has already occurred.

According to proprietary data from A.C. Nielsen, annual retail sales for OSP products totaled about $30 million in 2006. The vast majority of these sales are attributed to one manufacturer. That manufacturer has already voluntarily removed its OSP laxative products from the shelves. We believe that other suppliers have similarly removed their products. The agency requests specific comments on this assumption.

To the extent that any OSP products for laxative use might remain on the market, there would be no relabeling or reformulation costs attributed to this rule. If, however, manufacturers have chosen to improperly label their OSP products with a bowel cleansing indication, these manufacturers will incur the cost of relabeling to remove the bowel cleansing use from their labels. These costs would be incurred without this rule, because professional uses of OTC drugs are not properly included in labeling directed to consumers.

We analyzed proprietary data from SDI Health on the total number of retail prescriptions dispensed for bowel preparation products from March 2004 through February 2009. We included PEG products and OSP products that are considered alternatives to the OTC OSP products for bowel cleansing. The number of prescriptions for PEG products has grown significantly over this time period, whereas the number of OSP products remained relatively constant over most of this period and began to decline in late 2008. The average annual growth rate for all prescription bowel preparation products was 17 percent from 2006 to 2008. From 2006 through the third quarter of 2008, the monthly share of sodium phosphate prescriptions dispensed for bowel preparation was about 13 to 15 percent of total prescriptions, but declined to a monthly low of 7 percent by February 2009. This apparent decline in dispensed prescription sodium phosphate products may be a market response to recent agency actions, including the boxed warning requirement, that are separate from this rule. However, it is too soon to determine market changes. Nonetheless, the data on the number of prescriptions dispensed suggest that prior agency actions may have had a dampening market effect on the use of OSP products for bowel preparation.

Section III.A of this document presents data on the reports of serious adverse events associated with prescription and OTC products containing sodium phosphates for bowel cleansing. More than 100 adverse events have been reported that are associated with the customary dose of OSP products as presented in section III. A of this document. Although these serious events are rare, the public health consequences can be substantial. Acute phosphate nephropathy that has been associated with the customary dose of OSP for bowel cleansing can result in permanent impairment of kidney function that ultimately may require chronic dialysis or kidney transplant, and may result in long term renal failure and, in rare instances, death.

The economic consequences of this severity of renal impairment are significant. The cost of hospitalization resulting from acute renal failure without dialysis has been estimated at $22,251 (51 FR 77314 at 77344, December 26, 2006). Recent analyses have reported Medicare payments for a year's treatment of a dialysis patient of about $67,000. Employer group health insurance costs are much higher at $180,000 per year (Ref. 41).

Estimates of the cost of kidney transplants also vary. Associated medical costs for transplants average about $102,000 in the year of the transplant (Ref. 42). The mean cost of hospitalization for a kidney transplant procedure was $128,000 in 2006 (Ref. 43). In addition, patients with kidney transplants require immunosuppressive drugs for years after their transplant.

We believe, based on the available data, that sodium phosphates solution marketed under an OTC drug monograph for bowel cleansing may be a significant cause of severe adverse events. However, we note that there is uncertainty about the baseline risk of serious adverse events associated with customary dose of OSP products (for both OTC and prescription uses). It is not possible to predict a specific level of reduction in the incidence of these serious adverse events that might be attributable to limiting OSP products for bowel cleansing use to prescription drug use. Moreover, to the extent that OSP products have been voluntarily withdrawn from the market, this rule would not have an impact on the incidence of these serious adverse events.

The agency considered but rejected several alternatives: (1) Requiring additional (OTC or professional) labeling that describes potential adverse effects, the subpopulations at greatest risk, and detailed directions about hydration, (2) a longer implementation period for this rule if finalized, and (3) product withdrawal, including prescription use. We do not believe that the first two alternatives to the proposed regulation would be adequate to provide for the safe use of OTC sodium phosphates oral solution for bowel cleansing ( e.g., preparation for colonoscopy). Various attempts at conveying the risk associated with OTC sodium phosphates oral solution products, including detailed professional labeling describing potential adverse events and at risk populations (Ref. 29) by a manufacturer of an OTC sodium phosphates oral solution product have not been successful in reducing the number of serious adverse events attributed to these products. The agency also considered but rejected a longer implementation period for this proposed rule if finalized, because of the overriding safety considerations. We rejected the third alternative, to withdraw the product, because OSP has been demonstrated to be effective for bowel cleansing, and we believe that it is important to continue to have multiple options available for bowel cleansing because no single product is tolerated by all individuals.

The Small Business Administration (SBA) defines an entity as small in the pharmaceutical manufacturing industry if the business has fewer than 750 employees. Over 90 percent of manufacturers in the OTC pharmaceutical industry are classified as small. To the extent that there continue to be manufacturers of OSP products for bowel preparation that remain on the market, those sales would be shifted to prescription products. This is a transfer payment and not a social cost of this rule. The agency believes that most of this impact has already occurred with manufacturers voluntarily withdrawing products from the market prior to this rule.

We estimate that there are about 10 manufacturers that could be affected by this proposed rule and that all of them are small businesses. The economic impact on any remaining individual firms will vary based on the amount of lost production and lost sales revenue that is derived from sales of the OSP products for bowel cleansing. Without knowing the volume of OTC OSP sales that can be attributed to this use, it is difficult to estimate the impact of this proposed rule on small business entities. As noted above, a major manufacturer of OTC OSP labeled for professional use for bowel cleansing has already voluntarily withdrawn its bowel cleansing products from the market. The remaining suppliers may have done the same.

Given the small number of manufacturers of these products, we believe that it is unlikely that this proposed rule will have a significant economic impact on a substantial number of small entities. Nonetheless, the agency requests detailed comments on small businesses impacts. The proposed rule will not require any new recordkeeping and no additional professional skills are needed.

This analysis shows that this proposed rule is not economically significant under Executive Order 12866. Thus, this economic analysis, together with other relevant sections of this document, serves as the agency's initial regulatory flexibility analysis as required under the Regulatory Flexibility Act. Finally, this analysis shows that the Unfunded Mandates Reform Act does not apply to this proposed rule because it would not result in an expenditure in any 1 year by State, local, and Tribal governments in the aggregate, or by the private sector of $135 million.

FDA invites public comment regarding any significant economic impact that this proposal would have on affected manufacturers of sodium phosphates oral solutions. Comments regarding the impact of this proposal should be accompanied by appropriate documentation. FDA will evaluate any comments and supporting data that are received and will reassess the economic impact of this rulemaking in the preamble to any final rule.

This proposed rule contains no collections of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.

FDA has determined under 21 CFR 25.31(a) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. Section 4(a) of the Executive order requires agencies to “construe * * * a Federal statute to preempt State law only where the statute contains an express preemption provision or there is some other clear evidence that the Congress intended preemption of State law, or where the exercise of State authority conflicts with the exercise of Federal authority under the Federal statute.” The sole statutory provision giving preemptive effect to the proposed rule is section 751 of the FD&C Act (21 U.S.C. 379r).

We believe that the preemptive effect of this proposed rule, if finalized, would be consistent with Executive Order 13132. Through the publication of this proposed rule, we are providing notice and an opportunity for State and local officials to comment on this rulemaking.

The following references are on display in the Division of Dockets Management (HFA-305), 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, under Docket No. FDA-1978-N-0021 (formerly Docket No. 78N-036L) and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday.

1. Document Id. FDA-2007-P-0345-0003, Federal Dockets Management System.

2. Document Id. FDA-2007-P-0345-0005, Federal Dockets Management System.

3. Comment No. CP8, Docket 1978N-036L, Division of Dockets Management.

4. Comment No. SUP5, Docket No. 1978N-036L, Division of Dockets Management.

5. Comment No. LET41, Docket No. 1978N-036L, Division of Dockets Management.

6. Document Id. FDA-1978-N-0021-0032-0036, Federal Dockets Management System.

7. Comment No. CP14, Docket No. 1978N-036L, Division of Dockets Management.

8. Comment No. SUP8, Docket No. 1978N-036L, Division of Dockets Management.

9. Comment No. AMD10, Docket No. 1978N-036L, Division of Dockets Management.

10. Comment No. LET71, Docket No. 1978N-036L, Division of Dockets Management.

11. Comment No. SUP11, Docket No. 1978N-036L, Division of Dockets Management.

12. Comment No. SUP10, Docket No. 1978N-036L, Division of Dockets Management.

13. Comment No. C146, Docket No. 1978N-036L, Division of Dockets Management.

14. Comment No. LET109, Docket No. 1978N-036L, Division of Dockets Management.

15. Comment No. PDN4, Docket No. 1978N-036L, Division of Dockets Management.

16. Comment No. CP1, Docket No. 00P-1472, Division of Dockets Management.

17. Comment No. PDN1, Docket No. 00P-1472, Division of Dockets Management.

18. Comment No. CP28, Docket No. 1978N-036L, Division of Dockets Management.

19. Comment No. LET204, Docket No. 1978N-036L, Division of Dockets Management.

20. Document Id. FDA-1978N-0021-0031, Federal Dockets Management System.

21. Comment No. C207, Docket No. 1978N-036L, Division of Dockets Management.

22. Comment No. C208, Docket No. 1978N-036L, Division of Dockets Management.

23. Comment No. SUP18, Docket No. 1978N-036L, Division of Dockets Management.

24. FDA Science Background Paper: “Safety of Sodium Phosphates Oral Solution” September 17, 2001 in OTC Volume 09OSPPR.

25. FDA Science Background Paper: “Acute Phosphate Nephropathy and Renal Failure Associated with the Use of Oral Sodium Phosphate Bowel Cleansing Products,” May 2006 in OTC Volume 09OSPPR.

26. FDA Information for Healthcare Providers: Oral Sodium Phosphate Products for Bowel Cleansing, May 2006 in OTC volume 09OSPPR.

27. FDA Alert: Oral Sodium Phosphate (OSP) Products for Bowel Cleansing (marketed as Visicol and OsmoPrep, and oral sodium phosphate products available without a prescription), December 11, 2008 in OTC volume 09OSPPR.

28. FDA Information for Healthcare Professionals: Oral Sodium Phosphate (OSP) Products for Bowel Cleansing (marketed as Visicol and OsmoPrep, and oral sodium phosphate products available without a prescription), December 11, 2008, in OTC volume 09OSPPR.

29. Professional Labeling for Fleets Phosphasoda in OTC volume 09OSPPR.

30. Khurana, A. et al., “Acute Phosphate Nephropathy,” Journal of the American Society of Nephrology, 17: 163A, 2006.

31. Markowitz, G. S. et al., “Acute Phosphate Nephropathy Following Oral Sodium Phosphate Bowel Purgative: An Unrecognized Cause of Chronic Renal Failure,” Journal of the American Society of Nephrology, 16:3389-3396, 2005.

32. Ma, R. C. et al., “Acute Renal Failure Following Oral Sodium Phosphate Bowel Preparation in Diabetes,” Diabetes Care, January: 30(1):182-3. 2007.

33. Gonlusen, G. et al., “Renal Failure and Nephrocalcinosis Associated with Oral Sodium Phosphate Bowel Cleansing: Clinical Patterns and Renal Biopsy Findings,” Archives of Pathology and Laboratory Medicine, January: 130(1):101-6, 2006.

34. Hurst, F. P. et al., “Association of Oral Sodium Phosphate Purgative Use with Acute Kidney Injury,” Journal of the American Society of Nephrology, 18:1-6, 2007.

35. Brunelli, S. M. et al., “Risk of Kidney Injury Following Oral Phoshphasoda Bowel Preparations,” Journal of the American Society of Nephrology, 18: 199-3205, 2007.

36. Abaskharoun, R., W. Depew, and S. Vanner, “Changes in Renal Function Following Administration of Oral Sodium Phosphate or Polyethylene Glycol for Colon Cleansing Before Colonoscopy,” Canadian Journal of Gastroenterology, April: 21(4):227-31, 2007.

37. Khurana A., L. McLean, S. Atkinson, and C. J. Foulks, “The Effect of Oral Sodium Phosphate Drug Products on Renal Function in Adults Undergoing Bowel Endoscopy,” Archives of Internal Medicine, March 24:168(6):593-7, 2008.

38. Levey, A. S., T. Greene, J. Kusek, and G. Beck, “A Simplified Equation to Predict Glomerular Filtration Rate from Serum Creatinine (abstract), Journal of the American Society of Nephrology, 11: p.155A, 2000.

39. Russman, S. et al., “Risk of Impaired Renal Function After Colonoscopy: A Cohort Study in Patients Receiving Either Oral Sodium Phosphate or Polyethylene Glycol,” American Journal of Gastroenterology, 102:2655-2663, 2007.

40. Wexner, S.D. et al., “A Consensus Document on Bowel Preparation Before Colonoscopy,” prepared by a task force from the American Society of Colon and Rectal Surgeons (ASCRS), the American Society for Gastrointestinal Endoscopy (ASGE), and the Society of American Gastrointestinal and Endoscopic Surgeons (SAGES), Gastrointestinal Endoscopy; 63:894-909, 2006.

41. Just, P. M. et al., “Reimbursement and Economic Factors Influencing Dialysis Modality Choice around the World,” Nephrology Dialysis Transplantation, 23(7):2365-2373, 2008.

42. St. Peter, W., “Introduction: Chronic Kidney Disease: A Burgeoning Health Epidemic,” Journal of Managed Care Pharmacy, 13(9):S2-S5, 2007.

43. Agency for Healthcare Research and Quality, HCUPnet National and regional estimates on hospital use for all patients from the HCUP Nationwide Inpatient Sample (NIS) (2006), data accessed March 11, 2009.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR parts 310 and 334 (as proposed in the Federal Register of January 15, 1985 (50 FR 2124)), October 1, 1986 (51 FR 35136), September 2, 1993 (58 FR 46589), March 31, 1994 (59 FR 15139), September 2, 1997 (62 FR 46223), May 21, 1998 (63 FR 27886), June 19, 1998 (63 FR 33592), March 24, 2004 (69 FR 13765), November 29, 2004 (69 FR 69278), be amended as follows:

The notice of proposed rulemaking; notice of a public hearing; and withdrawal of previously proposed rulemaking that is the subject of this document is under section 6049 of the Internal Revenue Code.

As published, the notice of proposed rulemaking; notice of a public hearing; and withdrawal of previously proposed rulemaking (REG-146097-09) contains errors that are misleading and are in need of clarification.

Accordingly, the notice of proposed rulemaking; notice of a public hearing; and withdrawal of previously proposed rulemaking which is the subject of FR Doc. 2011-82 is corrected as follows:

On page 1105, in the preamble, column 3, under the caption DATES , line 4, the language “public hearing scheduled for April 28,” is corrected to read “public hearing scheduled for April 27,”.

On page 1107, in the preamble, column 2, under the paragraph heading “Comments and Public Hearing”, line 14, the language “for April 28, 2011, beginning at 10 a.m.” is corrected to read “for April 27, 2011, beginning at 10 a.m.”

On March 17, 2008, we published a request for public comments on the costs and benefits of expanding the existing 12-character HIN in order to provide additional information identifying vessels (73 FR 14193). The notice specifically requested comments on: (1) The expected benefits and costs of an expanded HIN; (2) the manner in which the Coast Guard should exempt small entities and builders of high-volume, low-cost vessels; (3) the estimated collection of information burdens to vessel manufacturers if the current 12-character HIN regulations were revised to require additional characters; and (4) possible alternatives to an expanded HIN. The Coast Guard also sought specific data to support its decision-making process about whether to initiate a rulemaking addressing an expanded HIN.

In response to the request for comments, we received 29 comments. The Coast Guard has decided not to initiate a rulemaking addressing an expanded HIN based on consideration of the comments received as well as the challenges from data uncertainty in describing, estimating, and quantifying potential costs and benefits of such a rulemaking.

The Coast Guard has been looking into the possibility of an expanded HIN for several years. In 1994, the Coast Guard initiated a rulemaking to create an expanded HIN, but ultimately withdrew the rulemaking, stating: “There is no consensus on format for an expanded HIN and the Coast Guard lacks sufficient data to demonstrate that the benefits clearly outweigh the costs and burdens” 65 FR 40069 (June 29, 2000, Supplemental notice of proposed rulemaking; termination); see also 59 FR 23651 (May 6, 1994, Notice of proposed rulemaking); 59 FR 55823 (November 9, 1994, Notice of workshop and reopening of comment period); 62 FR 7971 (February 21, 1997, Supplemental notice of proposed rulemaking); 63 FR 63638 (November 16, 1998, Request for comments).

The Coast Guard again looked into the possibility of an expanded HIN with publication of the 2008 request for comments.

The comments received covered a range of support and opposition to the Coast Guard's proposal for an expanded HIN. Several commenters addressed the Coast Guard's request for specific comments and data, although there was no consensus among commenters and the data and information provided was in an aggregate form with estimates which varied widely. For example, one commenter stated that certain recreational vessel manufacturers already use an expanded HIN format for their products (which include recreational vehicles as well as vessels), while several other commenters indicated by the substance of their comments that many recreational vessel manufacturers do not. Additionally, some commenters stated that the costs of an expanded HIN would be minimal and described why, while other commenters provided cost estimates to show that costs would be excessive. The Coast Guard found these comments helpful in showing a variety of opinions and possible data regarding the proposal to expand the HIN. These comments, however, also indicate that currently there are no definitive means to address this issue.

Although some commenters provided certain requested data, the request for comments did not garner any quantitative data or specific information regarding the benefits of an expanded HIN. Some commenters specifically agreed with the Coast Guard's discussion of possible benefits from an expanded HIN, such as enhanced assistance in the recovery of stolen vessels, reduced recreational vessel fraud, improved accuracy of accident data analysis, and increased remote identification of a “suspect” vessel. None of the commenters provided any benefit-specific data or information to support the commenters' expressed views. Challenges to an expanded HIN proposal and its potential benefits were also general statements—opposing the proposal or disagreeing with the Coast Guard's discussion of the proposal—and did not contain sufficiently specific data or information.

In addition to seeking information from the public on an expanded HIN proposal, the Coast Guard also performed its own evaluation of the potential costs and benefits of such a proposal. The Coast Guard found a lack of available data regarding potential costs and benefits.

At this time, the Coast Guard has decided that it is in the best interest of the public and the boating safety community to focus its attention and devote its resources to other regulatory actions. If the Coast Guard decides in the future to reconsider an expanded HIN, we will provide notice in a new Federal Register publication.

Under Title VIII of the Alaska National Interest Lands Conservation Act (ANILCA) (16 U.S.C. 3111-3126), the Secretary of the Interior and the Secretary of Agriculture (Secretaries) jointly implement the Federal Subsistence Management Program (Program). This Program provides a preference for take of fish and wildlife resources for subsistence uses on Federal public lands and waters in Alaska. The Secretaries published temporary regulations to carry out this Program in the Federal Register on June 29, 1990 (55 FR 27114), and final regulations were published in the Federal Register on May 29, 1992 (57 FR 22940). The Program has subsequently amended these regulations a number of times. Because this Program is a joint effort between Interior and Agriculture, these regulations are located in two titles of the Code of Federal Regulations (CFR): Title 36, “Parks, Forests, and Public Property,” and Title 50, “Wildlife and Fisheries,” at 36 CFR 242.1-28 and 50 CFR 100.1-28, respectively. The regulations contain subparts as follows: Subpart A, General Provisions; Subpart B, Program Structure; Subpart C, Board Determinations; and Subpart D, Subsistence Taking of Fish and Wildlife. Only the Secretaries can promulgate changes to the subpart A and B regulations.

Consistent with subpart B of these regulations, the Secretaries established a Federal Subsistence Board to administer the Federal Subsistence Management Program. The Board is made up of:

• A Chair appointed by the Secretary of the Interior with concurrence of the Secretary of Agriculture;

• The Alaska Regional Director, U.S. Fish and Wildlife Service;

• The Alaska Regional Director, U.S. National Park Service;

• The Alaska State Director, U.S. Bureau of Land Management;

• The Alaska Regional Director, U.S. Bureau of Indian Affairs; and

• The Alaska Regional Forester, U.S. Forest Service.

Through the Board, these agencies participate in the development of regulations for subparts C and D, which, among other things, set forth program eligibility and specific harvest seasons and limits. As the Secretaries are responsible for promulgating changes to subparts A and B; the Board is assisting the Secretaries in this effort.

In administering the program, the Secretaries divided Alaska into 10 subsistence resource regions, each of which is represented by a Regional Council. The Regional Councils provide a forum for rural residents with personal knowledge of local conditions and resource requirements to have a meaningful role in the subsistence management of fish and wildlife on Federal public lands in Alaska. The Regional Council members represent varied geographical, cultural, and user interests within each region.

On October 23, 2009, Secretary of the Interior Salazar announced the initiation of a Departmental review of the Federal Subsistence Management Program in Alaska. The review focused on how the Program is meeting the purposes and subsistence provisions of the Alaska National Interest Lands Conservation Act of 1980 (ANILCA), and how the Program is serving rural subsistence users as envisioned when the program was begun in the early 1990s.

On August 31, 2010, the Secretaries announced the findings of the review. The Program review proposed several administrative and regulatory changes to strengthen the Program and make it more responsive to the concerns of those who rely on it for their subsistence needs. One proposal called for adding two public members representing rural Alaskan subsistence users to the Federal Subsistence Board, which would allow additional regional representation and increased stakeholder input in the decisionmaking process. Conforming regulatory changes are also proposed to clarify the designation of alternates for Federal Board members and to increase the size of a quorum.

The Regional Councils have a substantial role in reviewing this proposed rule and making recommendations for the final rule. The Federal Subsistence Board, through the Regional Councils, will hold meetings on this proposed rule at the following locations in Alaska, on the following dates:

A notice will be published of specific dates, times, and meeting locations in local and statewide newspapers prior to this series of meetings. Locations and dates may change based on weather or local circumstances. The amount of work on each Regional Council's agenda determines the length of each Regional Council meeting.

The Board will discuss and evaluate proposed changes to the subsistence management regulations during a public meeting scheduled to be held in Anchorage, AK, on May 3, 2011. The Council Chairs, or their designated representatives, will present their respective Councils' recommendations at the Board meeting. Additional oral testimony may be provided to the Board at that time. At that public meeting, the Board will deliberate and make final recommendations to the Secretaries on this proposed rule.

As expressed in Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” the Federal officials that have been delegated authority by the Secretaries are committed to honoring the unique government-to-government political relationship that exists between the Federal Government and Federally Recognized Indian Tribes (Tribes) as listed in 75 FR 60810 (October 1, 2010) and the relationship required by statute for consultation and coordination with Alaska Native corporations. Consultation with Alaska Native corporations is based on Public Law 108-199, div. H, Sec. 161, Jan. 23, 2004, 118 Stat. 452, as amended by Public Law 108-447, div. H, title V, Sec. 518, Dec. 8, 2004, 118 Stat. 3267, which provides that: “The Director of the Office of Management and Budget and all Federal agencies shall hereafter consult with Alaska Native corporations on the same basis as Indian Tribes under Executive Order No. 13175.”

The Alaska National Interest Lands Conservation Act does not provide rights to Tribes for the subsistence taking of wildlife, fish, and shellfish. However, because Tribal members are affected by subsistence fishing, hunting, and trapping regulations, the Secretaries, through the Board, will provide Federally recognized Tribes and Alaska Native corporations an opportunity to consult on this rule.

The Board will engage in outreach efforts for this rule, including a notification letter, to ensure that Tribes and Alaska Native corporations are advised of the mechanisms by which they can participate. The Board provides a variety of opportunities for consultation: Commenting on proposed changes to the existing rule; engaging in dialogue at the Regional Council meetings; engaging in dialogue at the Board's meetings; and providing input in person, by mail, e-mail, or phone at any time during the rulemaking process. The Board will commit to efficiently and adequately providing an opportunity to Tribes and Alaska Native corporations for consultation with regard to subsistence rulemaking.

The Board will consider Tribes' and Alaska Native corporations' information, input, and recommendations, and address their concerns as much as practicable. The Board will inform the Tribes and Alaska Native corporations how their recommendations were considered.

A Draft Environmental Impact Statement that described four alternatives for developing a Federal Subsistence Management Program was distributed for public comment on October 7, 1991. The Final Environmental Impact Statement (FEIS) was published on February 28, 1992. The Record of Decision (ROD) on Subsistence Management for Federal Public Lands in Alaska was signed April 6, 1992. The selected alternative in the FEIS (Alternative IV) defined the administrative framework of an annual regulatory cycle for subsistence regulations.

Several alternatives were considered for the composition of the Board including all Federal agency heads and all public members representing subsistence users. This proposed regulation adding two additional public members to the Board falls within the scope of alternatives. For this reason, the impacts described in the FEIS and ROD are deemed sufficient for this proposed regulation and require no further analysis.

Even in the absence of the consideration of alternatives in the existing programmatic FEIS and ROD, no further NEPA analysis would be required in this instance. There are two reasons for this. The first is that this action is merely administrative in nature and has no environmental impact. The second is that activities of this nature are categorically excluded from the requirements of NEPA under both Department of the Interior (DOI) regulations and Department of Agriculture (DOA) regulations. Specifically, DOI regulations at 43 CFR 46.210 set forth categorical exclusions for both internal organizational changes and the adoption of regulations that are of an administrative nature. Similarly, DOA regulations at 7 CFR 1b.3(a) provide a categorical exclusion for routine activities such as personnel and organizational changes, and similar administrative functions.

A 1997 environmental assessment dealt with the expansion of Federal jurisdiction over fisheries and is available at the office listed under FOR FURTHER INFORMATION CONTACT . The Secretary of the Interior, with concurrence of the Secretary of Agriculture, determined that expansion of Federal jurisdiction does not constitute a major Federal action significantly affecting the human environment and, therefore, signed a Finding of No Significant Impact.

An ANILCA section 810 analysis was completed as part of the FEIS process on the Federal Subsistence Management Program. The intent of all Federal subsistence regulations is to accord subsistence uses of fish and wildlife on public lands a priority over the taking of fish and wildlife on such lands for other purposes, unless restriction is necessary to conserve healthy fish and wildlife populations. The final section 810 analysis determination appeared in the April 6, 1992, ROD and concluded that the Federal Subsistence Management Program, under Alternative IV with an annual process for setting subsistence regulations, may have some local impacts on subsistence uses, but will not likely restrict subsistence uses significantly. This analysis describes impacts of the alternative Board compositions. This proposed action falls within that analysis and no further analysis is warranted.

During the subsequent environmental assessment process for extending fisheries jurisdiction, an evaluation of the effects of this rule was conducted in accordance with § 810. That evaluation concluded that, because this is merely an administrative action, the rule will not reach the “may significantly restrict” threshold that would require notice and hearings under ANILCA § 810(a).

An agency may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. This proposed rule does not contain any new collections of information that require OMB approval. OMB has reviewed and approved the following collections of information associated with the subsistence regulations at 36 CFR 242 and 50 CFR 100: Subsistence hunting and fishing applications, permits, and reports, Federal Subsistence Regional Advisory Council Membership Application/Nomination and Interview Forms (OMB Control No. 1018-0075 expires January 31, 2013).

The Office of Management and Budget (OMB) has determined that this proposed rule is not significant and has not reviewed this rule under Executive Order 12866. OMB bases its determination upon the following four criteria:

(a) Whether the rule will have an annual effect of $100 million or more on the economy or adversely affect an economic sector, productivity, jobs, the environment, or other units of the government.

(b) Whether the rule will create inconsistencies with other agencies' actions.

(c) Whether the rule will materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients.

(d) Whether the rule raises novel legal or policy issues.

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq. ) requires preparation of flexibility analyses for rules that will have a significant effect on a substantial number of small entities, which include small businesses, organizations, or governmental jurisdictions. In general, the resources to be harvested under this rule are already being harvested and consumed by the local harvester and do not result in an additional dollar benefit to the economy. However, we estimate that two million pounds of meat are harvested by subsistence users annually and, if given an estimated dollar value of $3.00 per pound, this amount would equate to about $6 million in food value statewide. Based upon the amounts and values cited above, the Departments certify that this rulemaking will not have a significant economic effect on a substantial number of small entities within the meaning of the Regulatory Flexibility Act.

Under the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801 et seq. ), this rule is not a major rule. It does not have an effect on the economy of $100 million or more, will not cause a major increase in costs or prices for consumers, and does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

Title VIII of ANILCA requires the Secretaries to administer a subsistence priority on public lands. The scope of this program is limited by definition to certain public lands. Likewise, these regulations have no potential takings of private property implications as defined by Executive Order 12630.

The Secretaries have determined and certify pursuant to the Unfunded Mandates Reform Act, 2 U.S.C. 1502 et seq., that this rulemaking will not impose a cost of $100 million or more in any given year on local or State governments or private entities. The implementation of this rule is by Federal agencies and there is no cost imposed on any State or local entities or Tribal governments.

The Secretaries have determined that these regulations meet the applicable standards provided in §§ 3(a) and 3(b)(2) of Executive Order 12988, regarding civil justice reform.

In accordance with Executive Order 13132, the proposed rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. Title VIII of ANILCA precludes the State from exercising subsistence management authority over fish and wildlife resources on Federal lands unless it meets certain requirements.

The Alaska National Interest Lands Conservation Act does not provide rights to Tribes for the subsistence taking of wildlife, fish, and shellfish. However, the Board will provide Federally recognized Tribes and Alaska Native corporations an opportunity to consult on this rule. Consultation with Alaska Native corporations is based on Public Law 108-199, div. H, Sec. 161, Jan. 23, 2004, 118 Stat. 452, as amended by Public Law 108-447, div. H, title V, Sec. 518, Dec. 8, 2004, 118 Stat. 3267, which provides that: “The Director of the Office of Management and Budget and all Federal agencies shall hereafter consult with Alaska Native corporations on the same basis as Indian Tribes under Executive Order No. 13175.”

The Secretaries, through the Board, will provide a variety of opportunities for consultation: Commenting on proposed changes to the existing rule; engaging in dialogue at the Regional Council meetings; engaging in dialogue at the Board's meetings; and providing input in person, by mail, e-mail, or phone at any time during the rulemaking process.

This Executive Order requires agencies to prepare Statements of Energy Effects when undertaking certain actions. However, this proposed rule is not a significant regulatory action under E.O. 13211, affecting energy supply, distribution, or use, and no Statement of Energy Effects is required.

Theo Matuskowitz drafted these regulations under the guidance of Pat Pourchot, Special Assistant to the Secretary of the Interior for Alaska Affairs, Department of the Interior, Anchorage, Alaska. Additional assistance was provided by:

• Peter J. Probasco, Office of Subsistence Management, U.S. Fish and Wildlife Service; and

• Steve Kessler, Alaska Regional Office, U.S. Forest Service.

For the reasons set out in the preamble, the Secretaries propose to amend 36 CFR 242 and 50 CFR 100, as set forth below.

Today's action notifies interested parties of EPA's determination to regulate perchlorate, but imposes no requirements on public water systems (PWSs). However, this action also initiates the process to develop a national primary drinking water regulation (NPDWR) for perchlorate. At such time as the Agency establishes an NPDWR, certain PWSs will be required to take action to comply with the regulation in accordance with the schedule specified in the regulation.

The purpose of today's action is to present EPA's final determination to regulate perchlorate in drinking water, the rationale EPA used to make this regulatory determination, and EPA's response to certain key issues raised by commenters on previous Federal Register (FR) notices on the drinking water regulatory determination for perchlorate. (All comments are addressed in a Response to Comments document that is available in EPA's docket ID No. EPA-HQ-OW-2009-0297 for this regulatory determination.)

The statutory and regulatory background for this action is described in detail in the October 10, 2008, FR notice discussing EPA's preliminary regulatory determination for perchlorate (73 FR 60262; USEPA 2008a). Briefly, SDWA section 1412(b)(1)(A), as amended in 1996, requires EPA to make a determination whether to regulate at least five contaminants from its Contaminant Candidate List (CCL) every five years. To regulate a contaminant in drinking water, EPA must determine that it meets three criteria: (1) The contaminant may have an adverse effect on the health of persons; (2) the contaminant is known to occur or there is a substantial likelihood that the contaminant will occur in public water systems with a frequency and at levels of public health concern; and (3) in the sole judgment of the Administrator, regulation of such contaminant presents a meaningful opportunity for health risk reduction for persons served by public water systems. Once EPA makes a determination to regulate a contaminant in drinking water, SDWA requires that EPA issue a proposed NPDWR within 24 months and a final NPDWR within 18 months of proposal.

EPA included perchlorate on the first, second, and third CCLs that were published in the Federal Register on March 2, 1998 (63 FR 10273; USEPA 1998), February 24, 2005 (70 FR 9071; USEPA 2005a), and October 8, 2009 (74 FR 51850; USEPA 2009a), respectively. On May 1, 2007, EPA published an update on the Agency's evaluation of perchlorate as part of the preliminary regulatory determination for 11 other CCL 2 contaminants (72 FR 24016; USEPA 2007). The Agency did not make a preliminary determination for perchlorate as part of this regulatory determination, but requested public comment on the options that the Agency was evaluating for perchlorate and requested information that could assist the Agency in its regulatory determination. EPA received eight comment letters in response to the May 2007 document (72 FR 24016; USEPA 2007) that addressed perchlorate. Public comments on the May 2007 document can be found online at http://www.regulations.gov (Docket ID No. EPA-HQ-OW-2007-0068).

On October 10, 2008, EPA published a preliminary regulatory determination for perchlorate (73 FR 60262; USEPA 2008a), requesting public comment on its determination that perchlorate did not occur with a frequency and at levels of public health concern and regulation of perchlorate did not present a meaningful opportunity for health risk reduction for persons served by public water systems (the second and third criteria for regulating a contaminant under SDWA). The October 2008 notice describes in detail EPA's basis for its preliminary determination not to develop an NPDWR for perchlorate (73 FR 60262; USEPA 2008a). The Agency received nearly 33,000 comment letters on the October 2008 notice. Public comments on the October 2008 notice and supporting materials are available electronically at http://www.regulations.gov (Docket ID No. EPA-HQ-OW-2008-0692).

On August 19, 2009, EPA published the Perchlorate Supplemental Request for Comments (74 FR 41883; USEPA 2009b) requesting comment on additional approaches to analyzing data related to EPA's perchlorate regulatory determination. These additional comments were sought in an effort to ensure consideration of all potential options for evaluating whether there is a meaningful opportunity for human health risk reduction of perchlorate through a NPDWR. EPA stated that the alternative analyses presented in this notice could lead the Agency to make a determination to regulate perchlorate. EPA received over 6,000 comments on the August 2009 notice.

EPA has evaluated the approximately 39,000 public comments received on the May 2007 document, the October 2008 notice, and August 2009 notice. EPA has prepared a response to comment document that addresses the comments related to the perchlorate regulatory determination (USEPA, 2010a). This response to public comment document, the public comments on the August 2009 notice, and supporting materials are available electronically at http://www.regulations.gov (Docket ID No. EPA-HQ-OW-2009-0297).

After careful review and consideration of public comments on the May 2007, October 2008, and August 2009 notices, the Agency has made a determination to regulate perchlorate in drinking water. EPA has found that perchlorate may have an adverse effect on human health. EPA has reversed its October 2008 preliminary determination not to develop an NPDWR for perchlorate and now concludes, based on the analysis presented in this regulatory determination, that there is a substantial likelihood that perchlorate will occur in public water systems with a frequency and at levels of public health concern. Finally, EPA has determined that regulation of perchlorate presents a meaningful opportunity to reduce health risk for persons served by public water systems.

EPA is initiating the development of a proposed NPDWR for perchlorate. EPA intends to publish a proposed regulation and analyses required by SDWA for public review and comment within 24 months of this regulatory determination. EPA will consider the public comments and expects to promulgate a final regulation within 18 months of the proposal.

In making final regulatory determinations, EPA uses the criteria mandated by the 1996 SDWA Amendments. Specifically, EPA has found that perchlorate may have an adverse effect on the health of persons, that perchlorate occurs or there is a substantial likelihood that perchlorate will occur in public water systems with a frequency and at levels of public health concern, and that regulation of perchlorate in drinking water systems presents a meaningful opportunity for health risk reduction for persons served by public water systems.

Yes. The perchlorate anion is biologically significant specifically with respect to the functioning of the thyroid gland. Perchlorate can interfere with the normal functioning of the thyroid gland by inhibiting the transport of iodide into the thyroid, resulting in a deficiency of iodide in the thyroid. Perchlorate inhibits (or blocks) iodide transport into the thyroid by chemically competing with iodide, which has a similar shape and electric charge. The transfer of iodide from the blood into the thyroid is an essential step in the synthesis of thyroid hormones. The thyroid hormones play an important role in the regulation of metabolic processes throughout the body and are also critical to developing fetuses and infants, especially with respect to brain development. Because the developing fetus depends on an adequate supply of maternal thyroid hormone for its central nervous system development during the first and second trimester of pregnancy, iodide uptake inhibition from low-level perchlorate exposure has been identified as a concern in connection with increasing risk of neurodevelopmental impairment in fetuses of hypothyroid mothers. Poor iodide uptake and subsequent impairment of the thyroid function in pregnant and lactating women have been linked to delayed development and decreased learning capability in their infants and children (NRC, 2005). Additionally, deficiency during childhood reduces child growth and cognitive motor function (Zimmerman, 2009). Therefore, EPA finds that perchlorate may have an adverse effect on the health of persons.

Yes. EPA has determined that perchlorate occurs or there is a substantial likelihood that perchlorate will occur with a frequency and at levels of health concern in public water systems. EPA has made this determination by comparing the best available data on the occurrence of perchlorate in PWSs to potential health reference levels (HRLs) for perchlorate. HRLs are not final determinations about the level of a contaminant in drinking water that is necessary to protect any particular population. Rather they are benchmarks against which EPA compares the concentration of a contaminant found in public water systems to determine if it is at levels of public health concern.

In January 2005, the National Research Council (NRC) published “Health Implications of Perchlorate Ingestion,” a review of the state of the science regarding potential adverse health effects of perchlorate exposure and mode of action for perchlorate toxicity (NRC, 2005). The NRC recommended that EPA use data from the Greer et al. (2002) human clinical study as the basis for deriving a reference dose for perchlorate (NRC, 2005). Although the NRC committee concluded that hypothyroidism is the first adverse effect in the continuum of effects of perchlorate exposure, NRC recommended that “the most health-protective and scientifically valid approach” was to base the perchlorate RfD on the inhibition of iodide uptake by the thyroid, which the NRC considered a non-adverse effect (NRC, 2005). The NRC recommended that EPA apply an intraspecies uncertainty factor of 10 to the no observed effect level (NOEL), 1 to account for differences in sensitivity between the healthy adults in the Greer et al., (2002) study and the most sensitive population, fetuses of pregnant women who might have hypothyroidism or iodide deficiency. They viewed this as conservative and protective of health given that the NOEL is based on a non-adverse effect (iodide uptake inhibition), which precedes the adverse effect in a continuum of possible effects of perchlorate exposure. The NRC also noted that “any decrease (in thyroid hormone) is potentially more likely to have adverse effects in sensitive populations (people with thyroid disorders, pregnant women, fetuses, and infants). EPA's Integrated Risk Information System (IRIS) adopted the NRC's recommendations resulting in an RfD of 0.7 μg/kg/day (USEPA, 2005b).

In the October 2008 preliminary regulatory determination, EPA had derived a single HRL of 15 μg/L based upon the RfD, an estimate of perchlorate exposure from food for pregnant women, and traditional adult body weight (70 kg) and drinking water consumption (2 L/day) values. This single HRL was derived to reflect exposure to a pregnant woman and her fetus, which the NRC identified as “the most sensitive population.”

Since the NRC also identified infants and developing children as additional life stages, EPA derived potential alternative HRLs for 14 life stages (age groups) using the RfD and life stage-specific exposure information in the August 9, 2009, notice (74 FR 41883; USEPA 2009b). These levels range from 1 μg/L to 47 μg/L and are the concentrations of perchlorate in drinking water that may result in total perchlorate exposures (from food and water) greater than the RfD for individuals at each life stage. These HRLs are calculated based on individuals who consume an average amount of perchlorate from food (except for pregnant women where EPA used a 90th percentile dietary intake estimate), but who consume equal or more water on a per body weight basis than 90 percent of their cohorts. EPA is evaluating these potential alternative HRLs and considers them to be levels of public health concern for purposes of this determination. EPA has compared these values to the data provided by PWSs subject to the first Unregulated Contaminant Monitoring Rule (UCMR 1). EPA collected and analyzed drinking water occurrence data for perchlorate from 3,865 PWSs between 2001 and 2005 under the UCMR 1. The minimum reporting level (MRL) for perchlorate under the UCMR 1 was 4 μg/L.

EPA found that 160 (approximately 4.1 percent) of the 3,865 PWSs that sampled and reported had at least 1 analytical detection of perchlorate (in at least 1 sampling point) at levels greater than or equal to the MRL of 4 μg/L. These 160 PWSs are located in 26 States and 2 territories. Of these 160 PWSs, 8 are systems serving 10,000 or fewer people and 152 are systems serving more than 10,000 people. These 160 systems reported 637 detections of perchlorate at levels greater than or equal to 4 μg/L, which is approximately 11.3 percent of the 5,629 samples collected by these 160 PWSs and approximately 1.9 percent of the 34,331 samples collected by all 3,865 PWSs. The average concentration of perchlorate for those samples with positive detections for perchlorate was 9.85 μg/L and the median concentration was 6.40 μg/L.

Table 1 presents the number and percentage of PWSs that reported perchlorate at levels exceeding various threshold concentrations. Note that the MRL for perchlorate under the UCMR 1 was 4 µg/L.

Given the range of potential alternative HRLs, EPA has reversed its October 2008 preliminary determination not to regulate perchlorate in drinking water. Based on the data in Table 1 and the range of potential alternative HRLs, EPA has determined that perchlorate is known to occur or there is a substantial likelihood that it will occur with a frequency and at levels of public health concern.

Yes. EPA has made this determination based on a consideration of the best available peer reviewed science and data collected in accordance with accepted methods related to perchlorate occurrence in drinking water, the presence of perchlorate in foods, and the potential health effects of exposure to perchlorate.

Table 2 presents EPA's estimates of the population served by PWSs that were monitored under UCMR 1 for which the highest reported perchlorate concentration was greater than the thresholds identified in Table 1. EPA has determined that a NPDWR for perchlorate could reduce perchlorate exposures for these populations to levels below the potential alternative HRLs that EPA has identified as levels of public health concerns for purposes of this determination, and that such exposure reductions present a meaningful opportunity for the reduction of health risks for persons served by PWSs.

Specifically, Table 2 presents EPA's estimates of the population served by PWSs that were monitored under UCMR 1 for which the highest reported perchlorate concentration was greater than the thresholds identified in Table 1. The second column of Table 2 presents a range of estimates of the population served by PWSs that had at least one sample with perchlorate concentrations greater than the threshold. The population range represents both a high end estimate, as well as a central value estimate. These population estimates were derived using the UCMR 1 monitoring data. The high end estimate of the population served drinking water above a threshold is derived by adding the entire system population of all PWSs in which at least one sample was found to contain perchlorate above the threshold. EPA considers this a high end estimate because it is based on the assumption that the entire system population is served water from the entry point that had the highest reported perchlorate concentration. In fact, many PWSs have multiple entry points into which treated water is pumped for distribution to their consumers. For the PWSs with multiple entry points, it is unlikely that the entire service population receives water from the one entry point with the highest single concentration. Therefore, EPA also provides a central value estimate of the population served water with perchlorate above a threshold in the second column in Table 2. EPA developed this central value estimate by assuming the population was equally distributed among all entry points and added only the proportion of the total population served by those entry points in a PWS that had at least one sample with perchlorate concentrations greater than the threshold. For example, if a PWS with 10 entry points serving 200,000 people had a sample from a single entry point with a concentration at or above a given threshold, EPA assumed that the entry point served one-tenth of the PWS population, and added 20,000 people to the total when deriving the central value population estimate. In contrast, for the high end estimate using the example above, EPA added the entire PWS population of 200,000 to the total population. The latter is likely an overestimate. The UCMR 1 population estimates in Table 2 are for people at all life stages.

EPA has determined that perchlorate meets the criteria for regulating a contaminant in Section 1412(b)(1)(A) of SDWA. As previously discussed in this regulatory determination, perchlorate may have an adverse effect on the health of persons and perchlorate is known to occur or there is a substantial likelihood that perchlorate will occur in public water systems with a frequency and at levels of public health concern. Moreover, in light of the discussion in this regulatory determination and the information available at this time, the Administrator finds that regulation of perchlorate in drinking water systems presents a meaningful opportunity for health risk reduction for persons served by public water systems. Therefore, EPA will initiate the process of proposing a NPDWR for perchlorate.

EPA received a total of approximately 39,000 comments from individuals or organizations on the May 2007 document, and the October 2008, and August 2009 Federal Register notices regarding the perchlorate regulatory determination. This section briefly discusses a number of the key issues raised by commenters and EPA's response to these concerns. Responses to all of the comments received are available in the “Comment Response Document for the Final Regulatory Determination on Perchlorate” (USEPA, 2010a) available at http://www.regulations.gov (Docket ID No. EPA-HQ-OW-2009-0297).

EPA received comments indicating that the levels of perchlorate in drinking water that result in exposures greater than the RfD are not levels of public health concern because the RfD is based on a precursor to an adverse effect. EPA believes the NRC appropriately based the RfD on iodide uptake inhibition to the thyroid, for the reasons discussed in its report. EPA also received a substantial number of comments supporting the Agency's current view. EPA notes that the data underlying the definition of iodide uptake inhibition as a precursor effect and the relationship of iodide uptake inhibition to the continuum of adverse outcomes reflects an understanding of effects in adults; it may not reflect the relationship of the precursor event to adverse outcomes in neonates and infants, who may not have iodide stores sufficient to offset the effects of reduced iodide uptake. The less resilient neonatal and infant system makes the exposure gap between a precursor event (iodide uptake inhibition due to perchlorate) and reduced T3/T4 levels likely to be narrower than for adults, and in fact, the distinction between the two may be blurred for the very young (Greer et al., 2002; Savin et al., 2003; van den Hove et al., 1999). The NRC noted that, “[T]he minimal prolonged decrease in thyroid hormone production that would be associated with adverse health effects is not known; any decrease is potentially more likely to have adverse effects in sensitive populations (people with thyroid disorders, pregnant women, fetuses, and infants) but data are not available to determine the magnitude of the decrease needed to cause adverse effects in those populations.”

EPA received a number of comments that the Agency should consider the comparative effect on iodine uptake of perchlorate exposure in drinking water to nitrate and thiocyanate exposure in drinking water in determining whether there is a meaningful opportunity for risk reduction. Other commenters, including EPA's Office of Inspector General (USEPA, 2008c), believe that a NPDWR for a group of chemicals may be appropriate based on a yet-to-be-conducted cumulative risk assessment that assesses and characterizes the combined human health risk from perchlorate, nitrate, and thiocyanate.

While EPA acknowledges that nitrate and thiocyanate have the same mode of action as perchlorate, and that the effects of combined exposure to perchlorate, nitrate, and thiocyanate are additive, EPA does not believe there are sufficient scientific data currently available to assess and characterize the combined risk of these contaminants. EPA has committed to a drinking water strategy that outlines four principles to expand public health protection for drinking water (USEPA, 2010b). One of these principles is to address contaminants as groups. However, EPA does not believe that regulatory action to address perchlorate should be further delayed. Therefore, EPA intends to develop a proposed rule for perchlorate. At such time as a NPDWR is promulgated, EPA is required to review and revise, as appropriate, its drinking water standards at least every six years. Any revision must at least maintain or improve public health protection. When there are sufficient scientific data to assess the cumulative risks of perchlorate and other contaminants, EPA will review this information to evaluate whether any revisions of NPDWRs are appropriate.

A commenter wrote that a drinking water regulation for perchlorate does not present a meaningful opportunity for health risk reduction because perchlorate contamination in food is widespread. Other commenters indicated that EPA should regulate perchlorate in drinking water to reduce the public's overall exposure to perchlorate. EPA agrees that perchlorate contamination is more widespread in foods than in PWSs; however, EPA does not believe that the widespread presence of perchlorate in food overrides the need for public health risk reduction for persons served by PWSs with perchlorate contamination. The Agency presented an extensive evaluation of dietary exposure to perchlorate in the October 2008 and August 2009 notices (73 FR 60262; USEPA 2008a and 74 FR 41883; USEPA 2009b). EPA has used this dietary exposure data to account for the relative source contribution (RSC) of perchlorate from food to estimate the range of levels of public health concern. EPA recognizes that a drinking water regulation would not eliminate total perchlorate exposure, but believes that the reduction in perchlorate exposure in drinking water presents a meaningful opportunity for health risk reduction for persons served by PWSs contaminated by perchlorate.

Some commenters stated that public health concerns over iodide uptake inhibition could be addressed more efficiently through promotion of iodide nutrition than through regulation of perchlorate. EPA agrees that promoting iodide nutrition is good public health policy and may have a positive influence in reducing the iodide uptake inhibition effects associated with exposure to perchlorate. However, the Agency does not think it is appropriate to rely on the promotion of iodide nutrition in this case, especially since these activities are outside of EPA's SDWA authority. As a result, while the health concerns associated with perchlorate may be addressed through other means, it is the Administrator's judgment that a standard limiting perchlorate in drinking water can reduce health risk, particularly to fetuses, infants and children.

EPA reviewed, modified, and applied the perchlorate PBPK models, which were originally developed by Merrill et al. (2005) for adults and Clewell et al. (2007) for other life stages, to estimate the iodide uptake inhibition in the thyroid for each life-stage (73 FR 60262; USEPA 2008a). Estimated ingestion rates were then used to estimate the internal dose and resulting iodide uptake inhibition for several life stages, including susceptible populations ( e.g., pregnant women and their fetuses, as well as breast-fed and bottle-fed infants).

In the August 2009 notice, EPA stated that it was re-evaluating how best to incorporate the PBPK modeling analysis into its evaluation of perchlorate—if at all. The Agency sought comments on ways to use the PBPK modeling analysis to inform the regulatory determination.

Several commenters supported the use of the PBPK model to inform the regulatory determination only if the significant limitations of the current model are addressed. For example, the inability of the model to reflect iodide nutritional status was cited by commenters and three of four peer reviewers as an important limitation (USEPA, 2008d). Also, several commenters stated that the risks to breast-fed infants and young children are not adequately addressed by the model. They challenged that the modeling analysis is based on average weight infants and healthy adults, while the sensitive life stages for perchlorate include premature infants and hypothyroid women.

After further consideration of the peer review and public comments, EPA concludes that the PBPK modeling analysis, in the context of the perchlorate regulatory determination, is useful in examining which life stages are most susceptible to the effects of perchlorate. For example, the model indicates that a fetus may be seven times more sensitive to the effects of perchlorate than a pregnant woman. The model also allows for the estimation of the concentration of perchlorate in breast milk (thus breast-fed infant exposure) at various maternal perchlorate exposure levels. However, because of the stated limitations, EPA has decided the model does not directly bear on the current decision regarding the need for a NPDWR for perchlorate. EPA is continuing to evaluate whether the model could be used in setting a NPDWR for perchlorate.

EPA is initiating the development of a proposed NPDWR for perchlorate. However, this is not the end of a decision process but a middle step in a process that leads to a final drinking water standard. Based on this decision, EPA intends to publish a proposed NPDWR for public review and comment within 24 months of this regulatory determination. 2 EPA will continue to evaluate the science as we develop the proposed NPDWR. EPA will, as part of the proposed NPDWR, present a health risk reduction and cost analyses, an analysis of feasible treatment methods, and an analysis of small system compliance technologies. EPA will also consult with the National Drinking Water Advisory Council, the Science Advisory Board, and the Secretary of Health and Human Services, as required under SDWA.

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://regulations.gov. Follow the search instructions on that Web site to view public comments.

Comments received timely will be also 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.

The Patient Protection and Affordable Care Act (Pub. L. 111-148) was enacted on March 23, 2010; the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30, 2010. In this proposed rule we refer to the two statutes collectively as the Affordable Care Act. The Affordable Care Act reorganizes, amends, and adds to the provisions of Part A of title XXVII of the Public Health Service (PHS) Act relating to group health plans and health insurance issuers in the group and individual markets.

The Department of Health and Human Services (HHS or the Department) is issuing regulations in several phases in order to implement revisions to the PHS Act made by the Affordable Care Act. Most of the previous regulations were issued jointly with the Departments of Labor and the Treasury. Interim final rules published in 2010 by the three Departments included those that implemented PHS Act sections 2711 (regarding lifetime and annual dollar limits on benefits) and 2719A (regarding patient protections) (75 FR 37188 (June 28, 2010)), and section 2713 (regarding preventive health services) (75 FR 41726 (July 19, 2010)). HHS published interim final rules implementing section 2718, regarding medical loss ratio (75 FR 74864 (December 1, 2010)). A full list of the regulations, as well as guidance published by the Departments regarding various issues related to the implementation of the Affordable Care Act, is also available at http://www.hhs.gov/cciio and http://www.dol.gov/ebsa.

Pursuant to the Affordable Care Act which requires that “[N]othing in this title (or an amendment made by this title) shall be construed to prohibit an institution of higher education (as such term is defined for purposes of the Higher Education Act of 1965) from offering a student health insurance plan, to the extent that such requirement is otherwise permitted under applicable Federal, State, or local law,” this proposed regulation would define the term “student health insurance coverage” as a specific type of individual health insurance coverage, and would render certain requirements of the PHS Act and the Affordable Care Act as inapplicable to student health insurance coverage, given their unique characteristics.

The U.S. Government Accountability Office (GAO) has estimated that most students enrolled in U.S. colleges and universities have health coverage through employer-sponsored plans, but approximately 7 percent of students between ages 18 and 23, around 610,000 individuals, were covered through other private insurance such as student health insurance plans in 2006. 1 Industry estimates put the number of individuals with student health insurance coverage significantly higher, at 1.1 to 1.5 million individuals. This may be explained, in part, by the industry estimates counting university students of all ages, not just those between ages 18 and 23. Furthermore, older students may be more likely to have dependents enrolled under their student health insurance coverage. Altogether, according to industry sources, 1,500-2,000 institutions of higher education offer student health coverage. While the same sources estimate that 200,000 individuals have coverage through student health plan arrangements that are self-funded through colleges or universities, the vast majority of student plans are insured.

This generally means that a health insurance issuer contracts with a college or university to issue a group or an association “blanket” health insurance policy at a negotiated cost for a defined set of benefits for each student who desires coverage. While the contract between the issuer and the college or university usually covers multiple years, the contract can be modified on an annual basis to make minor benefit design modifications and to adjust the price for inflation. The policy is generally rated on a group basis based on the total expected claims experience of the college or university's students enrolled in the plan. Students of the college or university, in turn, are eligible to buy into the policy either on an academic term basis or an annual basis.

Insured student health insurance plans fall under the regulatory authority of the States and the Federal government pursuant to the PHS Act. Since these student health insurance plans are not employment-based, they do not meet the definition of a group health plan under PHS Act section 2791(a)(1), 2 even though some States regulate such plans, for purposes of State law, as types of group coverage (non-employer group coverage or association “blanket coverage”).

Concerns have been raised about the quality and value of these plans in some cases. For example, the Attorney General of New York in April 2010 released the findings of an investigation that concluded in part that some student health plans have such low coverage limits, exclusions, and limited benefits that they place students and their families at risk for catastrophic costs for medical care.

The benefits provided by student health plans vary widely. For example, the GAO study found annual limits ranging from $15,000 to $250,000, with the median being $50,000.

Given the variation in benefit designs for student health insurance coverage, premiums vary significantly. The GAO found annual premiums that ranged from $28 to $2,397, with the average being $850.

With the passage of the Affordable Care Act, several issues have arisen regarding the applicability of the PHS Act and the Affordable Care Act to student health insurance plans. Section 1560(c) of the Affordable Care Act provides that “[N]othing in this title (or an amendment made by this title) shall be construed to prohibit an institution of higher education (as such term is defined for purposes of the Higher Education Act of 1965) from offering a student health insurance plan, to the extent that such requirement is otherwise permitted under applicable Federal, State, or local law.” Were certain provisions of the Affordable Care Act applied to student health insurance coverage, we believe it would effectively prohibit institutions of higher education from being able to offer these plans. Because section 1560(c) of the Affordable Care Act instructs HHS not to construe any provisions of the Affordable Care Act to have this effect, this rule discusses which provisions we propose construing not to apply to student health insurance coverage pursuant to section 1560(c).

The proposed regulation would define student health insurance coverage as a type of individual health insurance coverage provided pursuant to a written agreement between an institution of higher education (as defined in the Higher Education Act of 1965) and a health insurance issuer, which is provided to students who are enrolled in that institution and their dependents. In addition, the definition would require that the coverage only be made available to students enrolled at the institution of higher education and their dependents; that eligibility for coverage could not be conditioned on any health status-related factor; and that it would have to satisfy any additional requirement that may be imposed under State law.

For purposes of the PHS Act, health insurance coverage that is not provided in connection with an employer-based group health plan is individual market coverage, notwithstanding that applicable State law might classify such non-employer group coverage as association blanket or discretionary group coverage. Previously, in the preamble to the interim final regulations implementing the individual market requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Department clarified that “college plan” coverage for students was individual market coverage, as distinguished from the group health plans provided to college employees. 62 FR 16985, 16992 (April 8, 1997).

As noted earlier in the introduction, it is believed that there are a small number of self-funded student health plans. The PHS Act and the Affordable Care Act give HHS regulatory authority over health insurance issuers in the group and individual markets and over non-Federal governmental group health plans. Because self-funded student health plans are neither health insurance coverage nor group health plans, as those terms are defined in the PHS Act, HHS has no authority to regulate them. Nonetheless, these self-funded student health plans may be regulated by the States. The Department invites comments on the prevalence, structure, and State regulation of these self-funded student health plans.

Under the proposed regulation, the term “student health insurance coverage” would be defined to include only insurance provided pursuant to a written agreement between an institution of higher education and a health insurance issuer. As proposed, the agreement could be evidenced by the health insurance issuer issuing the master insurance policy to the institution of higher education. If the institution of higher education is not the policyholder (that is, the students themselves are the policyholders), we proposed to require that in order to meet the definition of student health insurance coverage, there would have to be a separate agreement between the issuer and the institution of higher education clearly indicating the institution of higher education's role with respect to factors such as selecting, terminating, and replacing the health insurance issuer; choosing or negotiating policy terms; setting student and dependent eligibility terms; publicizing, endorsing, or recommending the policy to students and dependents; and/or providing students and dependents with assistance with obtaining benefits or appealing denials under the coverage. Under the proposed rule, if there were no written agreement between the institution of higher education and the health insurance issuer, such coverage would be subject to all of the individual market requirements in the PHS Act and the Affordable Care Act.

The definition of student health insurance coverage in this proposed regulation would be intended to ensure that student health insurance coverage is offered only to students enrolled in an institution of higher education. Student health insurance coverage also could cover students' dependents such as their spouses and children, as defined by the plan terms.

In addition, we propose that coverage that otherwise met the definition of student health insurance coverage could still meet the definition even if it also provided coverage for limited periods of time to individuals who are on breaks between academic terms, on temporary leaves of absence for medical or other reasons, or have recently graduated or otherwise ceased enrollment in an institution of higher education. The institution of higher education and the issuer would specify in the documents governing the student health insurance coverage which individuals could be viewed as being enrolled in the institution of higher education for purposes of eligibility for the student health insurance coverage.

Past research suggests that institutions of higher education vary in the extent to which part-time students are offered student health insurance coverage. 3 This proposed regulation would not set any minimum threshold for determining student status under student health insurance coverage (for example, require that students take a minimum number of course hours each term or be seeking a degree), leaving such eligibility decisions to each institution of higher education and the issuer.

The proposed regulation would provide that coverage offered to non-students seeking individual market coverage would not meet the definition of student health insurance coverage. Other individual market coverage that incidentally covers a student (such as under a parent's family policy) would not meet the definition of student health insurance coverage under this proposed regulation.

Lastly, under this proposed regulation, in order to meet the definition of student health insurance coverage, the coverage could not condition enrollment on any health status-related factor of a student or dependent. The term “health status-related factor” or “health factor” is proposed to have the same meaning as that term has in 45 CFR 144.103, incorporating 45 CFR 146.121(a), which applies with respect to group health insurance requirements. That term includes health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability. Incorporation of this non-discrimination requirement is modeled on the definition of bona fide association coverage in 45 CFR 144.103. HHS believes that this requirement will have a minimal impact on student health insurance plans because the Department understands that, in the past, student health insurance coverage offered by institutions of higher education receiving Federal funds generally has not discriminated against individual students or dependents on the basis of health status due to requirements under section 504 of the Rehabilitation Act of 1973 and related regulations issued by the U.S. Department of Education that prohibit discrimination based on disability. 4

45 CFR 144.103 defines short-term limited duration insurance as “health insurance coverage provided pursuant to a contract with an issuer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the issuer's consent) that is less than 12 months after the original effective date of the contract.” Short-term limited duration insurance is available to individuals to fill in gaps of coverage that otherwise might occur, such as when they are between jobs and without employer coverage. Since short-term limited duration insurance is specifically excluded from the definition of individual health insurance coverage in 45 CFR 144.103, the individual market protections of the PHS Act and the Affordable Care Act do not apply to short-term limited duration insurance.

In many student health insurance plans, the term of the coverage is for a period less than 12 months—sometimes for only a day or even minutes less than 12 months—suggesting an intent to claim short-term limited duration insurance status and avoid PHS Act and Affordable Care Act requirements. 5 However, we understand that some of these policies are also renewable at the option of the student so long as the student continues enrollment at the school. In fact, in some instances, the student's college or university will automatically re-enroll the student in such coverage without any affirmative action on the student's part.

It is our understanding that, in the past, student health insurance coverage was considered in some cases by issuers and institutions of higher education to be short-term limited duration insurance if the initial term of the coverage was less than 12 months in duration, even if it renewed automatically. Accordingly, many student health insurance plans do not provide some important protections of the PHS Act and the Affordable Care Act that apply to individual health insurance coverage. The proposed regulation would clarify that if the coverage is renewable each year at the option of the student as long as the student remains in school, the renewals would constitute “extensions that may be elected by the policyholder without the issuer's consent” that would not expire within a year, and that the coverage would not, therefore, meet the definition of short-term limited duration insurance. We understand that the right to renew the insurance coverage, provided that the student remains in school, is a common practice for student health insurance coverage. Thus, this proposed regulation would clarify that student health insurance coverage that is at least 12 months in duration, including any potential extension that may be elected by the student, is individual health insurance coverage generally subject to the individual market requirements of the PHS Act and the Affordable Care Act. This proposed regulation would not amend the existing definition of short-term limited duration insurance. HHS invites comments on the prevalence of existing student health insurance plans that meet the definition of short-term limited duration insurance and whether such plans should be subject to certain requirements of the PHS Act and the Affordable Care Act.

In clarifying the general applicability of the PHS Act and the Affordable Care Act to student health insurance plans, this proposed regulation would also specify that a limited number of requirements of the PHS Act and the Affordable Care Act are inapplicable to student health insurance coverage. Section 1560(c) of the Affordable Care Act provides that “[N]othing in this title (or an amendment made by this title) shall be construed to prohibit an institution of higher education (as such term is defined for purposes of the Higher Education Act of 1965) from offering a student health insurance plan, to the extent that such requirement is otherwise permitted under applicable Federal, State, or local law.” The Department interprets this provision of the Affordable Care Act to mean that if particular requirements in the Affordable Care Act would, as a practical matter, have the effect of prohibiting an institution of higher education from offering a student health plan otherwise permitted under Federal, State or local law, such requirements would be inapplicable pursuant to the rule of construction in section 1560(c).

The Department has identified several provisions in the PHS Act and the Affordable Care Act that we believe would have this effect and several others that might have this effect.

For example, the PHS Act guaranteed availability and guaranteed renewability requirements are incompatible with plans that, by definition, are restricted to individuals enrolled as students in institutions of higher education and their dependents. As explained below, the proposed regulation would construe these provisions as inapplicable to student health insurance coverage, for purposes of Federal law, so as to avoid conflict with section 1560(c) of the Affordable Care Act. The PHS Act and implementing regulations make clear that guaranteed issue and guaranteed renewability requirements are inapplicable to bona fide association plans that, like student health plans, are limited by definition to a defined pool of beneficiaries. This rule proposes to construe student health insurance coverage to be offered through a bona fide association for this purpose. 6

Under this proposed regulation, student health insurance coverage would be subject to the individual market requirements of the PHS Act and the Affordable Care Act, with the exception of those specific provisions that are identified in this proposed rule. The specific provisions which would be inapplicable to student health plans are discussed below. We also discuss other Affordable Care Act requirements that may so impede the offering of student health plans that they may also be found inapplicable pursuant to section 1560(c) of the Affordable Care Act. We solicit comments as to whether this is the case with respect to these latter requirements.

Section 2741(a) of the PHS Act generally requires health insurance issuers that offer coverage in the individual market in a State to offer coverage to certain eligible individuals, 7 and prohibits imposing any preexisting condition exclusion with respect to such individuals. 8

Section 2742 of the PHS Act requires a health insurance issuer that provides individual health insurance coverage to any individual to renew or continue the coverage in force at the option of the individual. This requirement applies regardless of whether the policyholder obtained the coverage as an eligible individual.

As previously indicated, both the guaranteed availability and guaranteed renewability requirements provide an exception for coverage that is offered through a bona fide association. ( See PHS Act sections 2741(e)(1) and 2742(b)(5) and §§ 148.120(g)(2) and 148.122 (c)(5).)  9

Because application of the guaranteed issue and guaranteed renewability requirements would be inconsistent with the provision of student health plans, this proposed regulation would construe student health insurance coverage for purposes of Federal law as falling within the bona fide association exception as provided in PHS Act sections 2741(e)(1) or 2742(b)(5). Such plans, by definition, meet the criteria described in sections (2) through (5) of the definition of a bona fide association, contained in 45 CFR 144.103. This is because student health insurance coverage is provided in a manner similar to a bona fide association since it only offers enrollment to a closed class of similarly situated individuals (that is, students and their dependents) and is only renewable to individuals who remain enrolled in colleges and universities as students and their dependents. 10

In construing student health insurance coverage as bona fide association plans for purposes of these two sections of the PHS Act, we do not propose to apply the first criterion in § 144.103, which is that the association must have been actively in existence for at least five years. That criterion is designed to reinforce the requirement that an association has been formed for purposes other than obtaining insurance. However, since it is highly unlikely that an institution of higher education would, or even could, be formed only for the purpose of obtaining insurance, we do not believe it is necessary to bar institutions of higher education that have not yet been in existence for five years from providing student health insurance coverage.

We would also note that the sixth criterion (meets any additional requirement imposed by State law) simply duplicates one of the criteria under the proposed definition of student health insurance coverage, so it would also be construed to be satisfied for this purpose.

This would be an automatic, construed status for purposes of Federal law, intended solely to allow student health insurance coverage to be limited to students and their dependents, without imposing any availability requirements for non-students, or renewability requirements after an individual has ceased to be a student, similar to how bona fide association coverage is limited to association members. This construed status does not require health insurance issuers offering student health insurance coverage to revise or amend their current business or marketing agreements and practices.

Section 2711 of the PHS Act prohibits group health plans and health insurance issuers offering group or individual health insurance coverage from establishing lifetime limits on the dollar value of essential health benefits  11 and restricts annual dollar limits on such benefits before 2014 for group health plans and non-grandfathered individual market plans. For plan or policy years beginning on or after January 1, 2014, annual dollar limits will be prohibited on essential health benefits. Interim final regulations published on June 28, 2010 implement the prohibition on lifetime dollar limits and set forth restrictions on annual dollar limits that apply prior to 2014 (75 FR 37188). Under the annual limits interim final regulations, annual limits on the dollar value of essential health benefits generally cannot be lower than: $750,000 for plan or policy years beginning on or after September 23, 2010 but before September 23, 2011; $1.25 million for plan or policy years beginning on or after September 23, 2011 but before September 23, 2012; and $2 million for plan or policy years beginning on or after September 23, 2012 but before January 1, 2014.

Many issuers that have provided student health insurance coverage customarily imposed low annual limits on the student health insurance coverage, and this practice apparently continued after the enactment of the Affordable Care Act and publication of the interim final rules because of the view by issuers that many of these policies were not subject to the Affordable Care Act because they were short-term limited duration insurance. As noted above, for plan years beginning after September 23, 2011, the minimum annual limit is $1.25 million, a level which, if applied immediately to student health insurance coverage, is so much higher than many current limits that it could serve to “prohibit an institution of higher education * * * from offering a student health insurance plan.” In order to avoid this and be consistent with section 1560(c) of the Affordable Care Act, HHS is proposing to provide a transition period for issuers of student health insurance coverage to comply with the annual limits requirements in 45 CFR 147.126. The transition period would be for policy years beginning before September 23, 2012. For that period, however, students and their dependents should have protection from being subjected to extremely low annual dollar limits on essential health benefits. Accordingly, student health insurance coverage would be required to have an annual limit of no less than $100,000 on essential benefits for policy years beginning on or after January 1, 2012 but before September 23, 2012. HHS believes that issuers of student health insurance coverage should be able to fully comply with the annual dollar limits requirements of not lower than $2 million for policy years beginning on or after September 23, 2012 without incurring undue financial hardship or without disruption to the student health insurance market given the period of time provided under this proposed rule for them to comply with the requirements. HHS is requesting comments on the applicability of the annual dollar limits requirements to student health insurance coverage, and the proposed phase-in of the annual dollar limits requirements.

Lastly, under the proposed regulation, the prohibition on lifetime limits under section 2711 of the PHS Act would be applicable to student health insurance coverage.

Section 2713 of the PHS Act requires that a group health plan and a health insurance issuer offering group or individual health insurance coverage provide benefits for specified recommended preventive services and prohibits the imposition of cost-sharing requirements with respect to such services. Interim final regulations published on July 19, 2010, implemented rules for preventive health services (75 FR 41726). Concerns have been raised as to whether certain administrative fees charged to all students to help cover the cost of student health clinic operations and care delivery (separate from the purchase of student health insurance coverage by a subset of students) constitutes “cost-sharing,” the imposition of which could violate the no cost-sharing requirements for certain preventive services. Such student health fees can be charged by the college or university to all students on a quarterly, semester or annual basis, regardless of whether a student utilizes a designated clinic or enrolls in student health insurance coverage. This type of student health fee is different from premiums and cost-sharing for group health plans and health insurance coverage in that it is charged to all students enrolled at the college or university, regardless of whether the student has student health insurance coverage. As a type of individual health insurance coverage, student health insurance coverage must comply with the requirements for preventive health services under section 2713 of the PHS Act, pertaining to the prohibition of cost-sharing for preventive services. However, because of the unique nature of the student health fee, the proposed rule would provide a definition of a student administrative health fee and clarify that such fees are not cost-sharing requirements under PHS Act section 2713.

HHS is requesting comments on the applicability of section 2713 to student health insurance coverage and the interaction of the college health fee and the no cost-sharing requirement for preventive services.

Section 2719A of the PHS Act provides that if a group health plan, or a health insurance issuer offering group or individual health insurance coverage, requires or provides for designation by a participant, beneficiary, or enrollee of a participating primary care provider, then the plan or issuer must permit each participant, beneficiary, or enrollee to designate any participating primary care provider who is available to accept the participant, beneficiary, or enrollee. Interim final regulations published on June 28, 2010 implemented rules for choice of health care professional (75 FR 37188). Concerns have been expressed by stakeholders representing colleges and universities that the provisions relating to choice of health care professional could be disruptive to the college health service system since it is a unique system which, although it is generally not indemnity coverage, is not structured like a traditional HMO or a PPO.

The proposed rule does not provide that the requirements of section 2719A would be inapplicable to student health insurance plans, but HHS is requesting comments on the applicability of the requirements for choice of health care professional to student health insurance coverage and the interaction with the college health service system.

HHS does not address in this proposed rule the applicability of PHS Act section 2702 (guaranteed issue) and section 2703 (guaranteed renewability) to student health insurance coverage, both of which are effective in the individual health insurance market for policy years beginning on or after January 1, 2014. HHS believes, however, that the general policy rationales supporting the inapplicability of PHS Act sections 2741 and 2742 to student health insurance coverage in this proposed regulation also would apply with respect to PHS Act sections 2702 and 2703. In addition, HHS could address in future regulations whether it would be appropriate to specify that these provisions would be inapplicable to student health insurance coverage provisions through the authority under section 1560(c) of the Affordable Care Act. Since student health insurance coverage is designed to be available and renewable only to students of colleges and universities (and their dependents), it is likely that requiring student health insurance coverage to be available and renewable to individuals other than these students could prevent the design and development of student health insurance coverage.

HHS requests comments on the applicability of PHS Act sections 2702 and 2703 and other 2014 Affordable Care Act provisions to student health insurance coverage as defined in this proposed regulation. Comments are also requested on the interaction of student health insurance coverage with the health insurance Exchanges that will be created in States beginning in 2014.

Some issuers have raised concerns regarding the application of the medical loss ratio (MLR) provisions of section 2718 of the Affordable Care Act to student health insurance plans. This provision requires that, in general, at least 80% (in the small group and individual markets) or 85% (in the large group market) of the premiums that issuers receive for insurance policies be spent on reimbursement for clinical services to enrollees (such as hospital and physician payments) and activities that improve health care quality. The issuers assert that the administrative cost structure of student health insurance plans is higher than the more typical individual policies, in part due to the customized nature of each college or university's plan, making compliance with the 80% MLR standard potentially prohibitive. For example, issuers stated that, compared to other health insurance coverage, student health insurance coverage may hold open enrollment periods more frequently (for example, each academic term rather than annually), require unique product designs (for example, for foreign students), and require more manual claims processing than average due to the billing and accounting practices of college health clinics. There is no public data regarding the actual expense structure of student health plans or regarding their MLRs.

HHS issued an interim final rule (IFR) (75 FR 74864, December 1, 2010, as modified by the Correction of IFR (75 FR 82277, December 30, 2010)), implementing section 2718, based on the recommendations in the MLR model regulation of the National Association of Insurance Commissioners (NAIC). In that regulation, issuers of policies that have a total annual limit of $250,000 or less (so-called “mini-med” plans) and issuers of expatriate plans are required to report their mini-med and expatriate plan experience separately from their other policies for one year, and, for that one-year period, are provided an accommodation in the formula for determining the MLR for those lines of business. This was done because mini-med plans and expatriate plans were believed to have unique characteristics or expense structures and, as here, there is limited data regarding the administrative cost structures of these policies. This accommodation was made in order to allow the collection and analysis of data to determine if they have special circumstances that warrant special methodologies. The MLR IFR does not provide a special methodology for student health insurance plans.

To the extent that the application of the MLR requirements set forth in 45 CFR part 158 to student health plans would “prohibit an institution of higher education * * * from offering a student health insurance plan,” as section 1560(c) of the Affordable Care Act provides, then student health insurance plans may have unique administrative expenses that warrant developing methodologies that take such expenses into account in calculating the measure of activities to be reported as part of the MLR requirements. HHS is requesting comments on PHS Act section 2718 as it relates to student health insurance coverage.

This proposed regulation would require a health insurance issuer to disclose to the student and any dependents in the insurance policy or certificate and any other written materials (for example, enrollment materials) that the policy being issued does not meet all of the requirements under the Affordable Care Act. HHS believes that the communication of this information is necessary in order for students and any dependents to understand the value and quality of the coverage that is being offered to them, and not have expectations that all of the requirements under the Affordable Care Act will apply. The notice would be required to provide a brief description of the requirements of the Affordable Care Act that do not apply to student health insurance coverage, and it would be required to be prominently displayed in clear, conspicuous 14-point bold type.

HHS is requesting comments on the notice requirement for student health insurance coverage.

This proposed regulation would provide model language that can be used by health insurance issuers to satisfy the notice requirement. This proposed regulation would provide that substantially similar language can also be used to satisfy the requirement. HHS is requesting comments on the model language.

As indicated earlier, many States do not regulate student health insurance as individual health insurance coverage but as a type of association blanket coverage or as non-employer group coverage. However, States have been aware, ever since the enactment of HIPAA in 1996, that health insurance coverage that is not sold in connection with employment is individual market coverage for purposes of the Federal statute (unless there is a specific exception such as for short-term limited duration insurance). The preemption provisions of section 2762 of the PHS Act (added by HIPAA and implemented in 45 CFR 148.210(b)) apply so that the PHS Act requirements are not to be “construed to prevent a State from establishing, implementing, or continuing in effect standards and requirements unless such standards and requirements prevent the application or requirement” of the PHS Act. The HIPAA conference report indicates that this is intended to be the “narrowest” preemption of State laws. ( See House Conf. Rep. No. 104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018).

In applying this preemption standard, a State is free to continue to regulate student health insurance coverage as association coverage or as a form of group health insurance provided that doing so does not prevent the application of any of the applicable requirements and protections of the individual market provisions of the PHS Act and Affordable Care Act. If any State law or requirement prevents the application of a Federal standard, then that particular State law or requirement would be preempted. HHS invites comments on the interaction of specific State laws or requirements with the Federal standards regarding student health insurance coverage.

Conforming amendments were made to the definitions in 45 CFR 144.103. First, this proposed regulation would clarify that the definitions apply to part 147 unless otherwise noted. Second, a definition of student health insurance coverage is added, which cross references the definition of student health insurance coverage in 45 CFR 147.145(a).

The applicability date of the proposed regulation would be for policy years beginning on or after January 1, 2012. This is because the Department recognizes that health insurance issuers will need time to incorporate the requirements of individual health insurance coverage under the PHS Act that would apply to student health insurance coverage. HHS believes it would be appropriate to provide time for transitioning student health insurance coverage to comply with the PHS Act and Affordable Care Act to the extent necessary in order to maintain the offering of student health insurance coverage to students. To require that issuers of student health insurance coverage comply with the applicable provisions of the PHS Act and Affordable Care Act upon the effective date of the regulation would be disruptive to the student health insurance market.

Under the Paperwork Reduction Act of 1995, 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. This proposed rule contains information collection requirements (ICRs) that are subject to review by OMB. A description of these provisions is given in the following paragraphs with an estimate of the annual burden, summarized in Table 1. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

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

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

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

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

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

Proposed 45 CFR 147.145(d)(1) would require issuers of student health insurance coverage to provide notice to enrollees that the policy does not meet all of the requirements of the Affordable Care Act. In addition, the proposed regulation would require that the disclosure must be prominently displayed in clear, conspicuous 14-point bold type. Additionally, the proposed regulation provides model language that issuers of student health insurance coverage can use in order to be in compliance with the notice requirement. The model language is provided in proposed 45 CFR 147.145(d)(2).

In order to provide the notices, the issuers of student health insurance coverage will need to review the model language or draft its own language, incorporate the plan or issuer's name into the model notice (or a notice that is similar to the model), and print the notice in any plan or policy documents that are regularly sent to student enrollees.

This burden estimate encompasses the entire notice process which includes assembly of the notice. It is estimated that approximately 75 student health insurance coverage issuers will have to provide such notice. 12 We estimate that it will take approximately 2 minutes per student enrollee or approximately 1,000 hours per student health insurance issuer to prepare and mail the notices to students. Including hourly wage and printing and mailing costs, we estimate the annual cost burden will be $40,840 per affected issuer for a total cost of $3,063,000. In some cases, actual burden per notice (for example, postage) may be lower because we expect that many issuers will insert the model language into the existing plan materials that they were already intending to send to enrollees each year.

The rule is being issued on behalf of Mr. Paul Williams, Chairman, Armed Services Board of Contract Appeals. It proposes to amend DFARS Appendix A, Armed Services Board of Contract Appeals, Part 2—Rules, to update thresholds related to requirements for contractor claims and to update information as follows:

○ The Preface, section II(a), is amended to update the Board's address and telephone number.

○ In Rule 1, subsections (b) and (c) implement section 2351(b) of Public Law 103-355, 108 Stat. 3322 (1994). Section 2351(b) amended 41 U.S.C. 605(c) to increase, from $50,000 to $100,000, the threshold relating to certification, decision, and notification requirements for contractor claims.

○ Rule 12.1, subsection (a), and Rule 12.3, subsection (b), implement section 2351(d) of Public Law 103-355, 108 Stat. 3322 (1994). Section 2351(d) amended 41 U.S.C. 608(a) to increase, from $10,000 to $50,000, the threshold for applicability of small claims procedures for disposition of appeals.

○ Rule 12.1, subsection (a) implements section 857 of Public Law 109-364, 120 Stat. 2349 (2006). Section 857 amended 41 U.S.C. 608(a) to insert after “$50,000 or less” the following language: “or, in the case of a small business concern (as defined in the Small Business Act and regulations under that Act), $150,000 or less.”

○ Rule 12.1, subsection (b), implements section 2351(c) of Public Law 103-355, 108 Stat. 3322 (1994). Section 2351(c) amended 41 U.S.C. 607(f) to increase, from $50,000 to $100,000, the threshold for applicability of accelerated procedures for disposition of appeals.

○ Rule 28, subsection (b), implements section 4322(b)(7) of Public Law 104-106, 110 Stat. 677 (1996). Section 4322(b)(7) amended 41 U.S.C. 612 to update statutory references relating to payment of claims. Rule 28, subsection (b), also contains changes for consistency with the judgment fund certification process specified in the Treasury Financial Manual, Financial Management Service, Department of the U.S. Treasury.

○ Minor changes were made throughout the Rules to ensure uniformity and to correct typographical errors.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

DoD does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule implements current statutory provisions relating to the submission and processing of contract appeals, primarily adjusting current dollar limits affecting the processing of contract appeals to keep pace with inflation. Therefore, the adjustment of thresholds just maintains the status quo. Accordingly, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties on the expected impact of this rule on small entities.

The rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act, 44 U.S.C. 3501, et seq.

Therefore, 48 CFR chapter 2 is amended as follows:

NMFS manages the U.S. groundfish fisheries of the exclusive economic zone off Alaska under the Fishery Management Plan for Groundfish of the Gulf of Alaska and the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area. With Federal oversight, the State of Alaska manages the commercial King crab and Tanner crab fisheries under the Fishery Management Plan for Bering Sea/Aleutian Islands King and Tanner Crabs. The fishery management plans (FMPs) were prepared by the North Pacific Fishery Management Council and approved by the Secretary of Commerce under authority of the Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. 1801 et seq. (Magnuson-Stevens Act). The FMPs are implemented by regulations at 50 CFR parts 679 and 680.

Management of the Pacific halibut fisheries in and off Alaska is governed by an international agreement, the “Convention Between the United States of America and Canada for the Preservation of the Halibut Fishery of the Northern Pacific Ocean and Bering Sea,” (Convention) which was signed in Ottawa, Canada, on March 2, 1953, and was amended by the “Protocol Amending the Convention,” signed in Washington, DC on March 29, 1979. The Convention is implemented in the United States by the Northern Pacific Halibut Act of 1982.

The Interagency Electronic Reporting System (IERS) with its data entry component, eLandings, was implemented with a final rule published March 2, 2005 (70 FR 10174), for the Crab Rationalization (CR) Program. The use of eLandings was implemented for groundfish fisheries and the fixed gear halibut and sablefish Individual Fishing Quota (IFQ) Program through a final rule published December 15, 2008 (73 FR 76136). The objective of IERS and eLandings is to remove reporting duplications and simplify recordkeeping and reporting. IERS is an Internet recordkeeping system which is currently in use by State of Alaska Department of Fish and Game (ADF&G), NMFS, and International Pacific Halibut Commission (IPHC) to collect commercial harvest and production data for groundfish, Pacific halibut, and CR crab in both State waters and in the EEZ, all with one reporting system.

The data obtained from eLandings are used during boardings and site visits by NOAA Fisheries Office for Law Enforcement (OLE) and United States Coast Guard to ensure conservation of groundfish, compliance to regulations, and reporting accuracy by industry. The data are used by the Council and NMFS Alaska Fisheries Science Center for biological and economic evaluation of management measures and stock assessment. The data are used by the NMFS Observer Program for vessel position coordinates and observer coverage information. The data are used by the NMFS Inseason Branch to monitor and manage the fisheries through openings and closures of fishery species and Federal reporting area, as well as through reallocation of quotas. Timely and accurate data entry improves in-season fishery management, resulting in fewer disruptions of the fleets and processors.

The December 15, 2008, final rule is known as the “IERS final rule” and will be referred to as such in the preamble to this proposed rule. The software, eLandings, replaced the Shoreside Processor Electronic Logbook Report for electronically entering groundfish catch information and replaced the paper shoreside processor daily cumulative production logbook (DCPL). Through eLandings, NMFS also created a landing report, discard and disposition report, and production report, thus removing the need for the paper weekly production reports, daily production reports, and aggregated mothership fish tickets.

The eLandings program allows shoreside processors, stationary floating processors (SFPs), catcher/processors, and motherships to enter, edit, and summarize landings, production, discard, and disposition data on a Web-based system. After data are entered through the Web interface, catch and production records are available in near real-time for managers Once data are entered and submitted, users receive a printed production report, fish ticket, and/or an IFQ report as a receipt.

The ability to view and edit data over the Web is a benefit to processing firms that may be based, for example, in Seattle, Washington, with operating plants in multiple locations in and/or off Alaska. Data can be entered at a processing plant in Dutch Harbor, for example, and be instantaneously available for review by employees of the plant's parent company in its Seattle office.

The operators of catcher/processors (C/Ps) and motherships are required to use a combination of eLandings and a catcher/processor DCPL or mothership DCPL, as appropriate, to record fishery information. NMFS has identified minor regulatory changes to improve and update the methods and procedures of eLandings, and to improve the flexibility and efficiency of recordkeeping and reporting requirements for the fishery programs of NMFS' Alaska Region. The amendments to the eLandings procedures and corresponding regulations are described in this proposed rule.

With these amendments, NMFS intends to remove inconsistencies in the current regulations describing eLandings and to provide new language for recent developments. These changes would reduce the risk of confusion or misinterpretation of regulatory intent among industry participants and other interested parties, and would increase the efficiency of the eLandings process. The overall impact on the fishing industry would be increased operational flexibility. No economic impacts are expected from the revisions in this proposed rule. The fishing industry currently uses eLandings to comply with recordkeeping and reporting requirements, so the time and knowledge required to complete an eLandings data entry is already established. The entities upon which these changes are imposed are those registered to use eLandings.

This proposed action would create no new costs for NMFS because the costs of implementation were previously incurred under existing data collection programs. Administrative costs for NMFS would be reduced by streamlining the administrative process with no appreciable loss of necessary data or management capabilities. Automated checks in the submission system would monitor data entry for completeness.

Monitoring compliance with the CR Program requires precise information about the port and/or region in which raw crab are received from the harvesting vessel. Current reporting requirements for SFPs do not require use of either actual port codes or geographic locations for landings. Consequently, NMFS cannot fully monitor compliance with regional delivery requirements or fully evaluate effectiveness of these provisions in protecting communities for which these requirements were developed. A minor reporting change would provide NMFS with all three of the pieces of information it requires from SFP operations: Operation type, the actual port (if any), and the region relevant to each crab fishery for which a landing is reported. The change would provide NMFS with more precise information of the port location of landings. Benefits of the change would include enhanced information about port use during crab fisheries and stronger regulatory enforcement.

The regional delivery requirements for CR Program quota share are intended to preserve the historic geographic distribution of landings in the fisheries. Communities in the Pribilof Islands and on Adak and Atka Islands are the primary beneficiaries of this regionalization provision. There are three regions; the North Region is the Bering Sea subarea north of 56°20′ N. latitude; the South Region is any area in Alaska, not in the “North Region;” and the West Region is west of 174° W. longitude and is only applicable for western Aleutian Islands golden king crab.

Although this rule would require processors to supply additional location information, regional location choices would be easily selected from pop-up menus. Under this proposed rule, for SFP operation types only (Table 14c to part 679), eLandings would “auto-fill” the port data field with the current SFP information obtained from current RCR permits and eLandings processor registrations ( see § 679.5(e)(2)). For RCRs reporting crab landings as SFPs in port, the at-sea operation type would be entered automatically; the RCR would select the port code from a menu provided by the software. For RCRs reporting crab landings as SFPs that are not in a port, the at-sea operation type would be entered automatically and the RCR would select the regional landing code from a menu provided by the software. The revisions at § 679.5(e)(4) and § 679.5(e)(8)(iii) would provide NMFS with all three pieces of information it requires from SFP operations: Operation type, the actual port (if any), and the region relevant to each crab fishery for which a landing is reported.

This proposed rule would revise regulations related to time and time limits, as follows:

♢ Time limits for recording information in the paper catcher vessel daily fishing logbooks (DFLs) and mothership and C/P DCPLs.

♢ Time limits to submit landing reports and production reports to NMFS through eLandings.

♢ Time limits to submit electronic logbook (ELB) information through eLandings.

♢ Revise information to be recorded or submitted “by noon of the following day” to read “by midnight of the following day”.

♢ Revise “noon” and “midnight” in Alaska local time (A.l.t.) to read 1200 hours, A.l.t., and 2400 hours, A.l.t., respectively.

♢ Change the deadline for a vessel operator's signature entry in the DFLs, DCPLs, and ELBs from noon to midnight.

♢ Revise the deadline for printing a copy of the ELB logsheet from noon to midnight each day.

♢ Revise the submittal time limit for the delivery “landed scale weight” entry on SSP or SFP eLandings landing reports.

♢ Revise the time limit to record scale weights in the DCPL for C/Ps participating in the Central Gulf of Alaska Rockfish Program.

♢ Revise deadlines for recording scale weights and CDQ group number in the C/P trawl DCPL.

♢ Remove the requirement to record the date of landing in the SSP or SFP landing report.

♢ Clarify extension of time limits for eLandings production reports from SSPs or SFPs not taking deliveries over the weekend.

♢ Correct reporting time limit tables for DCPLs and eLandings.

Regulations governing these recording and submittal time limits may be found in the following paragraphs of 50 CFR part 679:

NMFS received a public comment on the IERS supplemental proposed rule (75 FR 55368; September 24, 2008) regarding the time limit to submit an eLandings C/P production report. The commenter wrote that the proposed deadline of noon each day to record the previous day's discard and disposition information did not provide enough time for the vessel operator to obtain from the observer information needed to submit the report, especially for catch brought onboard the vessel immediately before midnight. He requested that NMFS change the deadline to increase the time allowed to record the previous day's discard and disposition information. NMFS agreed with this comment. In the IERS final rule, NMFS revised regulations at § 679.5(c)(3) and (c)(4) for trawl, longline, or pot C/Ps to change the data entry time limit for discard and disposition information in the eLandings production report from noon to midnight each day to record the previous day's information.

Regulations that require information to be recorded or submitted “by noon of the following day” would be revised to read “by midnight of the following day” in the DFL and DCPL. Operators of C/Ps or motherships would be required to submit their eLandings production reports by midnight each day to record the previous day's production information. For example, a C/P would submit a production report by midnight on November 2 that detailed production occurring on November 1.

After publication of the IERS final rule, industry representatives asked NMFS to change time limits for other data submitted by C/Ps and motherships. Because NMFS agrees that the deadlines for recording and submitting information should be consistent in 50 CFR part 679, NMFS proposes to revise the data entry deadlines for DFLs, DCPLs, ELBs, and eLandings. For additional time reference consistency, NMFS would revise references to “noon” and “midnight” in § 679.5 to the corresponding 24-hour clock reference in Alaska local time (A.l.t.). Noon would be changed to 1200 hours, A.l.t., and midnight would be changed to 2400 hours, A.l.t.

The deadlines for recording information in the ELBs should be consistent with the deadlines for recording the same information in the DFLs and DCPLs. Therefore, NMFS would revise the ELB regulations at § 679.5(f)(2)(iii)(B) to refer to the paragraphs in § 679.5(c) that contain the time limits for recording information in the DFLs and DCPLs.

In addition, NMFS would change the deadline for a vessel operator's signature in the DFLs, DCPLs, and ELBs from noon to midnight because the logsheets should not be signed until all required information has been recorded.

The deadline for printing a copy of the ELB logsheet also would be revised to midnight each day so that the logsheets are not printed before all the information required to be recorded for the day has been recorded.

NMFS would revise the submittal time limits for SSP or SFP eLandings landing reports. All the information in the landing report currently is required to be submitted by noon of the day following completion of the delivery. This rule would revise the submittal time limit for the “landed scale weight” of the delivery. Submission of estimated weights could be submitted by the manager if the actual landed scale weight is not available by noon of the day following completion of the delivery. NMFS would allow the SSP or SFP manager to submit a revised landing report with the actual landed scale weights by noon of the third day after completion of the delivery. NMFS would provide this additional time because it sometimes takes longer than a day to weigh all catch from a delivery.

In addition to revisions to the submittal time limits, the proposed rule would remove the requirement at § 679.5(e)(5)(i)(B)( 1 ) to record the date of landing in the SSP or SFP landing report, because this information already is required in the landing report under § 679.5(e)(5)(i)(A)( 5 ). The proposed rule also would remove the requirement at § 679.5(e)(5)(i)(A)( 11 ) to submit the “total estimated hail weight” on the landing report. The “hail weight” is an estimate of the total weight of the entire catch in a delivery without regard to species. The landing report requires the submission of either estimated or landed scale weight for each species. An estimate of the total weight of all catch in the delivery is not needed on the landing report and is not currently included in the eLandings data entry screens for the landing report, so the requirement would be removed from § 679.5.

NMFS would revise the time limits for recording information about the scale weight of a haul and the Community Development Quota (CDQ) group number in the C/P trawl and mothership DCPLs in response to a comment received on the proposed rule for Amendment 91 to the Fishery Management Plan (75 FR 14016; March 23, 2010). Five of the six CDQ groups and the At-Sea Processors Association commented that current regulations require operators of trawl C/Ps to record the scale weight for the haul and the CDQ group number within 2 hours after completion of gear retrieval. However, they noted that it is unlikely that all the catch from a haul will be weighed within 2 hours of gear retrieval. Catch is often held in tanks for several hours after the gear is retrieved before weighing and processing. In addition, vessel operators and CDQ group representatives need haul weight and catch composition before deciding whether to assign the haul to the CDQ group or to the non-CDQ fisheries. They recommended that the time limit for recording scale weight and CDQ group number should be changed to within 2 hours after the completion of weighing of the catch from the haul. That period would provide adequate time for the crew to safely move the fish across the scale and reduce pressure on the observer, who must simultaneously monitor the haul and complete other sampling duties. NMFS agrees with this recommendation because the time for completion of weighing of the catch from each haul is available from two sources. The observer records the time of completion of catch weighing of each haul. In addition, the daily printout from the at-sea scales shows date and time.

BSAI Amendment 91 was published August 30, 2010 (75 FR 53026). That final rule applied to participants in the pollock ( Theragra chalcogramma ) fishery in the Bering Sea subarea of the BSAI. NMFS changed the time limit in the Amendment 91 final rule for operators of catcher/processors, catcher vessels delivering to motherships, and motherships to record the CDQ group number in the paper or electronic logbooks to within 2 hours after completion of weighing on the scale all catch in the haul.

This current rule proposes to revise and standardize reporting time limits for recording scale weights of each haul and other required information; these requirements affect more vessels than those regulated under Amendment 91. This rule proposes to revise the time limit for recording scale weight and CDQ group number to within 2 hours after the completion of weighing of the catch from the haul.

In addition, NMFS would revise the time limit to record scale weights in the DCPL within 24 hours after completion of gear retrieval for C/Ps participating in the Central Gulf of Alaska Rockfish Program. That time limit was implemented in the IERS final rule to provide sufficient time for the vessel operator to weigh all the catch in a haul before recording the weight in the DCPL. However, NMFS believes that requiring recording of scale weights within 2 hours after the completion of weighing all catch in the haul would provide sufficient recording time for all C/Ps, including those participating in the Rockfish Program.

The submittal time limits for eLandings production reports that allow SSPs or SFPs not taking deliveries over a weekend to submit production reports by noon the following Monday would be clarified to state that this allowance applies to submitting production reports from Saturday or Sunday only.

The reporting time limit tables for C/P and mothership DCPLs and eLandings in §§ 679.5(c)(3)(ii)(B), 679.5(c)(4)(ii)(B), and 679.5(c)(6)(ii) would be revised to remove the “X” in the column titled “Submit via eLandings” for information that is not required to be submitted via eLandings. This includes the “X” in the rows of the tables associated with information required to be submitted within 2 hours, “all other required information,” and signatures on the logsheets.

NMFS proposes several revisions and edits to the regulations at 50 CFR part 679 that would correct miscellaneous errors, standardize text, reorganize eLandings text, remove outdated text, and correct cross references. Most of these proposed measures are technical in nature.

Recording data in a vessel logbook is procedurally different from submitting data through eLandings. This rule would standardize certain terms used to describe data entry of groundfish catch in vessel logbooks and eLandings to make the regulations easier for the public to understand. Motherships and C/Ps are required to use a combination of DCPL and eLandings to record fisheries information. SSPs and SFPs are required to use eLandings to record fisheries information. In regulatory text, NMFS would use the word “record” or “recording” when referring to entering data in a DFL or DCPL, because data are written or entered into the logbook by hand. NMFS would use the term “submit” for entering information into eLandings, because eLandings records and transmits the data to NMFS. For the combined activity of recording in the DCPL and submitting data through eLandings, NMFS would use the term “reporting.” Revisions to these terms would be made in numerous locations in §§ 679.5(c) and 679.5(e).

This rule would standardize the use of the terms “landings” and “landing” in numerous locations in § 679.5 because these two terms are inconsistently used in current regulations. This rule would revise regulatory text to use the correct form of the term. When used as a noun, the term “landings” would be used. When used as an adjective, the term “landing” would be used.

To resolve an inadvertent omission in the eLandings regulations, proposed paragraph 679.5(e)(8)(iii)(D) would be added. NMFS would require that the RCR record the number of crew aboard a vessel and observer information on the crab landings report. This information was not included in the IERS final rule, but these are not new data elements. This information is currently required in the DCPLs and on the eLandings data entry screen.

This rule would revise the heading for § 679.5(e)(1)(iii) from “Reporting of IFQ crab, IFQ halibut, and IFQ sablefish” to “IFQ manual landing report” because it would improve the description of that section.

This proposed rule would revise § 679.5(e)(2)(ii) regarding the eLandings User Agreement Form. This rule would remove detailed NMFS mail, fax, and delivery addresses and replace them with one paragraph stating that the form must be submitted in accordance with instructions on the form.

Paragraph 679.5(e)(7)(iii)(C) for a Registered Buyer landing report would be revised to simplify the text by removing “a completed IFQ landing report” and replacing it with “an IFQ landing report” and by removing “as described in this paragraph (e)(7)” and replacing it with “containing the information described in this paragraph (e)(7).”

Paragraphs 679.5(e)(11) and (12) would be revised so that both paragraphs refer to the documents using the document names used elsewhere in § 679.5 and in the same order in both paragraphs. These paragraphs describe the printing, retention, and inspection of landing reports, landing receipts, and production reports. The documents, which must be printed, are the same documents that must be retained and made available for inspection. Revising the regulations to use consistent terms in the same order would enhance compliance with the requirements by making them easier to understand.

This proposed rule would reinstate regulations about the location where scale inspections would occur under § 679.28(b)(2)(v). This paragraph would state that scales inspections by inspectors paid by NMFS will be conducted on vessels tied up at docks in Kodiak, Alaska; Dutch Harbor, Alaska; and in the Puget Sound area of Washington State. This paragraph was inadvertently removed from § 679.28 in the IERS final rule.

This rule would modify several regulatory tables. These modifications do not change the regulatory requirements or impose costs on entities.

Table 1a to part 679 describes delivery condition and product codes. This action would add a footnote to define “delivery condition.” “Delivery condition” would be defined as the condition of the fish or shellfish at the point it is weighed and recorded on the ADF&G fish ticket.

Table 1b to part 679 describes discard and disposition codes. This rule would revise Table 1b by adding a footnote to define “disposition code.” Disposition would be the intended use or disposal of the fish or shellfish.

This action would revise or add several species codes.

Tables 2a and 2d to part 679 currently describe species codes for FMP species and species codes for non-FMP species, respectively. Bering flounder, Hippoglossoides robustus, (species code 116) would be moved from Table 2d to Table 2a to part 679 because this species is managed under a Fishery Management Plan as part of the “other flatfish” group and therefore qualifies as an “FMP groundfish.”

This action would provide separate species codes for Arrowtooth flounder, Atheresthes stomias, and for Kamchatka founder, Atheresthes evermanni. Arrowtooth flounder/Kamchatka flounder have been combined under the species code 121, because they are very similar in appearance, difficult to identify to species, and few Kamchatka flounder have been harvested until recent years. Separate species codes are necessary to allow proper reporting of the catch of these two species. As increasing amounts of Kamchatka flounder are harvested, observers and industry members are increasing efforts to identify and report the separate species. Arrowtooth flounder and Kamchatka flounder have been combined in Table 2a to part 679 under the species code 121. This action would add a new species code, 117, for Kamchatka flounder to Table 2a to part 679 and would revise the definition of species code 121 in this table to mean only Arrowtooth flounder.

Table 3 to part 679 describes product recovery rates (PRRs) for groundfish species and conversion rates for Pacific halibut. Standard (or average) PRRs are used to calculate round weight equivalents for each groundfish species and product combination from a given product. The proposed rule would make these minor revisions to Table 3 to part 679:

• Remove obsolete product codes, 2 and 42.

• Replace species codes for skates and sharks with dashes (- - -), because there are several individual species codes for these species and these PRRs apply to all of them.

Table 10 to part 679 describes Gulf of Alaska (GOA) retainable percentages. This action would make minor revisions to two footnotes. In Footnote 4, this rule would correct the spelling for the Latin term for Northern rockfish to read S. polyspinis. In Footnote 6, this rule would remove text that duplicates requirements described at § 679.20(j). Duplicative text within regulations can promote confusion if differences occur, and a table is not a suitable location for regulatory requirements. In Footnote 10, which lists aggregated forage species, the entry for Pacific herring (family Clupeidae) would be removed as it was incorrectly placed there. Pacific herring is not a forage fish.

Table 21 to part 679 describes the eligible GOA communities, the halibut IFQ regulatory use areas, and the community governing body that recommends the community quota entity. This rule would correct the spelling for the name of one of the communities listed in Table 21. The spelling of Port Lyons would be corrected to read Port Lions, for both the eligible community and the governing body.

Pursuant to section 305(d) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the provisions of the Magnuson-Stevens Act and other applicable law, subject to further consideration after public comment.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities.

NMFS does not expect this action to have a significant economic impact on a substantial number of small entities. None of the six components of this action are expected to impose more than de minimus costs on directly regulated entities of any size. The RIR prepared for this action provides detailed analyses of each component. Details of each of the components are presented in the preamble. In summary:

Component 1 revises regulations to standardize language between logbooks and the eLandings system. While this component should make regulations easier for the public to use, it does not add to or subtract from the regulations applying to regulated entities, and creates no costs for them.

Component 2 standardizes data entry time limits for recording information in the DFL, the DCPL, eLandings, and electronic logbooks. Standardizing data entry and submission time limits would not impose any additional costs on industry and may reduce costs by reducing the number of different daily deadlines that apply to entry of data into the logbooks.

Component 3 standardizes the use of the terms “landings” and “landing.” This action makes regulations easier to understand, does not restrict the behavior of the public, and imposes no costs on the public.

Component 4 requires the RCR to record in eLandings the region in which the SFP is located at the time of crab delivery. This information would assist NMFS in monitoring regional delivery requirements incorporated into the CR Program to protect rural areas. The costs of complying with this regulation would be de minimus.

Component 5 revises regulations to correct minor problems. These changes would clarify the text of the regulations, reinstate regulations that were incorrectly removed, and ensure the regulations accurately describe eLandings procedures. NMFS now requires processors to use eLandings instead of DCPLs to enter much of the required data. In one instance, eLandings regulations would be modified to add information on crew and observers that has long been required in the DCPL regulations, was included in the eLandings software, but was inadvertently omitted from the eLandings regulations. Crew information is required in the longline or pot gear DCPL at § 679.5(c)(3)(v)(F), and observer information is required at § 679.5(c)(3)(v)(I). Crew information is required in the trawl gear DCPL at § 679.5(c)(4)(v)(G), and observer information is required at 679.5(c)(4)(v)(J). Crew information is required in the mothership DCPL at § 679.5(c)(6)(v)(E), and observer information is required at 679.5(c)(6)(v)(I). Because the crew and observer information is already required in the DCPLs, requiring data entry of the same information into eLandings instead of the DCPLs would not require increased burden to provide the information. This component imposes no increased cost for entities, and may in fact reduce the burden.

Component 6 modifies regulatory tables to clarify them. These changes do not add to or subtract from the regulatory requirements imposed on entities; nor do they impose costs on entities.

This action directly regulates entities that are required to use the eLandings system for reporting landings. These entities are diverse, and include groundfish C/Ps, groundfish motherships, groundfish SFPs, groundfish SSPs, CDQ groups, CR Program RCRs, CR Program C/Ps, and halibut and sablefish IFQ Program Registered Buyers. In 2009, there were 205 registered eLandings users.

NMFS estimates that this action may directly regulate the following numbers of potential small entity eLandings users:

• Groundfish C/Ps. In 2008, 86 vessels were registered as groundfish C/Ps. Only 11 of these had gross revenues less than or equal to $4 million. An examination of these indicated that five had affiliations that would make them large entities. Thus, there were perhaps six small C/Ps. This number may actually be smaller if there are relevant affiliations between these and other firms of which NMFS is unaware.

• Groundfish motherships. In recent years, there have been three active groundfish motherships. These are considered to be large entities, due to their affiliations with American Fisheries Act cooperatives.

• Groundfish SFPs: In 2008, nine firms apparently operated permitted SFPs. Based on a staff review of the firms registered as primary owners, NMFS estimates that five of these may have been small entities. This number may actually be smaller, if there are relevant affiliations between these and other firms of which NMFS is unaware.

• Groundfish SSPs: In 2008, an estimated 80 separate firms held Federal processor permits allowing them to process groundfish. Based on NMFS' review of a list of the permitted processors, 72 of these are estimated to be small entities. The number of small entities may actually be smaller, if there are relevant affiliations between these and other firms of which NMFS is unaware.

• CDQ groups: There are six CDQ groups. These are non-profit organizations and are considered small entities for the purpose of a regulatory flexibility analysis.

• CR Program RCRs: NMFS Alaska Region Restricted Access Management (RAM) records show 20 separate firms with RCR permits for the 2008-2009 season. Based on NMFS' examination of the list, NMFS estimates that 13 of these are small entities. The number of small entities may actually be smaller if there are relevant affiliations between these and other firms of which NMFS is unaware.

• CR Program C/Ps: NMFS has identified five crab C/Ps in 2009. NMFS cannot report the numbers of large and small C/Ps, because of confidentiality regulations (50 CFR 600.405).

• Halibut and sablefish IFQ Program: Registered Buyers must report electronically, but they may use eLandings or another, older NMFS electronic reporting system to report halibut and sablefish IFQ data. In 2009, NMFS identified 462 distinct Registered Buyers. Most of these 462 Registered Buyers are small entities. In 2010, NMFS identified 157 distinct Registered Buyers registered to use eLandings.

Given the criteria governing the use of the word “substantial,” these estimates of small entity numbers indicate that this action could directly regulate substantial numbers of small entities.

Pursuant to NMFS' guidelines, the two criteria recommended by the Regulatory Flexibility Act to determine the significant economic impact of the action are disproportionality and profitability. The proposed action would not place a substantial number of small entities at a disadvantage relative to large entities. NMFS expects any costs to be de minimus. This action would create opportunities for some small entities to reduce their costs slightly and, thus, perhaps slightly increase their profitability. The benefit is probably proportionally greater for small entities than for large ones, but still small overall.

NMFS' guidelines for economic review of regulatory actions explain that the term “substantial number” has no specific statutory definition and the criterion does not lend itself to objective standards applicable across all regulatory actions. Rather, “substantial number” depends upon the context of the action, the problem to be addressed, and the structure of the regulated industry. The Small Business Administration defines “substantial” within the context of “more than just a few” or de minimus criteria.

The estimates of the numbers of small entities that may be affected were derived from several sources. Gross revenue estimates for individual C/Ps were provided by the Alaska Fisheries Science Center. Lists of SFPs, SSPs, CDQ groups, CR Program RCRs, and IFQ Registered Buyers were obtained from lists maintained by the NMFS Alaska Region's RAM Program. The list of CR Program C/Ps was obtained from the Alaska Region's catch accounting system. Almost all data reflect 2008 conditions as reported by NMFS sources in October 2009. Identification of large entities—when gross revenues were unavailable or when determination was based on other standards—was based on NMFS Alaska Region staff knowledge of the relevant firms.

The economic analysis contained in the RIR further describes the potential economic impacts of this action. Based upon that analysis, NMFS finds that the proposed action would not have a significant economic impact on the small entities participating in these fisheries. As a result, an initial regulatory flexibility analysis is not required, and none has been prepared.

All the items included in this action would create no new costs for NMFS, because the costs of eLandings implementation have already been incurred. In fact, in addition to having more options, the industry may have fewer costs due to increased efficiency. Administrative costs for NMFS would also be reduced by streamlining the administrative process, with no appreciable loss of necessary data or management capabilities.

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

This rule contains collection-of-information requirements subject to the Paperwork Reduction Act (PRA) and which have been approved by the Office of Management and Budget (OMB). Public reporting burden estimates per response for these requirements are listed by OMB control number.

Public reporting burden is estimated to average per response: 18 minutes for catcher vessel trawl gear DFL; 28 minutes for catcher vessel longline or pot gear DFL; 31 minutes for mothership DCPL; 41 minutes for catcher/processor longline or pot gear DCPL; and 30 minutes for catcher/processor trawl gear DCPL or ELB.

Public reporting burden is estimated to average per response: 15 minutes for eLandings application processor registration; 35 minutes for eLandings landing report; and 20 minutes for catcher/processor or mothership eLandings production report.

Public reporting burden is estimated to average per response: 6 minutes for inspection request for an at-sea scale.

Public reporting estimates include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection-of-information.

Send comments on these or any other aspects of the collection-of-information to NMFS Alaska Region at the ADDRESSES above, and e-mail to OIRA_Submission@omb.eop.gov, or fax to 202-395-7285.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection-of-information subject to the requirements of the PRA, unless that collection-of-information displays a currently valid OMB Control Number.

For the reasons set out in the preamble, 50 CFR part 679 is proposed to be amended as follows: