Comments Invited

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2013-0527; Directorate Identifier 2013-CE-014-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued AD No. 2013-0084, dated April 5, 2013 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

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

Piaggio Aero Industries S.p.A. has issued Mandatory Service Bulletin No. 80-0345, and Appendix A, both dated September 20, 2012, which includes Messier-Dowty Service Bulletin No. P180-32-32, dated September 10, 2012. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

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

We consider this AD interim action. We are requiring inspection(s) of the left and right MLG LHF with a report to the manufacturer of the results if cracks are found. We will work with the type certificate holder to evaluate the report results to determine repetitive inspection intervals and subsequent terminating action. Based on this evaluation, we may initiate further rulemaking action to address the unsafe condition identified in this AD.

We estimate that this proposed AD will affect 109 products of U.S. registry. We also estimate that it would take about 11 total work-hours, which is 2 work-hours for the initial visual inspection; 2 work-hours for the detailed visual inspection; and 7 work-hours for the fluorescent penetrant inspection, per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour.

Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $101,915, or $935 per product.

In addition, we estimate that any necessary follow-on actions would take about 7 work-hours and require parts costing $21,540 to replace a left-hand LHF, for a cost of $22,153, and $20,662 to replace a right-hand LHF, for a cost of $21,257.

According to the manufacturer, some of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate

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

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

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

For the reasons discussed above, I certify this proposed regulation:

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

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

(3) Will not affect intrastate aviation in Alaska, and

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

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

On April 30, 2013, the Federal Trade Commission (“FTC” or “Commission”) issued a Notice of Proposed Rulemaking (“Textile NRPM”) announcing proposed amendments to its Rules and Regulations (“Textile Rules”) under the Textile Fiber Products Identification Act (“Textile Act”). Among other things, the proposed changes would alter the form for continuing guaranties filed with the Commission and require annual renewal of such guaranties. Both the Textile and the Fur Products Labeling Act (“Fur Act”) provide exemptions from liability for retailers and other recipients of covered products based on certifications that the transferred products are not misbranded, falsely invoiced, or falsely advertised.

On September 17, 2012, the Commission proposed amendments to the Fur Rules to update the Fur Products Name Guide, provide greater labeling flexibility, and incorporate provisions of the recently enacted Truth in Fur Labeling Act. Since that proposal, the Commission proposed altering the textile guaranty provisions in the Textile NPRM. In addition, one commenter has urged changes to the fur guaranty provisions. The Commission, therefore, now proposes additional guaranty amendments for the Fur Rules to provide notice and an opportunity to comment on this proposal while the Commission considers comments received in response to the changes it proposed in 2012. Doing so will allow the Commission to incorporate any guaranty final amendments in conjunction with any other final amendments, and thereby assist businesses in understanding their compliance obligations under the revised rules.

This document provides information on guaranties, explains the proposed amendments, solicits additional comment, provides analyses under the Regulatory Flexibility Act and the Paperwork Reduction Act, and sets forth the Commission's proposed amendments.

The Fur Act, Textile Act, and Wool Products Labeling Act (“Wool Act”) 1 each shield from liability entities that obtain guaranties from third parties. These guaranties attest that the transferred products are not mislabeled or falsely advertised or invoiced. There are two types of guaranties. Separate guaranties designate particular products.2 Continuing guaranties, which guarantors file with the Commission, apply to any textile, wool, or fur product transferred from a particular guarantor.3 Each act further provides that guaranty protections are available only for entities that receive a guaranty in “good faith” from a “person residing in the United States.” 4

Entities providing continuing guaranties for fur products must file those guaranties with the Commission using the form specified in the Textile Rules at 16 CFR 303.38(b).5 Continuing guaranties remain in effect until revoked.6

In response to the Commission's September 17, 2012, proposed amendments (“Fur NPRM”),7 the National Retail Federation (“NRF”) submitted a comment recommending revisions to the guaranty provisions. Specifically, NRF supported changes allowing entities to provide separate guaranties through electronic means, removing the penalty of perjury language from the continuing guaranty form, making the guaranty format “suggested” rather than “prescribed,” and adding a provision to extend guaranty protections to retailers that import goods directly and, therefore, cannot obtain a guaranty.8 NRF recommended making the same changes to the Textile Rules.9

On April 30, 2013, the Commission issued the Textile NPRM, which announced several proposed amendments to the rules governing guaranties.10 As detailed in that NPRM, the Commission proposed eliminating the penalty of perjury language in the required form for continuing guaranties and proposed requiring that guarantors renew continuing guaranties annually.

In light of the proposed amendments to the Textile Rules, as well as NRF's comment, the Commission proposes conforming amendments to the Fur Rules. As explained below, the Commission declines to propose amendments specifically providing for electronic transmission of separate guaranties, and proposes that guarantors renew continuing guaranties annually. In addition, the Commission does not propose amendments regarding NRF's concerns about guaranty protections for retailers directly importing products because a recently announced Enforcement Policy Statement provides the requested protections.11

NRF urged the Commission to publish amendments explicitly providing for the electronic transmission of separate guaranties. Currently, section 301.47 provides a “suggested form” for such guaranties, which includes the guarantor's “signature and address.” 12 Section 301.47 does not provide guidance regarding what qualifies as a signature. NRF urged amending the Rules to specify that an order for apparel between a purchasing business' “electronic agent,” as that term is defined by the Uniform Commercial Code (“UCC”), and a guarantor will constitute a separate guaranty if the order is explicitly subject to the goods' conformance with the Fur Act and Rules.13 Notably, the “electronic agent” definition proposed by NRF provides that electronic acceptance can occur “with or without review or action by an individual.” 14 NRF also urged that the Fur Rules “clearly stat[e] how companies [can] comply with the regulations though electronic means,” including the use of electronic signatures.15

The Commission declines to propose amendments specifically addressing electronic transmittal of guaranties. The Fur Rules do not prohibit or discourage the electronic communication of guaranties, nor do they require any particular mode of communication. Instead, the Rules focus on the guaranties' substance. Furthermore, incorporating “electronic agent” as defined by the UCC could undermine compliance with the Rules. For example, incorporating the definition would permit guaranteeing of goods by “a computer program or an electronic or other automated means.” 16 This would allow guaranties without any individual monitoring to ensure that the guaranteed products meet the legal requirements for guaranties. Indeed, it is unclear how a buyer receiving a guaranty in such circumstances could do so in good faith.

Moreover, NRF has not presented any evidence showing that the current Fur Rules impose significant costs on businesses or that making its recommended change would decrease those costs. The Rules appear to provide sufficient flexibility for compliance without providing specifically for “electronic guaranties.” Although the Commission is not proposing NRF's recommended amendment, the Commission seeks comment on this issue.

The Commission proposes two amendments, however, to make clear that electronically transmitted guaranties are not prohibited. First, the Commission proposes, as it did in the Textile NPRM, changing the term “invoice” in section 301.47 and the phrase “invoice or other paper” in section 301.48(b) to “invoice or other document.” The proposed change would make clear that “invoice” includes documents that are electronically stored or transmitted. Second, the Commission proposes amending section 301.47 to include, as the Textile Rules currently do, a statement that the guarantor's printed name and address will meet the signature component for separate guaranties.17 Specifically, the Commission proposes adding the following language to section 301.47: “Note: The printed name and address on the invoice or other document will suffice to meet the signature and address requirements.” This additional language should make clear that entities can sign guaranties electronically, consistent with the Electronic Signatures in Global and National Commerce Act.18

Section 301.48 requires that guarantors use the prescribed form in 16 CFR 303.38(b) for a continuing guaranty filed with the Commission. The current form requires the guarantor to sign the guaranty under penalty of perjury. NRF recommended making the guaranty form optional and eliminating the penalty-of-perjury requirement.19 Consistent with the Textile NPRM, the Commission declines to propose the first amendment, but proposes to require that guarantors certify guaranties rather than sign them under penalty of perjury.

NRF recommended making the continuing guaranty form optional to allow businesses to use electronic processes without the obligation to revert to paper documents and signatures.20 The Commission declines to propose this change because the prescribed form benefits businesses without imposing significant burdens. Requiring a uniform document enables the Commission to review, process, and return the guaranties expeditiously. Reviewing documents in varying formats to determine whether they qualify as guaranties would add needless delay.

In addition, requiring a specific form does not appear to inhibit electronic processes or cause any other burden. NRF did not present any evidence showing that businesses cannot adapt the prescribed form to electronic communications, including electronic signatures. Businesses may send the prescribed form electronically, and the Fur Rules allow electronic signatures.21 Moreover, the form is only one page and consists of a two-sentence certification and a signature block stating the date, location, and name of the business making the guaranty, as well as the name, title, and signature of the person signing the guaranty.

NRF also recommended that the Commission eliminate the penalty of perjury language for continuing guaranties. It argued that requiring sworn statements inappropriately introduces the criminal elements of perjury into private contracts and that the person providing the attestation cannot attest to the truth of labels and invoices in the future.22

Although swearing under penalty of perjury in private agreements is not unusual,23 swearing to future events is problematic and may present enforcement issues. Specifically, many people who intend to comply with the Rules may be understandably reluctant to swear to a future event. Accordingly, in its Textile NPRM, the Commission proposed eliminating the penalty of perjury language. Because the Fur Rules incorporate the same form, the proposed Textile amendments would eliminate the penalty of perjury requirement for fur guaranties as well.

Continuing guaranties, however, must provide sufficient indicia of reliability to permit buyers to rely on them on an ongoing basis. The perjury language addressed this concern. Therefore, instead of requiring guarantors to swear under penalty of perjury, the Textile NPRM proposed requiring guarantors to acknowledge that providing a false guaranty is unlawful; to certify that they will actively monitor and ensure compliance with the Fur, Textile, and Wool Acts and Rules; and to renew guaranties annually.

As explained in the Textile NPRM, the new form should increase a guaranty's reliability by focusing the guarantor's attention on, and underscoring, its obligation to comply. However, the new form would not impose additional burdens on guarantors because they would simply be acknowledging the Fur Act's prohibition against false guaranties 24 and certifying to the monitoring that they already must engage in to ensure that they do not provide false guaranties. In addition, the required statements would benefit recipients of guaranties by bolstering the basis of their good-faith reliance on the guaranties.

Additionally, requiring guarantors to renew guaranties annually provides needed assurance of reliability in the absence of a sworn statement. Annual renewal should encourage guarantors to take regular steps to ensure that they remain in compliance with the Fur Act and Rules and thereby increase the guaranties' reliability. Moreover, these benefits should outweigh the minimal burden of completing the one-page form. As discussed above, the form consists of only a two-sentence certification and a signature block stating the date, location, and name of the business making the guaranty, as well as the certifier's name and title. Thus, businesses should not incur significant costs in completing and submitting the form annually. Although certifying also would require guarantors to confirm that their business remains in compliance, this would not impose any burden beyond what the Fur Rules currently require. Specifically, entities that have filed continuing guaranties must continuously monitor their shipments to ensure that they are complying with the Fur Act and Rules.25

Unlike changes to the continuing guaranty form, requiring annual renewal necessitates an amendment to the Fur Rules. Thus, the Commission proposes amending section 301.48(a)(2) to provide that continuing guaranties are valid for a year or until revoked.

The Fur Act authorizes fur guaranties from persons “residing in the United States by whom the fur product or fur guaranteed was manufactured or from whom it was received.” 26 Thus, businesses that buy from manufacturers or suppliers that have no representative in the United States cannot obtain a guaranty.

Because many retailers now regularly rely on global supply chains, NRF recommended that the Commission adopt an alternative guaranty for such businesses. Specifically, NRF recommended that the Commission allow such businesses to rely on compliance representations from foreign manufacturers or suppliers when: (1) The businesses do not embellish or misrepresent the representations; (2) the fur products are not sold as private label products; and (3) the businesses have no reason to know that the marketing or sale of the products would violate the Act or Rules.27

As discussed in the Textile NPRM, NRF's argument has merit. Changes in the clothing industry resulting in increased imports mean that more businesses cannot obtain guaranties. In light of the increased reliance on global supply chains for fur products, the Commission finds it in the public interest to provide protections for retailers that: (1) Cannot legally obtain a guaranty under the Fur Act; (2) do not embellish or misrepresent claims provided by the manufacturer related to the relevant Act or Rules; and (3) do not market the products as private label products; unless the retailers knew or should have known that the marketing or sale of the products would violate the Act or Rules. Such protections provide greater consistency for retailers regardless of whether they directly import products or use third-party domestic importers. Accordingly, on January 3, 2013, the Commission announced an enforcement policy statement providing that it will not bring enforcement actions against retailers that meet the above criteria.28 This statement addresses the concerns raised by NRF.29

You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before July 23, 2013. Write “Fur Rules Review, 16 CFR Part 301, Project No. P074201” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to remove individuals' home contact information from comments before placing them on the Commission Web site.

Because your comment will be made public, you are solely responsible for making sure that your comment doesn't include any sensitive personal information, such as anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, don't include any “[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential,” as provided in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.

If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).30 Your comment will be kept confidential only if the FTC General Counsel, in his or her sole discretion, grants your request in accordance with the law and the public interest.

Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https://ftcpublic.commentworks.com/ftc/furproductslabelingnprm, by following the instruction on the web-based form. If this Notice appears at http://www.regulations.gov, you also may file a comment through that Web site.

If you file your comment on paper, write “Fur Rules Review, 16 CFR Part 301, Project No. P074201” on your comment and on the envelope, and mail or deliver it to the following address: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex O), 600 Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your paper comment to the Commission by courier or overnight service.

Visit the Commission Web site at http://www.ftc.gov to read this NPRM and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before July 23, 2013. You can find more information, including routine uses permitted by the Privacy Act, in the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

The Commission invites members of the public to comment on any issues or concerns they believe are relevant or appropriate to the Commission's consideration of proposed amendments to the Fur Rules. The Commission requests that comments provide factual data upon which they are based. In addition to the issues raised above, the Commission solicits public comment on the costs and benefits to industry members and consumers of each of the proposals as well as the specific questions identified below. These questions are designed to assist the public and should not be construed as a limitation on the issues on which public comment may be submitted.

1. Do the Fur Rules and the proposed changes to the guaranty provisions in sections 301.47 and 301.48 provide sufficient flexibility for compliance using electronic transmittal of guaranties? If so, why and how? If not, why not?

2. Should the Commission amend section 301.47 by changing the term “invoice” to “invoice or other document” and removing “the date of shipment of the merchandise”? If so, why? If not, why not?

3. Should the Commission revise the proposed certification requirement for continuing guaranties provided by suppliers pursuant to section 301.48? If so, why and how? If not, why not?

4. Should the Rules require those providing a continuing guaranty pursuant to section 301.48 to renew the certification annually or at some other interval? If so, why? If not, why not? To what extent would requiring guarantors to renew certifications annually increase costs? What benefits would requiring annual renewal provide?

5. What evidence supports your answers?

Written communications and summaries or transcripts of oral communications respecting the merits of this proceeding from any outside party to any Commissioner or Commissioner's advisor will be placed on the public record.31

The Regulatory Flexibility Act (“RFA”) 32 requires that the Commission conduct an analysis of the anticipated economic impact of the proposed amendments on small entities. The purpose of a regulatory flexibility analysis is to ensure that an agency considers the impacts on small entities and examines regulatory alternatives that could achieve the regulatory purpose while minimizing burdens on small entities. Section 605 of the RFA 33 provides that such an analysis is not required if the agency head certifies that the regulatory action will not have a significant economic impact on a substantial number of small entities.

The Commission believes that the proposed amendments would not have a significant economic impact upon small entities, although it may affect a substantial number of small businesses. The proposed amendments clarify and update the guaranty provisions of sections 301.47 and 301.48 by, among other things, replacing the requirement that suppliers that provide a guaranty sign under penalty of perjury with a certification requirement for continuing guaranties that must be renewed every year.

In the Commission's view, the proposed amendments should not have a significant or disproportionate impact on the costs of small entities that manufacture or import fur products. Therefore, based on available information, the Commission certifies that amending the Rules as proposed will not have a significant economic impact on a substantial number of small businesses.

Although the Commission certifies under the RFA that the proposed amendments would not, if promulgated, have a significant impact on a substantial number of small entities, the Commission has determined, nonetheless, that it is appropriate to publish an Initial Regulatory Flexibility Analysis to inquire into the impact of the proposed amendments on small entities. Therefore, the Commission has prepared the following analysis:

In response to public comments, the Commission proposes amending the Rules to update its fur guaranty provisions.

The objective of the proposed amendments is to clarify and update the Rules' guaranty provisions by, among other things, replacing the requirement that suppliers that provide a guaranty sign under penalty of perjury with an annually renewed certification. The Fur Act authorizes the Commission to implement its requirements through the issuance of rules.

The proposed amendments would clarify and update the Fur Rules without imposing significant new burdens or additional costs. The proposal that continuing guaranty certifications expire after one year would likely impose minimal additional costs on businesses that choose to provide a guaranty. Providing a new continuing guaranty each year would likely entail minimal costs.

The Rules apply to various segments of the fur industry, including manufacturers and importers of furs and fur products. Under the Small Business Size Standards issued by the Small Business Administration, apparel manufacturers qualify as small businesses if they have 500 or fewer employees. Importers qualify as small businesses if they have 100 or fewer employees. The Commission's staff has estimated that approximately 1,290 fur product manufacturers and importers are covered by the Rules' disclosure requirements.34 A substantial number of these entities likely qualify as small businesses. The Commission estimates that the proposed amendments will not have a significant impact on small businesses because they do not impose any significant new obligations on them. The Commission seeks comment and information with regard to the estimated number or nature of small business entities for which the proposed amendments would have a significant impact.

As explained earlier in this document, the proposed amendments would clarify and update the Rules' guaranty provisions by, among other things, replacing the requirement that suppliers that provide a guaranty sign under penalty of perjury with a certification requirement that must be renewed annually. The small entities potentially covered by these proposed amendments will include all such entities already subject to the existing Rules. The professional skills necessary for compliance with the Rules as modified by the proposed amendments would include clerical personnel to submit guaranties and keep records. The Commission invites comment and information on these issues.

The Commission has not identified any other federal statutes, rules, or policies that would duplicate, overlap, or conflict with the proposed amendments. The Commission invites comment and information on this issue.

The Commission has not proposed any specific small entity exemption or other significant alternatives, as the proposed amendments simply clarify and update the Rules' guaranty provisions by, among other things, replacing the requirement that suppliers that provide a guaranty sign under penalty of perjury with a certification requirement. Under these limited circumstances, the Commission does not believe a special exemption for small entities or significant compliance alternatives are necessary or appropriate to minimize the compliance burden, if any, on small entities while achieving the intended purposes of the proposed amendments. As discussed above, adopting NRF's proposed changes is unnecessary to allow electronic compliance with the Fur Rules.

Nonetheless, the Commission seeks comment and information on the need, if any, for alternative compliance methods that would reduce the economic impact of the Fur Rules on small entities. If the comments filed in response to this document identify small entities that would be affected by the proposed amendments, as well as alternative methods of compliance that would reduce the economic impact of the proposed amendments on such entities, the Commission will consider the feasibility of such alternatives and determine whether they should be incorporated into the final Rules.

The Rules contain various “collection of information” (e.g., disclosure and recordkeeping) requirements for which the Commission has obtained OMB clearance under the Paperwork Reduction Act (“PRA”).35 As discussed above, the Commission proposes amending sections 301.47 and 301.48 to clarify and update the Rules' guaranty provisions by, among other things, replacing the requirement that suppliers provide a guaranty signed under penalty of perjury with a certification requirement for continuing guaranties that must be renewed every year.

The proposed amendments to the guaranties would impose no additional collection of information requirements. The proposal that continuing guaranty certifications expire after one year would likely impose minimal additional costs on businesses that choose to provide a guaranty.

For the reasons discussed in the preamble, the Federal Trade Commission proposes to amend title 16, Chapter I, Subchapter C, of the Code of Federal Regulations, part 301, as follows:

I. Regulatory Authorities

The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Medical Device Amendments of 1976 (the 1976 amendments) (Public Law 94-295), the Safe Medical Devices Act of 1990 (Pub. L. 101-629), and the Food and Drug Administration Modernization Act of 1997 (Pub. L. 105-115), the Medical Device User Fee and Modernization Act of 2002 (Pub. L. 107-250), the Medical Devices Technical Corrections Act (Pub. L. 108-214), and the Food and Drug Administration Amendments Act of 2007 (Pub. L. 110-85), establish a comprehensive system for the regulation of medical devices intended for human use. Section 513 of the FD&C Act (21 U.S.C. 360c) established three categories (classes) of devices, reflecting the regulatory controls needed to provide reasonable assurance of their safety and effectiveness. The three categories of devices are class I (general controls), class II (special controls), and class III (premarket approval).

Under the FD&C Act, FDA clears or approves the three classes of medical devices for commercial distribution in the United States through three regulatory processes: Premarket approval (PMA), product development protocol, and premarket notification (a premarket notification is generally referred to as a “510(k)” after the section of the FD&C Act where the requirement is found). The purpose of a premarket notification is to demonstrate that the new device is substantially equivalent to a legally marketed predicate device. Under section 513(i) of the FD&C Act, a device is substantially equivalent if it has the same intended use and technological characteristics as a predicate device, or has different technological characteristics but data demonstrate that the new device is as safe and effective as the predicate device and does not raise different issues of safety or effectiveness.

FDA determines whether new devices are substantially equivalent to previously offered devices by means of premarket notification procedures in section 510(k) of the FD&C Act (21 U.S.C. 360(k)) and part 807 of the regulations (21 CFR part 807). Section 510(k) of the FD&C Act and the implementing regulations in part 807, subpart E, require a person who intends to market a medical device to submit a premarket notification submission to FDA before proposing to begin the introduction, or delivery for introduction into interstate commerce, for commercial distribution of a device intended for human use.

In accordance with section 513(f)(1) of the FD&C Act, devices that were not in commercial distribution before May 28, 1976, the date of enactment of the 1976 amendments, generally referred to as postamendment devices, are classified automatically by statute into class III without any FDA rulemaking process. These devices remain in class III and require premarket approval, unless FDA classifies the device into class I or class II by issuing an order finding the device to be substantially equivalent, in accordance with section 513(i) of the FD&C Act, to a predicate device that does not require premarket approval or the device is reclassified into class I or class II. The Agency determines whether new devices are substantially equivalent to predicate devices by means of premarket notification procedures in section 510(k) of the FD&C Act and part 807 of FDA's regulations.

Section 513(f)(2) of the FD&C Act establishes procedures for “de novo” risk-based review and classification of postamendment devices automatically classified into class III by section 513(f)(1). Under these procedures, any person whose device is automatically classified into class III by section 513(f)(1) of the FD&C Act may seek reclassification into class I or II, either after receipt of an order finding the device to be not substantially equivalent, in accordance with section 513(i) of the FD&C Act, to a predicate device that does not require premarket approval, or at any time after determining there is no legally marketed device upon which to base a determination of substantial equivalence. In addition, under section 513(f)(3) of the FD&C Act, FDA may initiate, or the manufacturer or importer of a device may petition for, the reclassification of a device classified into class III under section 513(f)(1).

A nucleic acid-based in vitro diagnostic device for the detection of M. tuberculosis complex in respiratory specimens is a postamendment device classified into class III under section 513(f)(1) of the FD&C Act in 1995. Consistent with the FD&C Act and FDA's regulations in 21 CFR 860.130(a), FDA believes that these devices should be reclassified from class III into class II because there is sufficient information from FDA's accumulated experience with these devices to establish special controls that can provide reasonable assurance of the device's safety and effectiveness.

Nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens are qualitative nucleic acid-based in vitro diagnostic devices intended to detect M. tuberculosis complex nucleic acids extracted from human respiratory specimens. These devices are non-multiplexed and intended to be used as an aid in the diagnosis of pulmonary tuberculosis when used in conjunction with clinical and other laboratory findings. These devices do not include devices intended to detect the presence of organism mutations associated with drug resistance. Respiratory specimens may include sputum (induced or expectorated), bronchial specimens (e.g., bronchoalveolar lavage or bronchial aspirate), or tracheal aspirates.

At an FDA/Centers for Disease Control (CDC)/National Institute of Allergy and Infectious Diseases public workshop entitled “Advancing the Development of Diagnostic Tests and Biomarkers for Tuberculosis”, held in Silver Spring, MD, on June 7 and 8, 2010, the class III designation for nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens was raised as a barrier to advancing M. tuberculosis diagnostics (Ref. 1). Based on discussion at the public workshop, FDA agreed to consider this issue further and subsequently convened a meeting of the Microbiology Devices Panel of the Medical Devices Advisory Committee on June 29, 2011. Panel members were asked to discuss if sufficient risk mitigation was possible for FDA to initiate the reclassification process from class III to class II devices for this intended use through the drafting of a special controls guidance. All panel members expressed the opinion that sufficient data and information exist such that the risks of false positive and false negative results can be mitigated to allow a special controls guideline to be created that would support reclassification from class III to class II for nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens (Ref. 2). All outside speakers at the open public hearing session during the meeting also spoke in favor of reclassification.

FDA is proposing that nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens be reclassified from class III to class II. FDA believes that class II with special controls (guideline document) would provide reasonable assurance of the safety and effectiveness of the device. Section 510(m) of the FD&C Act provides that a class II device may be exempt from the premarket notification requirements under section 510(k), if the Agency determines that premarket notification is not necessary to provide reasonable assurance of the safety and effectiveness of the device. For this device, FDA believes that premarket notification is necessary to provide reasonable assurance of safety and effectiveness and, therefore, does not intend to exempt the device from the premarket notification requirements.

After considering the information discussed by the Microbiology Devices Panel during the June 29, 2011, meeting, the published literature, and the Medical Device Reporting system reports, FDA believes the following risks are associated with nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens: (1) False positive test results may lead to incorrect treatment of the individual with possible adverse effects. The patient may be subjected to unnecessary isolation and/or other human contact limitations. Unnecessary contact investigations may also occur; (2) False negative test results could result in disease progression and the risk of transmitting disease to others; and (3) Biosafety risks to health care workers handling specimens and control materials with the possibility of transmission of tuberculosis infection to health care workers.

FDA, consistent with the opinions expressed by the Microbiology Devices Panel of the Medical Devices Advisory Committee, believes that the establishment of special controls, in addition to general controls, provides reasonable assurance of the safety and effectiveness of nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens.

1. The safety and effectiveness of nucleic acid-based systems for M. tuberculosis complex have become well-established since approval of the first device for this use in 1995.

2. The risk of false positive test results can be mitigated by specifying minimum performance standards in the special controls guideline and including information regarding patient populations appropriate for testing in the device labeling. Additional risk mitigation strategies include the indication for use that the device be used as an aid to the diagnosis of pulmonary tuberculosis in conjunction with other clinical and laboratory findings. The device also should be accurately described and have labeling that addresses issues specific to these types of devices.

3. The risk of false negative test results can be mitigated by specifying minimum performance standards for test sensitivity in the special controls guideline and ensuring that different patient populations are included in clinical trials. Additional risk mitigation strategies include the indication for use that the device be used as an aid to the diagnosis of pulmonary tuberculosis in conjunction with other clinical and laboratory findings. The device also should be accurately described and have appropriate labeling that addresses issues specific to these types of devices.

4. Biosafety risks to health care workers handling specimens and control materials with the possibility of transmission of tuberculosis infection to health care workers could be addressed similarly to existing devices of this type that we have already approved. It is believed there are no additional biosafety risks introduced by reclassification from class III to class II. The need for appropriate biosafety measures can be addressed in labeling recommendations that are included in the special controls guideline and by adherence to recognized laboratory biosafety procedures.

Based on FDA's review of published literature, the information presented by outside speakers invited to the Microbiology Devices meeting, and the opinions of panel members expressed at that meeting, FDA believes that there is a reasonable basis to determine that nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens can provide the significant benefit of rapid detection of infection in patients with suspected tuberculosis as compared to traditional means of diagnosis. For patients with acid-fast smear negative tuberculosis, nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens are currently the only laboratory tests available for rapid detection of active pulmonary tuberculosis. Rapid identification of patients with active tuberculosis may have significant benefits to the infected patient by earlier diagnosis and management as well as potentially significant effects on the public health by limiting disease spread.

Nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens have been approved for marketing by FDA for over 15 years. There is substantial scientific and medical information available regarding the nature, complexity, and problems associated with these devices. Revised public health recommendations for use, published by CDC on January 16, 2009, recommended the use of nucleic acid amplification testing in conjunction with acid-fast microscopy and culture and specifically states that “Nucleic acid amplification testing should be performed on at least one respiratory specimen from each patient with signs and symptoms of pulmonary [tuberculosis] for whom a diagnosis of [tuberculosis] is being considered but has not yet been established, and for whom the test result would alter case management or [tuberculosis] control activities” (Ref 3).

FDA believes that the measures set forth in the special controls guideline entitled “Nucleic Acid-Based In Vitro Diagnostic Devices for the Detection of Mycobacterium tuberculosis Complex in Respiratory Specimens” are necessary, in addition to general controls, to mitigate the risks to health described in section VI in this document. As seen in table 1, the special controls set forth in the guideline for this device address each of the identified risks.

If this proposed rule is finalized, nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens will be reclassified into class II. As discussed in this document, the reclassification will be codified in 21 CFR 866.3372. Firms submitting a 510(k) for a nucleic acid-based in vitro diagnostic devices for the detection of M. tuberculosis complex in respiratory specimens will need either to: (1) Comply with the particular mitigation measures set forth in the special controls guideline or (2) use alternative mitigation measures, but demonstrate to the Agency's satisfaction that alternative measures identified by the firm will provide at least an equivalent assurance of safety and effectiveness. Adherence to the criteria in the guideline, when finalized, in addition to the general controls, is necessary to provide a reasonable assurance of the safety and effectiveness of the devices.

Persons interested in obtaining a copy of the draft guideline may do so by using the Internet. A search capability for all Center for Devices and Radiological Health guidelines and guidance documents is available at http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/default.htm. The guideline is also available at http://www.regulations.gov.

To receive “Class II Special Controls Guideline: Nucleic Acid-Based In Vitro Diagnostic Devices for the Detection of Mycobacterium tuberculosis Complex in Respiratory Specimens,” you may either send an email request to dsmica@fda.hhs.gov to receive an electronic copy of the document or send a fax request to 301-847-8149 to receive a hard copy. Please use the document number 1788 to identify the guideline you are requesting.

The Agency has determined under 21 CFR 25.34(b) that this proposed reclassification 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.

This proposed rule refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR 56.115 have been approved under OMB control number 0910-0130; the collections of information in 21 CFR part 807, subpart E have been approved under OMB control number 0910-0120; the collections of information in 21 CFR part 812 have been approved under OMB control number 0910-0078; the collections of information in 21 CFR part 820 have been approved under OMB control number 0910-0073; and the collections of information in 21 CFR part 801 and 21 CFR 809.10 have been approved under OMB control number 0910-0485.

This special controls guideline reflects changes the Agency is making to clarify its position on the binding nature of special controls. The changes include referring to the document as a “guideline,” as that term is used in section 513(a) of the FD&C Act, which the Secretary has developed and disseminated to provide a reasonable assurance of safety and effectiveness for class II devices, and not a “guidance,” as that term is used in 21 CFR 10.115. The guideline clarifies that firms will need either to: (1) Comply with the particular mitigation measures set forth in the special controls guideline or (2) use alternative mitigation measures, but demonstrate to the Agency's satisfaction that those alternative measures identified by the firm will provide at least an equivalent assurance of safety and effectiveness. Finally, the guideline uses mandatory language to emphasize that firms must comply with special controls to legally market their class II devices. These revisions do not represent a change in FDA's position about the binding effect of special controls, but rather are intended to address any possible confusion or misunderstanding.

FDA proposes that any final regulation based on this proposed rule become effective 30 days after its date of publication in the Federal Register.

FDA has examined the impacts of the proposed rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct 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 Executive Order 12866.

The Regulatory Flexibility Act requires Agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the proposed reclassification would relieve manufacturers of premarket approval requirements of section 515 of the FD&C Act (21 U.S.C. 360e) it would not create new burdens. Thus, the Agency proposes to certify that the proposed rule, if finalized, 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 $139 million, using the most current (2011) Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this proposed rule, if finalized, to result in any 1-year expenditure that would meet or exceed this amount.

Our estimate of benefits annualized over 20 years is $11.85 million at a 3 percent discount rate and $7.83 million at a 7 percent discount rate. The change in pre- and post-marketing requirements between a 510(k) and a PMA lead to benefits in the form of reduced submission costs, review-related activities, and inspections. Another unquantifiable benefit from the rule is that a decrease in entry could lead to further product innovation. FDA is unable to quantify the costs that could arise if there is a change in risk which could lead to adverse events, recalls, warning letters, or unlisted letters.

The full discussion of economic impacts is available in docket FDA-2013-N-0544 at http://www.regulations.gov, and at http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm (Ref. 4).

Interested persons may submit either electronic comments regarding this document or the associated Special Controls guideline to http://www.regulations.gov or written comments to the Division of Dockets Management (see ADDRESSES). It is only necessary to send one set of comments. Identify comments with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday, and will be posted to the docket at http://www.regulations.gov.

The following references have been placed on display in the Dockets Management Branch (see ADDRESSES) and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday, and are available electronically at http://www.regulations.gov. (FDA has verified all the Web site addresses in this reference section, but we are not responsible for any subsequent changes to the Web sites after this document publishes in the Federal Register.)

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 part 866 is amended as follows:

The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Medical Device Amendments of 1976 (the 1976 amendments) (Pub. L. 94-295), the Safe Medical Devices Act of 1990 (Pub. L. 101-629), the Food and Drug Administration Modernization Act of 1997 (FDAMA) (Pub. L. 105-115), the Medical Device User Fee and Modernization Act of 2002 (Pub. L. 107-250), the Medical Devices Technical Corrections Act (Pub. L. 108-214), the Food and Drug Administration Amendments Act of 2007 (Pub. L. 110-85), and the Food and Drug Administration Safety and Innovation Act (FDASIA) (Pub. L. 112-144), establish a comprehensive system for the regulation of medical devices intended for human use. Section 513 of the FD&C Act (21 U.S.C. 360c) established three categories (classes) of devices, reflecting the regulatory controls needed to provide reasonable assurance of their safety and effectiveness. The three categories of devices are class I (general controls), class II (special controls), and class III (premarket approval).

Under section 513 of the FD&C Act, devices that were in commercial distribution before the enactment of the 1976 amendments, May 28, 1976 (generally referred to as preamendments devices), are classified after FDA has: (1) Received a recommendation from a device classification panel (an FDA advisory committee); (2) published the panel's recommendation for comment, along with a proposed regulation classifying the device; and (3) published a final regulation classifying the device. FDA has classified most preamendments devices under these procedures.

Devices that were not in commercial distribution prior to May 28, 1976 (generally referred to as postamendments devices), are automatically classified by section 513(f) of the FD&C Act into class III without any FDA rulemaking process. Those devices remain in class III and require premarket approval unless, and until, the device is reclassified into class I or II or FDA issues an order finding the device to be substantially equivalent, in accordance with section 513(i) of the FD&C Act, to a predicate device that does not require premarket approval. The Agency determines whether new devices are substantially equivalent to predicate devices by means of premarket notification procedures in section 510(k) of the FD&C Act (21 U.S.C. 360(k)) and part 807 (21 CFR part 807).

A preamendments device that has been classified into class III and devices found substantially equivalent by means of premarket notification (510(k)) procedures to such a preamendments device or to a device within that type may be marketed without submission of a PMA until FDA issues a final order under section 515(b) of the FD&C Act (21 U.S.C. 360e(b)) requiring premarket approval or until the device is subsequently reclassified into class I or class II.

Although, under the FD&C Act, the manufacturer of class III preamendments device may respond to the call for PMAs by filing a PMA or a notice of completion of a PDP, in practice, the option of filing a notice of completion of a PDP has not been used. For simplicity, although corresponding requirements for PDPs remain available to manufacturers in response to a final order under section 515(b) of the FD&C Act, this document will refer only to the requirement for the filing and receiving approval of a PMA.

On July 9, 2012, FDASIA was enacted. Section 608(a) of FDASIA amended section 513(e) of the FD&C Act, changing the process for reclassifying a device from rulemaking to an administrative order. Section 608(b) of FDASIA amended section 515(b) of the FD&C Act changing the process for requiring premarket approval for a preamendments class III device from rulemaking to an administrative order.

FDA is publishing this document to propose the reclassification of intra-aortic balloon and control system devices when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure from class III to class II.

Section 513(e) of the FD&C Act governs reclassification of classified preamendments devices. This section provides that FDA may, by administrative order, reclassify a device based upon “new information.” FDA can initiate a reclassification under section 513(e) or an interested person may petition FDA to reclassify a preamendments device. The term “new information,” as used in section 513(e) of the FD&C Act, includes information developed as a result of a reevaluation of the data before the Agency when the device was originally classified, as well as information not presented, not available, or not developed at that time. (See, e.g., Holland-Rantos Co. v. United States Department of Health, Education, and Welfare, 587 F.2d 1173, 1174 n.1 (D.C. Cir. 1978); Upjohn v. Finch, 422 F.2d 944 (6th Cir. 1970); Bell v. Goddard, 366 F.2d 177 (7th Cir. 1966).)

Reevaluation of the data previously before the Agency is an appropriate basis for subsequent action where the reevaluation is made in light of newly available authority (see Bell, 366 F.2d at 181; Ethicon, Inc. v. FDA, 762 F.Supp. 382, 388-391 (D.D.C. 1991)), or in light of changes in “medical science” (Upjohn, 422 F.2d at 951). Whether data before the Agency are old or new data, the “new information” to support reclassification under section 513(e) must be “valid scientific evidence,” as defined in section 513(a)(3) of the FD&C Act and § 860.7(c)(2) (21 CFR 860.7(c)(2)). (See, e.g., General Medical Co. v. FDA, 770 F.2d 214 (D.C. Cir. 1985); Contact Lens Association v. FDA, 766 F.2d 592 (D.C. Cir.), cert. denied, 474 U.S. 1062 (1985).)

FDA relies upon “valid scientific evidence” in the classification process to determine the level of regulation for devices. To be considered in the reclassification process, the valid scientific evidence upon which the Agency relies must be publicly available. Publicly available information excludes trade secret and/or confidential commercial information, e.g., the contents of a pending PMA. (See section 520(c) of the FD&C Act (21 U.S.C. 360j(c)).) Section 520(h)(4) of the FD&C Act, added by FDAMA, provides that FDA may use, for reclassification of a device, certain information in a PMA 6 years after the application has been approved. This can include information from clinical and preclinical tests or studies that demonstrate the safety or effectiveness of the device but does not include descriptions of methods of manufacture or product composition and other trade secrets.

Section 513(e)(1) of the FD&C Act sets forth the process for issuing a final order. Specifically, prior to the issuance of a final order reclassifying a device, the following must occur: (1) Publication of a proposed order in the Federal Register; (2) a meeting of a device classification panel described in section 513(b) of the FD&C Act; and (3) consideration of comments to a public docket. FDA has held a meeting of a device classification panel described in section 513(b) of the FD&C Act with respect to intra-aortic balloon and control system devices, and therefore, has met this requirement under section 515(b)(1) of the FD&C Act.

FDAMA added section 510(m) to the FD&C Act, which provides that a class II device may be exempted from the premarket notification requirements under section 510(k) of the FD&C Act, if the Agency determines that premarket notification is not necessary to assure the safety and effectiveness of the device.

FDA is proposing to require PMAs for intra-aortic balloon and control system devices when indicated for septic shock or pulsatile flow generation.

Section 515(b)(1) of the FD&C Act sets forth the process for issuing a final order. Specifically, prior to the issuance of a final order requiring premarket approval for a preamendments class III device, the following must occur: (1) Publication of a proposed order in the Federal Register; (2) a meeting of a device classification panel described in section 513(b) of the FD&C Act; and (3) consideration of comments from all affected stakeholders, including patients, payers, and providers. FDA has held a meeting of a device classification panel described in section 513(b) of the FD&C Act with respect to intra-aortic balloon and control system devices, and therefore, has met this requirement under section 515(b)(1) of the FD&C Act.

Section 515(b)(2) of the FD&C Act provides that a proposed order to require premarket approval shall contain: (1) The proposed order, (2) the proposed findings with respect to the degree of risk of illness or injury designed to be eliminated or reduced by requiring the device to have an approved PMA or a declared completed PDP and the benefit to the public from the use of the device, (3) an opportunity for the submission of comments on the proposed order and the proposed findings, and (4) an opportunity to request a change in the classification of the device based on new information relevant to the classification of the device.

Section 515(b)(3) of the FD&C Act provides that FDA shall, after the close of the comment period on the proposed order, consideration of any comments received, and a meeting of a device classification panel described in section 513(b) of the FD&C Act, issue a final order to require premarket approval or publish a document terminating the proceeding together with the reasons for such termination. If FDA terminates the proceeding, FDA is required to initiate reclassification of the device under section 513(e) of the FD&C Act, unless the reason for termination is that the device is a banned device under section 516 of the FD&C Act (21 U.S.C. 360f).

A preamendments class III device may be commercially distributed without a PMA until 90 days after FDA issues a final order (a final rule issued under section 515(b) of the FD&C Act prior to the enactment of FDASIA is considered to be a final order for purposes of section 501(f) of the FD&C Act (21 U.S.C. 351(f))) requiring premarket approval for the device, or 30 months after final classification of the device under section 513 of the FD&C Act, whichever is later. For intra-aortic balloon and control system devices, the preamendments class III devices that are the subject of this proposal, the later of these two time periods is the 90-day period. Since these devices were classified in 1980, the 30-month period has expired (45 FR 7939; February 5, 1980). Therefore, if the proposal to require premarket approval for intra-aortic balloon and control system devices indicated for septic shock or pulsatile flow generation is finalized, section 501(f)(2)(B) of the FD&C Act requires that a PMA for such device be filed within 90 days of the date of issuance of the final order. If a PMA is not filed for such device within 90 days after the issuance of a final order, the device would be deemed adulterated under section 501(f) of the FD&C Act.

Also, a preamendments device subject to the order process under section 515(b) of the FD&C Act is not required to have an approved investigational device exemption (IDE) (see part 812 (21 CFR part 812)) contemporaneous with its interstate distribution until the date identified by FDA in the final order requiring the filing of a PMA for the device. At that time, an IDE is required only if a PMA has not been filed. If the manufacturer, importer, or other sponsor of the device submits an IDE application and FDA approves it, the device may be distributed for investigational use. If a PMA is not filed by the later of the two dates, and the device is not distributed for investigational use under an IDE, the device is deemed to be adulterated within the meaning of section 501(f)(1)(A) of the FD&C Act, and subject to seizure and condemnation under section 304 of the FD&C Act (21 U.S.C. 334) if its distribution continues. Other enforcement actions include, but are not limited to, the following: Shipment of devices in interstate commerce will be subject to injunction under section 302 of the FD&C Act (21 U.S.C. 332), and the individuals responsible for such shipment will be subject to prosecution under section 303 of the FD&C Act (21 U.S.C. 333). In the past, FDA has requested that manufacturers take action to prevent the further use of devices for which no PMA has been filed and may determine that such a request is appropriate for the class III devices that are the subject of this proposed order, if finalized.

In accordance with section 515(b) of the FD&C Act, interested persons are being offered the opportunity to request reclassification of intra-aortic balloon and control system devices indicated for septic shock or pulsatile flow generation.

In the preamble to the proposed rule (44 FR 13369; March 9, 1979), the Cardiovascular Device Classification Panel (the 1979 Panel) recommended that intra-aortic balloon and control system devices be classified into class III because the device is life-supporting, and there was insufficient medical and scientific information to establish a standard to assure the safety and effectiveness of the device. The 1979 Panel noted that controversy exists as to whether the device is beneficial in many situations in which it is used and that it is difficult to use the device safely and effectively. The 1979 Panel further noted that accurate and precise labeling and directions for use are especially critical and voiced concern that the various components of the device would not function properly if its modular components were poorly matched. The 1979 Panel indicated that the balloon of the device is used within the main artery of the body and because this portion of the device is in contact with internal tissues and blood, the materials used with it require special controls, and because the device is electrically powered and portions of the device may be in direct contact with the heart, the electrical characteristics of the device, e.g., electrical leakage current, need to meet certain requirements. Additionally, if the design of the device is inadequate for accurate and precise blood pumping, a resulting failure could lead to death. Consequently, the 1979 Panel believed that premarket approval was necessary to assure the safety and effectiveness of the device. In 1980, FDA classified intra-aortic balloon and control system devices into class III after receiving no comments on the proposed rule (45 FR 7939; February 5, 1980).

In 1987, FDA published a clarification by inserting language in the codified language stating that no effective date had been established for the requirement for premarket approval for intra-aortic balloon and control system devices (52 FR 17736; May 11, 1987).

In 2009, FDA published an order for the submission of information on intra-aortic balloon and control system devices by August 7, 2009 (74 FR 16214; April 9, 2009). FDA received four responses to that order from device manufacturers. One manufacturer stated in their response that they were “not aware of adequate and valid scientific information that would support reclassification of the device to Class I or II.” The other three manufacturers recommended that intra-aortic balloon and control system devices be reclassified to class II. The manufacturers stated that safety and effectiveness of these devices may be assured based on data available in the clinical literature; preclinical and clinical testing; 40 or more years of knowledge and information regarding the clinical use of the devices; and the overall number of marketed devices.

As explained further in sections VII and XI of this document, a meeting of the Circulatory System Devices Panel (the 2012 Panel) took place December 5, 2012, to discuss whether intra-aortic balloon and control system devices should be reclassified or remain in class III. The 2012 Panel recommended that intra-aortic balloon and control system devices be reclassified to class II with special controls when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure based on available evidence that supports the safety and effectiveness of the devices for these uses and the ability of special controls to mitigate identified risks to health. The 2012 Panel also recommended that intra-aortic balloon and control system devices indicated for septic shock or pulsatile flow generation remain in class III because the devices are life-supporting and there was insufficient information to establish special controls for these uses. FDA is not aware of new information that would provide a basis for a different recommendation or findings.

An intra-aortic balloon and control system, also known as an intra-aortic balloon pump (IABP), consists of a balloon, which inflates and deflates in synchronization with the cardiac cycle, and console, which provides the pneumatic flow of helium to the balloon so that it can inflate and deflate. The balloon is usually manufactured from polyurethane. It is inserted through the femoral artery and resides in the descending aorta. Conventional timing sets inflation of the balloon to occur at the onset of diastole or the aortic valve closure timepoint. During diastole, the balloon will inflate, increasing blood flow to the coronary arteries, therefore increasing myocardial oxygen supply. The balloon remains inflated throughout the diastolic phase, maintaining the increased pressure in the aorta. The deflation of the balloon takes place at the onset of systole during the isovolumetric contraction or very early in the systolic ejection phase. This deflation will cause a decrease in pressure in the aorta and this decrease in pressure assists the left ventricle by reducing the pressure that needs to be generated to achieve ejection through the aortic valve. As the balloon deflates during systole, it increases blood flow to the systemic circulation by reducing afterload and also decreases the oxygen demand of the myocardium.

The console includes software that controls the inflation and deflation of the balloon based upon the patient's electrocardiogram or arterial pressure waveform. The console also controls the amount of helium that is transferred from the internal helium cylinder to the balloon. Most balloons come in sizes of 30cc, 40cc, and 50cc with a catheter diameter of 7.5Fr or 8Fr.

FDA is proposing that intra-aortic balloon and control system devices when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure be reclassified from class III to class II. In this proposed order, the Agency has identified special controls under section 513(a)(1)(B) of the FD&C Act that, together with general controls applicable to the devices, would provide reasonable assurance of their safety and effectiveness. Absent the special controls identified in this proposed order, general controls applicable to the device are insufficient to provide reasonable assurance of the safety and effectiveness of the device.

Therefore, in accordance with sections 513(e) and 515(i) of the FD&C Act and § 860.130, based on new information with respect to the devices and taking into account the public health benefit of the use of the device and the nature and known incidence of the risk of the device, FDA, on its own initiative, is proposing to reclassify this preamendments class III device into class II when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure. FDA believes that this new information is sufficient to demonstrate that the proposed special controls can effectively mitigate the risks to health identified in the next section, and that these special controls, together with general controls, will provide a reasonable assurance of safety and effectiveness for intra-aortic balloon and control system devices when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure.

Section 510(m) of the FD&C Act authorizes the Agency to exempt class II devices from premarket notification (510(k)) submission. FDA has considered intra-aortic balloon and control system devices when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure in accordance with the reserved criteria set forth in section 513(a) of the FD&C Act and decided that the device requires premarket notification. Therefore, the Agency does not intend to exempt this proposed class II device from premarket notification (510(k)) submission.

After considering available information, including the recommendations of the advisory committees (panels) for the classification of these devices, FDA has evaluated the risks to health associated with the use of intra-aortic balloon and control system devices and determined that the following risks to health are associated with its use:

• Cardiac arrhythmias or electrical shock: Excessive electrical leakage current can disturb the normal electrophysiology of the heart, leading to the onset of cardiac arrhythmias.

• Ineffective cardiac assist (poor augmentation): Failure to sense or synchronize on heartbeat, failure to inflate and deflate at the proper intervals, and/or failure of the balloon to fully unwrap can lead to improper or ineffective pumping of blood.

• Thromboembolism: Inadequate blood compatibility of the materials used in this device and/or inadequate surface finish and cleanliness can lead to potentially debilitating or fatal thromboemboli.

• Aortic rupture or dissection: Improper sizing or over inflation of the balloon can cause a rupture in the main artery.

• Limb ischemia: Improper operation of the device which restricts blood flow to the peripheral vascular tree results in tissue ischemia in the limbs.

• Gas embolism: Balloon rupture or a leak in the balloon can cause potentially debilitating or fatal gas emboli to escape into the bloodstream.

• Hemolysis: Poor material-blood compatibility or excessive disruption of the normal hemodynamic flow patterns can cause hemolysis.

• Infection: Defects in the design or construction of the device preventing adequate sterilization can allow pathogenic organisms to be introduced and may cause an infection in a patient.

• Insertion site bleeding: Improper sizing of the cannula can cause trauma to the artery during insertion of the catheter.

• Thrombus/large blood clots: Leaks of the membrane (balloon surface) or catheter can result in gaseous embolic injury of organs or cause a large blood clot to form within the balloon membrane requiring surgical removal of the catheter.

• Balloon entrapment: A balloon perforation can cause blood to enter the balloon forming a large hardened mass of blood within the balloon. This can cause the balloon to become “entrapped “in the femoral/iliac system upon removal. Balloon entrapment is characterized by undue resistance to balloon removal.

• Insertion difficulty/inability to insert the catheter: Device sizing, insertion technique and/or patient anatomy, specifically tortuous and/or narrowed femoral arteries, can cause insertion difficulties. As a result, therapy can be delayed and there could be an increased risk of vascular damage and/or bleeding due to forceful insertion.

• Vessel occlusion resulting in ischemia, infarction to an organ (including paraplegia) and/or compartment syndrome: Malposition of the balloon can compromise circulation due to large vessel occlusion from catheter migration, resulting in ischemia, infarction to an organ or increased compartment pressures, leading to muscle and nerve damage. Vessel occlusion can also be caused by dislodged atherosclerotic plaque and/or clots.

• Thrombocytopenia: Improper inflation of the balloon can cause a drop in platelets.

• Stroke: Mechanical disruption of atheroma or thrombus liberation causing embolism; disruption of the cranial circulation by the balloon, including obstruction, dissection or perforation; or complications resulting from the use of anticoagulation, can lead to stroke.

• Death: Mechanical failure of the device, vascular complications or bleeding can lead to death.

If properly manufactured and used as intended, intra-aortic balloon and control system devices can provide a treatment option for patients when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure, by increasing myocardial oxygen supply, decreasing myocardial oxygen demand, and improving cardiac output. FDA believes that intra-aortic balloon and control system devices indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure, should be reclassified from class III to class II because, in light of new information about the effectiveness of these devices, FDA believes that special controls, in addition to general controls, can be established to provide reasonable assurance of the safety and effectiveness of the device, and because general controls themselves are insufficient to provide reasonable assurance of its safety and effectiveness.

Since the time of the original 1979 Panel recommendation, sufficient evidence has been developed to support a reclassification of intra-aortic balloon and control system devices to class II with special controls when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure. FDA has been reviewing these devices for many years and their risks are well known. FDA conducted a comprehensive review of available literature for IABP devices for acute coronary syndrome, cardiac and non-cardiac surgery, and complications of heart failure. FDA's review found 18 cohort studies (9 retrospective and 9 prospective), 6 randomized controlled trials, 3 case-control studies, 2 case series, 4 systematic reviews, and a meta-analysis, which provided consistent evidence of the safety and effectiveness of intra-aortic balloon and control system devices for acute coronary syndrome, cardiac and non-cardiac surgery, and complications of heart failure.

Collectively these studies support that the overall complication rates for intra-aortic balloon and control systems is low. For example, in the Benchmark Registry (Ref. 1), there were low IABP complication rates, including IABP-related mortality (0.05 percent and 0.07 percent in the United States and European Union, respectively), major limb ischemia (0.09 percent, 0.8 percent) and severe bleeding (0.9 percent, 0.8 percent). This is consistent with other studies of IABP use with large sample sizes. Additionally, in the most recently published trial of IABP use, the IABP SHOCK II trial (Ref. 2), published in October 2012, 600 patients were randomized to IABP (301 patients) or no IABP (299 patients). The IABP group and the control group did not differ significantly with respect to the rates of adverse events, including major bleeding (3.3 percent and 4.4 percent, respectively; P = 0.51), peripheral ischemic complications (4.3 percent and 3.4 percent, P = 0.53), sepsis (15.7 percent and 20.5 percent, P = 0.15), and stroke (0.7 percent and 1.7 percent, P = 0.28). These rates represent recent IABP usage outcomes in a randomized trial of patients with high associated morbidity using modern aggressive interventional approaches to acute myocardial infarction (MI) and cardiogenic shock, which include the use of percutaneous coronary intervention and aggressive anticoagulation. The trial demonstrates low rates of adverse events that can be attributed directly to the IABP itself.

It is important to note that the patients in whom IABP is used have severe comorbidities and underlying illnesses. As a result, overall mortality in these patients is high. Patients recruited for studies on the IABP are of a population segment that is at an inherently greater risk of mortality because of the high-risk procedures they require, and the illnesses that necessitated the procedures. Additionally, there are trends to less balloon-related mortality over time, as balloon catheter sizes have decreased and procedural techniques have improved.

The literature data also supports the effectiveness of IABP for acute coronary syndrome, cardiac and non-cardiac surgery, and complications of heart failure. With respect to acute coronary syndrome, the Benchmark Registry (Ref. 1) demonstrated that the mortality of patients with cardiogenic shock was 30.7 percent, which was low compared to other cardiogenic shock trials, and has been cited as evidence of a benefit from IABP use. Further evaluation of this registry has shown that in U.S. patients, compared to patients outside the United States (OUS), an IABP was placed at earlier stages of the disease. After appropriate adjustment of risk factors, U.S. patients showed decreased mortality (10.8 percent (U.S.) vs. 18 percent (OUS), P < 0.001). The results of the Global Utilization of Streptokinase and Tissue Plasminogen Activator for Occluded Coronary Arteries (GUSTO-1 trial) (Ref. 3) also demonstrated a 12-month survival advantage in cardiogenic shock with early IABP implantation. This was a retrospective study of IABP use in patients presenting with acute MI and cardiogenic shock who received systemic fibrinolysis. Sixty-eight of 310 cardiogenic shock patients received an IABP. The significantly higher frequency of IABP use in the United States in relation to Europe in these two trials was associated with more bleeding complications, but also with a lower mortality rate, both nonsignificantly at 30 days (47 percent vs. 60 percent) and significantly at 1 year (57 percent vs. 67 percent). This mortality benefit is also supported by two publications regarding the National Registry of Myocardial Infarction (Refs. 4 and 5).

The literature regarding the effectiveness of IABPs in cardiac and non-cardiac surgery has demonstrated utility in some studies and in others has been equivocal in demonstrating effectiveness. However, FDA and the 2012 Panel (as described in further detail in this document) find that there are certain subgroups of patients that may benefit from IABP use for cardiac and non-cardiac surgery indications. This is demonstrated in Christenson et al. (Ref. 6), which randomized 30 high-risk off-pump coronary artery bypass graft (CABG) surgery recipients to receive an IABP preoperatively or no IABP. The use of an IABP improved preoperative and postoperative cardiac performance significantly (P < 0.0001). The postoperative course was also improved, including decreased pneumonia and acute renal failure, shorter duration of ventilator support, and fewer patients requiring postoperative inotropic medications for greater than 48 hours. The lengths of stay in the intensive care unit and in the hospital were shorter in the IABP group. Additionally, Miceli et al. (Ref. 7) studied 141 consecutive patients from 2004-2007 undergoing CABG, in which 38 patients (27 percent) received a prophylactic IABP. After risk-adjusting for propensity score, prophylactic IABP patients had a lower incidence of postcardiotomy low cardiac output syndrome (adjusted OR 0.07, P < 0.006) and postoperative myocardial infarction (adjusted OR 0.04, P < 0.04), as well as a shorter length of hospital stay (10.4±0.8 vs. 12.2±0.6 days, P < 0.0001) compared to those who did not receive an IABP.

Much of the evidence that supports the effectiveness of an IABP for complications of heart failure is outlined previously in this document with respect to acute coronary syndrome (e.g., cardiogenic shock from acute MI). However, there are additional smaller studies that support use in heart failure specifically, including bridge to transplant and acute decompensated dilated cardiomyopathy. For example, Norkiene et al. (Ref. 8) studied 11 patients with decompensated dilated cardiomyopathy (CMP) listed for heart transplant who were recorded in the Benchmark Registry from September 2004 to December 2005, with New York Heart Association Class IV functional status. Frequency of complications and clinical outcomes were assessed prior to and after IABP insertion as well as hemodynamics and end-organ function (renal and hepatic). After 48 hours of IABP support, there was a significant increase of mean systemic arterial pressure from 74.5±9.6 to 82.3±4.7 mmHg (P = 0.02), and ejection fraction from 14.7±6.4 to 21.0±8.6 (P = 0.014). Improvement of the cardiac index, pulmonary wedge pressure, and end-organ perfusion markers did not reach statistical significance. The authors concluded that IABP support may be successfully and safely used in acute decompensated dilated cardiomyopathy patients as an urgent measure of cardiac support to stabilize the patient and maintain organ perfusion until transplant is available, ventricular assist device is placed, or the patient is weaned from the IABP.

Rosenbaum et al. (Ref. 9) studied 43 patients with end-stage congestive heart failure in whom an IABP was used as a bridge to transplant. Twenty-seven patients had non-ischemic CMP (NICM), and 16 had ischemic CMP (ISCM). Hemodynamics improved in both groups, immediately (15 to 30 minutes) following IABP insertion, with greater improvement (p < 0.05) in cardiac index and a trend toward greater reduction in filling pressures in the NICM group. Systemic vascular resistance fell to a similar degree in both groups. During continued IABP support (0.13 to 38 days in NICM, 1 to 54 days in ISCM), all hemodynamic changes persisted in both groups, with a larger decrease (p < 0.05) in systemic vascular resistance and greater increase (p < 0.05) in cardiac index in the patients with NICM. The reduction in filling pressures, however, tended to be greater in patients with ISCM. Complications from the IABP were low. The authors concluded that IABP use was both safe and effective in this group as a bridge to transplant.

The literature data outlined previously in this document supports a conclusion of reasonable evidence for the safety and effectiveness of intra-aortic balloon and control system devices when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, and complications of heart failure. In addition, bench studies designed to demonstrate the devices' ability to function as intended have been well characterized.

FDA's presentation to the 2012 Panel included a summary of the available safety and effectiveness information for intra-aortic balloon and control system devices when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure, including adverse event reports from FDA's Manufacturer and User Facility Device Experience (MAUDE) database and available literature. Based on the available scientific literature, which supports that use of intra-aortic balloon and control system devices may be beneficial for patients when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure, FDA recommended to the 2012 Panel that intra-aortic balloon and control system devices indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure be reclassified to class II (special controls). The 2012 Panel discussed and made recommendations regarding the regulatory classification of intra-aortic balloon and control system devices to either reconfirm to class III (subject to premarket approval application) or reclassify to class II (subject to special controls) as directed by section 515(i) of the FD&C Act. The 2012 Panel agreed with FDA's conclusion that the available scientific evidence is adequate to support the safety and effectiveness of intra-aortic balloon and control system devices when indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure. Several members of the 2012 Panel noted that not all available data supports the effectiveness of the device conclusively; however, there was consensus that IABPs improve hemodynamics and provide an important tool for clinicians in treating a patient population with high morbidity and mortality. The 2012 Panel also acknowledged that intra-aortic balloon and control systems are life-supporting devices and provided the following rationale per § 860.93 for recommending that IABPs for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure be reclassified to class II: (1) There is a wealth of clinical experience that attests to the benefit of the device; (2) there is an important advantage to use of intra-aortic balloon counter-pulsation to provide hemodynamic stability or protection from ischemia in precarious or unstable patients; and (3) the recommended special controls will mitigate the health risks associated with the device.

The 2012 Panel also agreed with the identified risks to health presented at the meeting; however, the 2012 Panel recommended that compartment syndrome, death, and stroke be added to the list of risks to health and that ischemia be added to “vessel occlusion resulting in infarction to an organ (including paraplegia)”. FDA agrees with the 2012 Panel's recommendations and modified the risks to health accordingly as outlined in section V. The 2012 Panel also agreed with FDA's proposed special controls outlined in section VIII; however, the 2012 Panel further recommended that information about IABP clinical trials should be added to the device labeling as a special control. FDA does not agree with this recommendation from the 2012 Panel. FDA determined that it was not appropriate to require that clinical trial information be included in the device labeling as a special control because available clinical trial information would most accurately represent the device type, not individual devices, so including such information in the labeling for a specific device may be misleading. On this basis, the special controls outlined in section VIII were not modified based on this recommendation from the 2012 Panel.

The 2012 Panel transcript and other meeting materials are available on FDA's Web site (Ref. 10).

FDA believes that the following special controls, together with general controls, are sufficient to mitigate the risks to health described in section V: (1) Appropriate analysis and non-clinical testing must be conducted to validate electromagnetic compatibility and electrical safety of the device; (2) appropriate software verification, validation, and hazard analysis must be performed; (3) the device must be demonstrated to be biocompatible; (4) sterility and shelf life testing must demonstrate the sterility of patient-contacting components and the shelf life of these components; (5) non-clinical performance evaluation of the device must provide a reasonable assurance of safety and effectiveness for mechanical integrity, durability, and reliability; and (6) labeling must bear all information required for the safe and effective use of the device, including a detailed summary of the device- and procedure-related complications pertinent to use of the device.

Intra-aortic balloon and control system devices are prescription devices restricted to patient use only upon the authorization of a practitioner licensed by law to administer or use the device. (Proposed 21 CFR 870.3535(a); see section 520(e) of the FD&C Act and 21 CFR 801.109 (Prescription devices)). Prescription-use requirements are a type of general controls authorized under section 520(e) of the FD&C Act and defined as a general control in section 513(a)(1)(A)(i) of the FD&C Act; and under 21 CFR 807.81, the device would continue to be subject to 510(k) notification requirements.

In accordance with section 515(b) of the FD&C Act, FDA is proposing to require that a PMA be filed with the Agency for intra-aortic balloon and control systems indicated for septic shock or pulsatile flow generation within 90 days after issuance of any final order based on this proposal. An applicant whose device was legally in commercial distribution before May 28, 1976, or whose device has been found to be substantially equivalent to such a device, will be permitted to continue marketing such class III devices during FDA's review of the PMA provided that the PMA is timely filed. FDA intends to review any PMA for the device within 180 days of the date of filing. FDA cautions that under section 515(d)(1)(B)(i) of the FD&C Act, the Agency may not enter into an agreement to extend the review period for a PMA beyond 180 days unless the Agency finds that “the continued availability of the device is necessary for the public health.”

An applicant whose device was legally in commercial distribution before May 28, 1976, or whose device has been found to be substantially equivalent to such a device, who does not intend to market such device for septic shock or pulsatile flow generation, may remove such intended uses from the device's labeling by initiating a correction within 90 days after issuance of any final order based on this proposal. Under 21 CFR 806.10(a)(2) a device manufacturer or importer initiating a correction to remedy a violation of the FD&C Act that may present a risk to health is required to submit a written report of the correction to FDA.

FDA intends that under § 812.2(d), the preamble to any final order based on this proposal will state that, as of the date on which the filing of a PMA is required to be filed, the exemptions from the requirements of the IDE regulations for preamendments class III devices in § 812.2(c)(1) and (c)(2) will cease to apply to any device that is: (1) Not legally on the market on or before that date, or (2) legally on the market on or before that date but for which a PMA is not filed by that date, or for which PMA approval has been denied or withdrawn.

If a PMA for a class III device is not filed with FDA within 90 days after the date of issuance of any final order requiring premarket approval for the device, the device would be deemed adulterated under section 501(f) of the FD&C Act. The device may be distributed for investigational use only if the requirements of the IDE regulations are met. The requirements for significant risk devices include submitting an IDE application to FDA for review and approval. An approved IDE is required to be in effect before an investigation of the device may be initiated or continued under § 812.30. FDA, therefore, recommends that IDE applications be submitted to FDA at least 30 days before the end of the 90-day period after the issuance of the final order to avoid interrupting any ongoing investigations.

Because intra-aortic balloon and control systems indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure, can currently be marketed after receiving clearance of an application for premarket notification and FDA is proposing to reclassify these devices as class II requiring clearance of an application for premarket notification, this order, if finalized, will not require a new premarket submission for intra-aortic balloon and control systems indicated for acute coronary syndrome, cardiac and non-cardiac surgery, or complications of heart failure.

As required by section 515(b) of the FD&C Act, FDA is publishing its proposed findings regarding: (1) The degree of risk of illness or injury designed to be eliminated or reduced by requiring that this device have an approved PMA when indicated for septic shock or pulsatile flow generation and (2) the benefits to the public from the use of intra-aortic balloon and control systems indicated for septic shock or pulsatile flow generation.

These findings are based on the reports and recommendations of the advisory committees (panels) for the classification of these devices along with information submitted in response to the 515(i) order (74 FR 16214; April 9, 2009), and any additional information that FDA has obtained. Additional information regarding the risks as well as classification associated with this device type is discussed in Section XI B., Summary of Data, and can also be found in 44 FR 13284-13434, March 9, 1979; 45 FR 7907-7971, February 5, 1980; and 52 FR 17736, May 11, 1987.

An intra-aortic balloon and control system is a prescription device that consists of an inflatable balloon, which is placed in the aorta to improve cardiovascular functioning during certain life-threatening emergencies, and a control system for regulating the inflation and deflation of the balloon. The control system, which monitors and is synchronized with the electrocardiogram, provides a means for setting the inflation and deflation of the balloon with the cardiac cycle.

When indicated for septic shock or pulsatile flow generation, FDA concludes that the safety and effectiveness of these devices have not been established by adequate scientific evidence. There is limited scientific evidence regarding the effectiveness of intra-aortic balloon and control system devices for these indications. Specifically, based on FDA's review of the published scientific literature, it appears that there are no studies regarding intra-aortic balloon and controls systems indicated for septic shock in humans. The use of the IABP for pulsatile flow generation made up less than 1 percent of the indications for use evaluated in FDA's literature search. Three observational studies regarding pulsatile flow generation were found during FDA's review of the literature. All three articles state that the device is associated with low mortality and adverse event rates; however, none of the studies was stratified by indication. As a result, it cannot be concluded that these results apply to septic shock or pulsatile flow generation specifically.

FDA presented the findings of our literature search for intra-aortic balloon and control system devices for the indications of septic shock and pulsatile flow generation to the 2012 Panel on December 5, 2012. Based on FDA's findings, the Panel recommended that available scientific evidence is not adequate to support the effectiveness of intra-aortic balloon and control system devices for the indications of septic shock or pulsatile flow generation. As a result, the 2012 Panel concluded that intra-aortic balloon and control system devices for the indications of septic shock or pulsatile flow generation should remain in class III (subject to premarket approval application). The 2012 Panel transcript and other meeting materials are available on FDA's Web site (Ref. 10).

The risks to health for intra-aortic balloon and control system devices for the indications of septic shock or pulsatile flow generation are the same as outlined in section V.

As discussed previously in this document, there is limited scientific evidence regarding the effectiveness of intra-aortic balloon and control system devices for the indications of septic shock or pulsatile flow generation. For indications of septic shock, the hemodynamic effects generated by use of intra-aortic balloon and control systems do not address the fundamental hemodynamic derangements of septic shock syndrome. FDA is not aware of any theoretical or demonstrated benefit to using intra-aortic balloon and control systems for this clinical syndrome. For indications of pulsatile flow generation, it is impossible to estimate the direct effect of the devices on patient outcomes based on the lack of effectiveness data for this indication as described previously.

A PMA for intra-aortic balloon and control system devices indicated for septic shock or pulsatile flow generation must include the information required by section 515(c)(1) of the FD&C Act. Such a PMA should also include a detailed discussion of the risks identified previously, as well as a discussion of the effectiveness of the device for which premarket approval is sought. In addition, a PMA must include all data and information on: (1) Any risks known, or that should be reasonably known, to the applicant that have not been identified in this document; (2) the effectiveness of the device that is the subject of the application; and (3) full reports of all preclinical and clinical information from investigations on the safety and effectiveness of the device for which premarket approval is sought.

A PMA must include valid scientific evidence to demonstrate reasonable assurance of the safety and effectiveness of the device for its intended use (see § 860.7(c)(1)). Valid scientific evidence is “evidence from well-controlled investigations, partially controlled studies, studies and objective trials without matched controls, well-documented case histories conducted by qualified experts, and reports of significant human experience with a marketed device, from which it can fairly and responsibly be concluded by qualified experts that there is reasonable assurance of the safety and effectiveness of a device under its conditions of use . . . Isolated case reports, random experience, reports lacking sufficient details to permit scientific evaluation, and unsubstantiated opinions are not regarded as valid scientific evidence to show safety or effectiveness.” (see § 860.7(c)(2)).

Before requiring the filing of a PMA for a device, FDA is required by section 515(b)(2)(D) of the FD&C Act to provide an opportunity for interested persons to request a change in the classification of the device based on new information relevant to the classification. Any proceeding to reclassify the device will be under the authority of section 513(e) of the FD&C Act.

A request for a change in the classification of intra-aortic balloon and control system devices indicated for septic shock or pulsatile flow generation is to be in the form of a reclassification petition containing the information required by § 860.123, including new information relevant to the classification of the device.

Prior to the amendments by FDASIA, section 513(e) of the FD&C Act provided for FDA to issue regulations to reclassify devices and section 515(b) of the FD&C Act provided for FDA to issue regulations to require approval of an application for premarket approval for preamendments devices or devices found to be substantially equivalent to preamendments devices. Because sections 513(e) and 515(b) as amended require FDA to issue final orders rather than regulations, FDA will continue to codify reclassifications and requirements for approval of an application for premarket approval, resulting from changes issued in final orders, in the Code of Federal Regulations. Therefore, under section 513(e)(1)(A)(i) of the FD&C Act, as amended by FDASIA, in this proposed order, we are proposing to revoke the requirements in § 870.4360 related to the classification of non-roller type cardiopulmonary and circulatory bypass blood pump devices as class III devices and to codify the reclassification of non-roller type cardiopulmonary and circulatory bypass blood pump devices into class II.

The Agency has determined under 21 CFR 25.34(b) 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.

This proposed order refers to collections of information that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

The collections of information in 21 CFR part 814 have been approved under OMB control number 0910-0231. The collections of information in part 807, subpart E, have been approved under OMB control number 0910-0120.

The effect of this order, if finalized, is to shift certain devices from the 510(k) premarket notification process to the PMA process. FDA estimates that there will be two fewer 510(k) submissions as a result of this order, if finalized. Based on FDA's most recent estimates, this will result in a 91-hour burden decrease to OMB control number 0910-0120, which is the control number for the 510(k) premarket notification process. However, because FDA does not expect to receive any new PMAs as a result of this order, if finalized, we estimate no burden increase to OMB control number 0910-0231 based on this order, if finalized. Therefore, on net, FDA expects a burden hour decrease of 91 due to this proposed regulatory change.

The collections of information in 21 CFR part 812 have been approved under OMB control number 0910-0078.

FDA is proposing that any final order based on this proposed order become effective 90 days after date of publication of the final order in the Federal Register.

Interested persons may submit either electronic comments regarding this document to http://www.regulations.gov or written comments to the Division of Dockets Management (see ADDRESSES). It is only necessary to submit one set of comments. Identify comments with the docket number found in the brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday, and will be posted to the docket at http://www.regulations.gov.

The following references have been placed on display in the Division of Dockets Management (see ADDRESSES), and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday, and are available electronically at http://www.regulations.gov. (FDA has verified the Web site address in this reference section, but FDA is not responsible for any subsequent changes to the Web site after this document publishes in the Federal Register.)

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 part 870 be amended as follows:

The globalization of the pharmaceutical market has created tremendous challenges for FDA, including dramatic increases in drug imports, complex and fragmented global supply chains, and increasing threats of fraudulent and substandard drugs. Title VII of FDASIA (Pub. L. 112-144) amends the Federal Food, Drug, and Cosmetic Act (the FD&C Act) to provide FDA with important new authorities to respond to these challenges and better ensure the safety, effectiveness, and quality of drugs imported into the United States. These authorities increase FDA's ability to collect and analyze data to make risk-informed decisions, employ risk-based approaches to facility oversight, partner with foreign regulatory authorities to leverage resources through information sharing and recognition of foreign inspections, and drive safety and quality throughout the supply chain. Implementation of these authorities will significantly advance the strategies set forth in the Pathway to Global Product Safety and Quality report published by FDA (available at http://www.fda.gov/downloads/AboutFDA/CentersOffices/OfficeofGlobalRegulatoryOperationsandPolicy/GlobalProductPathway/UCM262528.pdf), and accelerate the Agency's adaptation to the rapidly changing demands of the global environment. Implementation of these authorities will also support and advance FDA's ongoing industry oversight of quality related initiatives.

At the same time, implementation of Title VII of FDASIA is difficult and complex, and requires not only the development of new regulations, guidances, and reports, but also major changes in FDA information systems, processes, and policies. Since the enactment of FDASIA in July 2012, FDA has been working diligently to implement the provisions of Title VII and has prioritized these efforts based on public health impact in order to maximize use of the Agency's limited resources.

Sections 713 and 714 in Title VII of FDASIA relate to drugs imported or offered for import and commercial drug importers. Section 713 allows FDA to require, as a condition of granting admission to a drug imported or offered for import into the United States, that an importer electronically submit information demonstrating that the drug complies with applicable requirements of the FD&C Act. As specified in section 713, such information may include: Information demonstrating the regulatory status of the drug, such as the new drug application number, abbreviated new drug application number, investigational new drug number, or drug master file number; facility information, such as proof of registration and the unique facility identifier; indication of compliance with current good manufacturing practice (CGMP), testing results, certifications relating to satisfactory inspections, and compliance with the country of export regulations; and any other information deemed necessary and appropriate by the Secretary to assess compliance. Section 713 also allows FDA to take into account differences among importers and types of imported drugs and, based on the level of risk posed by the imported drug, provide for expedited clearance for those importers that volunteer to participate in partnership programs for highly compliant companies and pass a review of internal controls, including sourcing of foreign manufacturing inputs, and plant inspections. Section 713 requires FDA to adopt regulations implementing section 713 not later than 18 months after the date of enactment of FDASIA.

Section 714 requires commercial drug importers to register with FDA and submit a unique identifier for the principal place of business at the time of registration. FDA is to specify a unique facility identifier system to be used by registrants. Section 714 amends section 502(o) of the FD&C Act (21 U.S.C. 352(o)) to deem misbranded a drug imported or offered for import by a commercial importer of drugs not duly registered. Section 714 also requires FDA, in consultation with the Secretary of the Department of Homeland Security acting through U.S. Customs and Border Protection, to issue regulations establishing good importer practices that specify the measures an importer shall take to ensure that imported drugs are in compliance with the FD&C Act and the Public Health Service Act. Section 714 requires FDA to adopt regulations implementing section 714 not later than 36 months after the date of enactment of FDASIA.

The public meeting is an opportunity for FDA to share information regarding Title VII and the Agency's approach to implementation, and to obtain input from stakeholders that will assist FDA in developing regulations under sections 713 and 714.

The first part of the public meeting will consist of introductory presentations by FDA that will provide an overview to stakeholders regarding Title VII, including the new authorities granted to FDA under Title VII and their importance in ensuring drug safety, effectiveness, and quality; how Title VII relates to and will help advance FDA's larger strategic initiatives; the Agency's approach to implementation; and the progress achieved to date.

The second part of the meeting will be used to obtain input from stakeholders on issues relating to standards for admission of imported drugs, registration of commercial importers, and good importer practices that will assist FDA in the development of the regulations described previously. Individuals will have opportunities to express their views by making presentations at the meeting and submitting written comments to the dockets for these matters (see section V of this document).

FDA is particularly interested in obtaining information and public comment on the following topics:

1. How should the regulations implementing section 801(r) of the FD&C Act (21 U.S.C. 381(r)), as amended by section 713 of FDASIA, define “importer” as that term is used in 801(r)(l)?

2. What information should FDA require importers to submit at the time of entry that would demonstrate a drug's compliance with applicable requirements of the FD&C Act as a condition of granting admission of the drug into the United States?

3. What information could an importer submit to FDA at the time of entry to demonstrate compliance with applicable requirements of the FD&C Act relating to:

a. homeopathic drugs intended for human use,

b. articles intended for human drug compounding,

c. articles intended for animal drug compounding, and

d. drugs intended for research?

4. What facility information should FDA request from importers at the time of entry to help assess whether a drug complies with applicable requirements of the FD&C Act?

5. What information could importers submit at the time of entry to demonstrate compliance with country of export regulations in accordance with section 801(r)(2)(C) of the FD&C Act?

6. What information could importers submit at the time of entry to demonstrate that a drug offered for import complies with U.S. CGMP requirements?

7. What information could importers submit at the time of entry that would serve as evidence of satisfactory inspection, such as by a foreign government or an agency of a foreign government?

8. Should FDA require that importers submit certificates of analysis (COAs) to the Agency as a condition of admission under section 801(r) of the FD&C Act? If so, how could an importer demonstrate a COA's authenticity?

9. Section 801(r)(4)(B)(i) of the FD&C Act permits FDA, as appropriate, to consider differences among imports and types of drugs and “based on the level of risk posed by the imported drug, provide for expedited clearance for those importers that volunteer to participate in partnership programs for highly compliant companies and pass a review of internal controls, including sourcing of foreign manufacturing inputs, and plant inspections.”

a. What criteria should FDA use to evaluate potential participants in “voluntary partnership programs for highly compliant companies”?

b. How could FDA take into account differences among importers and types of drugs to allow for expedited entry as part of a voluntary partnership program?

c. What risk factors should FDA consider when determining drug admissibility under a voluntary partnership program?

10. What benefits and burdens may be created by requiring drug importers to electronically submit information demonstrating that a drug complies with applicable requirements of the FD&C Act as a condition of admission? How could we minimize any possible burdens? How do we strike a reasonable balance between rigor and efficiency in requiring information that is both reliable and yet can be submitted and reviewed efficiently?

1. How should the regulations implementing section 714 of FDASIA (section 801(s) of the FD&C Act) define “commercial importer” to ensure that the appropriate entities are required to register with FDA and meet requirements regarding good importer practices (GIP)? Should these “commercial importers” be the same entities as the “importers” required to comply with the standards for admission to be adopted under section 801(r) of the FD&C Act?

2. Under section 801(s)(1) of the FD&C Act, the registration regulations will apply to commercial importers of “drugs.” A “drug” is defined in section 201(g)(1) of the FD&C Act (21 U.S.C. 321(g)(1)) and includes, but is not limited to, finished dosage form drug products, drugs for further processing, active pharmaceutical ingredients, and other drug components, including inactive ingredients. Should commercial importers of certain types of drugs, such as inactive ingredients, be exempt from the commercial importer registration requirements? Should the importation of drugs for certain purposes (e.g., research use) be exempt from registration?

3. What information should commercial importers be required to submit as part of their registration?

4. What benefits and burdens might be created by requiring commercial drug importers to register with FDA? How can we minimize any possible burdens (e.g., through gradual implementation, exemption of certain commercial importers, use of other alternatives)?

1. How might FDA structure the GIP regulations to avoid imposing redundant regulatory requirements on commercial importers that also are drug manufacturers and therefore would be subject to both the GIP and CGMP requirements?

2. Should the GIP regulations require commercial importers of drugs to establish drug safety management programs to ensure that imported drugs meet the requirements of the FD&C Act and the Public Health Service Act, as applicable? If so, what matters (e.g., procedures, personnel) should the GIP regulations require commercial importers to address in such programs?

3. What drug safety management programs or other measures do commercial importers currently have in place to ensure that imported drugs are manufactured in compliance with applicable FDA requirements? How do these programs and measures differ for different “types” of drugs?

4. Should the GIP regulations include qualifications and training for personnel who perform GIP activities? If so, what qualifications and training should be required?

5. Should the GIP regulations include a requirement for commercial importers to assess whether it is appropriate to import a particular drug from a particular foreign supplier? If so, what information on the drug and the supplier should the commercial importer be required to consider as part of this assessment?

6. Should commercial importers be required to conduct activities to verify that a drug that is offered for import is in compliance with applicable U.S. requirements (e.g., the CGMP regulations) and are not adulterated under section 501 of the FD&C Act (21 U.S.C. 351) or misbranded under section 502 of the FD&C Act? If so, what supplier verification activities should commercial importers be required to conduct?

7. Should there be different supplier verification or other GIP requirements for different “types” of drugs? Should there be different requirements for particular types of finished dosage form drug products that might be associated with different levels of risk (e.g., sterile injectables, drugs that require temperature controls)? If so, what should these requirements be?

8. Should the GIP regulations require commercial importers to obtain a COA for each imported drug? Should such a requirement apply only to certain types of drugs or commercial importers? If commercial importers are required to obtain COAs, should the commercial importer also be required to conduct testing to verify the accuracy of the COA?

9. Should the GIP regulations include specific requirements for drugs imported for export in accordance with section 801(d)(3) of the FD&C Act? If so, what should these requirements be?

10. How should the GIP regulations reflect or incorporate the requirements concerning the standards for admission of imported drugs under section 801(r) of the FD&C Act? For example, should the GIP requirements include the adoption of procedures to ensure that the commercial importer submits the compliance information required under section 801(r) and the regulations implementing that section? If so, what procedures should commercial importers be required to follow to ensure that these requirements are met?

11. Should the GIP regulations require commercial importers to take corrective actions when the drugs they import or offer for import are not in compliance with applicable U.S. requirements? If so, what actions should importers be required to take?

12. Should the GIP regulations include a requirement for commercial importers to list the drugs they import or offer for import? If so, what information should be required with listing?

13. What records should commercial importers be required to maintain under the GIP regulations?

14. What other matters, if any, should the GIP regulations address?

15. How should FDA take into account “differences among importers and types of imports, including based on the level of risk posed by the imported product,” in determining reasonable time periods for commercial importers to come into compliance with the GIP regulations under section 714(d)(3) of FDASIA? In considering such differences, how should FDA determine the level of risk posed by an imported drug?

16. What benefits and burdens might be created by requiring commercial importers to comply with GIP regulations? How can we minimize any possible burdens (e.g., through gradual implementation, exemption of certain commercial importers, use of other alternatives)?

Individuals who wish to present at the public meeting must register on or before July 5, 2013, through the FDASIA Web site at http://www.fda.gov/RegulatoryInformation/Legislation/FederalFoodDrugandCosmeticActFDCAct/SignificantAmendmentstotheFDCAct/FDASIA/ucm20027187.htm and provide complete contact information, including name, title, affiliation, address, email, and phone number. In section III of this document, FDA has included questions for comment. You should identify by number each question you wish to address in your presentation, provide a brief description of your presentation, and indicate the approximate desired length of your presentation, so that FDA can consider these in organizing the presentations. FDA will do its best to accommodate requests to speak and will determine the amount of time allotted to each presenter and the approximate time that each oral presentation is scheduled to begin. After reviewing the presentation requests, FDA will notify each participant before the meeting of the amount of time available and the approximate time their presentation is scheduled to begin. If time permits, individuals or organizations that did not register in advance may be granted the opportunity to make a presentation. An agenda will be posted on the FDASIA Web site at http://www.fda.gov/RegulatoryInformation/Legislation/FederalFoodDrugandCosmeticActFDCAct/SignificantAmendmentstotheFDCAct/FDASIA/ucm20027187.htm prior to the meeting.

Table 1 of this document provides information on participating in the meeting and on submitting comments to the docket. See table 2 of this document for a list of docket numbers and corresponding sections of FDASIA and topics.

Regardless of attendance at the public meeting, interested persons may submit either electronic comments regarding this document to the Federal eRulemaking Portal at http://www.regulations.gov or written comments or the Division of Dockets Management (HFA-305), Food and Drug Administration, 5600 Fishers Lane, rm. 1061, Rockville, MD 20857. Because multiple docket numbers are associated with this document, please include with your comments the docket number(s) that corresponds with the section of FDASIA and topic on which you are commenting (see table 2 of this document for a list of docket numbers and corresponding sections and topics). Comments that address more than one docket must be filed with each docket to ensure consideration. The deadline for submitting comments to the docket is August 12, 2013. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday, and will be posted to the docket at http://www.regulations.gov.

Transcripts of the meeting will be available for review at the Division of Dockets Management and http://www.regulations.gov approximately 30 days after the meeting. A transcript will also be made available in either hardcopy or on CD-ROM, upon submission of a Freedom of Information request. Written requests are to be sent to Division of Freedom of Information (ELEM-1029), Food and Drug Administration, 12420 Parklawn Dr., Element Bldg., Rockville, MD 20857.

The advance notice of proposed rulemaking (FR Doc. 2013-11326) that VA published on May 13, 2013, at 78 FR 27882, contained two errors—the word “advanced” was missing from the second sentence of the SUMMARY and the title of contact person was incorrect. This document corrects those errors.

In the first column, second sentence of the SUMMARY, add the word “advanced” before “notice of proposed rulemaking,” and in the second column, FOR FURTHER INFORMATION CONTACT, correct the title by removing “Executive Director, Center for Veterans Enterprise (00VE)” and adding, in its place, “Executive Director of the Office of Small and Disadvantaged Business Utilization (00SB)”.

EPA intends to hold public hearings at one location each on the Navajo Reservation, on the Hopi Reservation, and in Page, Phoenix, and Tucson, Arizona. These hearings will provide interested parties the opportunity to present facts, views, or arguments concerning the proposed rule requiring NGS to meet emission limits for NOX, required under the BART provision of the Regional Haze Rule, in order to reduce visibility impairment resulting from NGS at 11 National Parks and Wilderness Areas.

Written statements and supporting information submitted during the comment period will be considered with the same weight as any oral comments and supporting information presented at the public hearing. Written comments must be postmarked on or before the last day of the comment period, August 5, 2013.

If you are unable to attend the hearing but wish to submit comments on the proposed rule, you may submit comments, identified by docket number EPA-R09-OAR-2013-0009, by one of the following methods:

(1) Federal eRulemaking Portal: www.regulations.gov. Follow the on-line instructions.

(2) Email: r9ngsbart@epa.gov.

(3) Mail or deliver: Anita Lee (Air-2), U.S. Environmental Protection Agency Region 9, 75 Hawthorne Street, San Francisco, CA 94105-3901.

For more detailed instructions concerning how to submit comments on this proposed rule, and for more information on our proposed rule, please see the notice of proposed rulemaking, published in the Federal Register on February 5, 2013 (78 FR 8274).

On September 29, 2006, and on June 22, 2010, PADEP submitted on behalf of AMS two SIP revisions for Philadelphia County addressing the requirements of RACT under the 1997 8-hour ozone NAAQS.

Ozone is formed in the atmosphere by photochemical reactions between VOC, NOX, and carbon monoxide (CO) in the presence of sunlight. In order to reduce ozone concentrations in the ambient air, the CAA requires all nonattainment areas to apply controls on VOC and NOX emission sources to achieve emission reductions. Among effective control measures, RACT controls are a major group for reducing VOC and NOx emissions from stationary sources.

Since the 1970's, EPA has consistently interpreted RACT to mean the lowest emission limit that a particular source is capable of meeting by the application of the control technology that is reasonably available considering technological and economic feasibility (See 72 FR 20586 at 20610, April 25, 2007). Section 172(c)(1) of the CAA provides that SIPs for nonattainment areas must include reasonably available control measures (RACM) for attainment of the NAAQS, including emissions reductions from existing sources through adoption of RACT. Section 182(a)(2)(A) of the CAA referred to as RACT fix-up requires the correction of RACT rules for which EPA identified deficiencies before the CAA was amended in 1990. Philadelphia County has no deficiencies to correct under this section of the CAA.

Section 182(b)(2) and (f) of the CAA requires that moderate (or worse) ozone nonattainment areas, as well as marginal and attainment areas in the ozone transport region (OTR) established pursuant to section 184 of the CAA, implement RACT controls on all major VOC and NOx emission sources (point sources) and on all sources and source categories covered by a control technique guideline (CTG) issued by EPA. A major source in a nonattainment area is defined as any stationary source that emits or has the potential to emit NOx and VOC emissions above a certain applicability threshold that is based on the ozone nonattainment classification of the area: marginal, moderate, serious, or severe. (See “major stationary source” in 40 CFR 51.165).

Philadelphia County was designated under the 1-hour ozone NAAQS as part of the Philadelphia-Wilmington-Trenton severe ozone nonattainment area. See 56 FR 56694, at 56822 (November 6, 1991). The entire Commonwealth of Pennsylvania is also part of the OTR established under section 184 of the CAA. Therefore, Philadelphia County was subject to the CAA RACT requirements under the 1-hour ozone NAAQS. As a result, PADEP and AMS implemented numerous RACT controls applicable in Philadelphia County to meet the RACT requirements.

On July 18, 1997 (62 FR 38856), EPA promulgated an 8-hour ozone NAAQS. On April 30, 2004, Philadelphia County was designated under the 1997 8-hour ozone NAAQS as part of the Philadelphia-Wilmington-Atlantic City moderate ozone nonattainment area. See 69 FR 23858, at 23931 (April 30, 2004). Therefore, PADEP is required to submit to EPA, on behalf of AMS, a SIP revision that addresses how Philadelphia County meets the RACT requirements under the 1997 8-hour ozone standard. Implementation of RACT controls is required in Philadelphia County for each category of VOC sources covered by a CTG document issued by EPA and all other major stationary sources of NOX and VOC.

On November 29, 2005 (70 FR 71612), EPA published an ozone implementation rule to address nonattainment SIP requirements for the 1997 8-hour ozone NAAQS (the Phase 2 Ozone Implementation Rule). This rule addressed various statutory requirements, including the requirement for RACT level controls for sources located within nonattainment areas generally, and controls for NOX emissions from EGUs in particular. In the Phase 2 Ozone Implementation Rule, EPA specifically required that states meet the RACT requirements under the 1997 8-hour ozone NAAQS, either through a certification that previously adopted RACT controls in their SIP revisions approved by EPA under the 1-hour ozone NAAQS continue to represent adequate RACT control levels for 8-hour attainment purposes, or through the adoption of new or more stringent regulations that represent RACT control levels. See 70 FR 71655 (November 29, 2005).

As set forth in the preamble to the Phase 2 Ozone Implementation Rule, a certification must be accompanied by appropriate supporting information such as consideration of information received during the public comment period and consideration of new data. This information may supplement existing RACT guidance documents that were developed for the 1-hour standard, such that the state's SIP accurately reflects RACT for the 1997 8-hour ozone standard based on the current availability of technically and economically feasible controls. Adoption of new RACT regulations will occur when states have new stationary sources not covered by existing RACT regulations, or when new data or technical information indicates that a previously adopted RACT measure does not represent a newly available RACT control level. Another 1997 8-hour ozone NAAQS requirement for RACT is to submit a negative declaration if there are no CTG major sources of VOC and NOX emissions within the nonattainment area in lieu of or in addition to a certification.

For addressing interstate transport of ozone pollution, EPA determined in the Phase 2 Ozone Implementation Rule that the regional NOX emissions reductions that result from either the NOX SIP Call or the Clean Air Interstate Rule (CAIR) would meet the NOX RACT requirement for EGUs located in states included within the respective geographic regions. Thus, EPA concluded that the states need not perform a NOX RACT analysis for sources subject to the state's emission cap-and-trade program where the cap-and-trade program has been adopted by the state and approved by EPA as meeting the NOX SIP Call requirements or, in states achieving the CAIR reductions solely from EGUs, the CAIR NOX requirements.

In November 2008, several parties challenged EPA's Phase 2 Ozone Implementation Rule. In particular, EPA's determination that compliance with the NOX SIP Call could satisfy NOX RACT requirements for EGUs in nonattainment areas was challenged. As a result of this litigation, the Court decided that the provisions in the Phase 2 Ozone Implementation Rule providing that a state need not perform (or submit) a NOX RACT analysis for EGU sources subject to a cap-and-trade program in accordance with the NOX SIP Call were inconsistent with the statutory requirements of section 172(c)(1) of the CAA. Because regionwide RACT-level reductions in emissions do not meet the statutory requirement that the reductions be from sources in the nonattainment area, the Court found that EPA has not shown that compliance with the NOX SIP Call will result in at least RACT-level reductions in emissions from sources within each nonattainment area. See NRDC v. EPA, 571 F.3d 1245 (D.C. Cir. 2009).

On September 29, 2006, PADEP submitted on behalf of AMS a SIP revision for Philadelphia County to meet the RACT requirements for the 1997 8-hour ozone NAAQS. The 2006 SIP revision consists of a demonstration that Philadelphia County has met the RACT requirements for NOX and VOC, and includes: (1) A certification that previously adopted RACT controls in Pennsylvania's SIP that were approved by EPA for Philadelphia County under the 1-hour ozone NAAQS are based on the currently available technically and economically feasible controls, and continue to represent RACT for the 8-hour implementation purposes; (2) the adoption of federally enforceable permits that represent RACT control levels for four major VOC sources; and (3) a negative declaration that certain VOC sources do not exist in Philadelphia County.

On August 26, 2008 (73 FR 50270), EPA published a notice of proposed rulemaking (NPR) proposing approval of the 2006 SIP revision. However, the 2006 SIP revision relies on the NOX SIP Call to meet the NOX RACT requirements for EGUs. In light of the Court decision regarding the Phase 2 Ozone Implementation Rule, EPA has determined it cannot approve the presumption in the 2006 SIP submittal that the NOX SIP Call constitutes RACT for EGU sources in Philadelphia County. Thus, AMS needs to perform a NOX RACT analysis for sources that in the 2006 SIP revision relied on the NOX SIP Call to satisfy Philadelphia County's NOX RACT requirements.

Upon further review, EPA also determined that the 2006 SIP revision does not specifically and sufficiently address if the source-specific RACT controls for 46 major sources in Philadelphia County that were previously approved in the SIP under the 1-hour ozone NAAQS continue to represent RACT under the 1997 8-hour ozone NAAQS. Therefore, to satisfy the major source RACT requirement for the 1997 8-hour ozone NAAQS, AMS needs to either: (1) Provide a certification that previously adopted source-specific RACT controls approved by EPA in Pennsylvania's SIP under the 1-hour ozone NAAQS for major sources in Philadelphia County (as listed in 40 CFR 52.2020(d)(1)) continue to adequately represent RACT for the 1997 8-hour ozone NAAQS, or (2) perform a source-specific RACT analysis for each source which controls are not currently adequately representing RACT under the 1997 8-hour ozone standard.

On June 22, 2010, PADEP submitted another SIP revision addressing Philadelphia County's RACT requirements under the 1997 8-hour ozone standard. The 2010 SIP revision consists of: (1) The adoption of two regulations to meet CTG RACT requirements, and (2) a negative declaration for a CTG source category.

Since the 2006 SIP revision relies on the NOX SIP Call to meet the NOX RACT requirements for EGUs and it does not specifically and sufficiently address the source-specific RACT determinations for 46 major sources that were previously approved under the 1-hour ozone standard, EPA has determined that it cannot proceed with the final approval of this SIP revision. Therefore, EPA is withdrawing its August 26, 2008 proposed rule (73 FR 50270) to approve the 2006 SIP revision.

Nevertheless, in this rulemaking action, EPA is proposing conditional approval of Philadelphia County's 1997 8-hour ozone RACT demonstration provided in the 2006 and 2010 SIP revisions, based upon a commitment from AMS to submit additional SIP revisions to provide source-specific RACT determinations for certain major sources of VOC and NOX in Philadelphia County, and a certification that previously adopted source-specific RACT controls approved by EPA in the Pennsylvania's SIP under the 1-hour ozone NAAQS for the remaining sources in Philadelphia County (as listed in 40 CFR 52.2020(d)(1)) continue to adequately represent RACT for the 1997 8-hour ozone NAAQS. Pursuant to section 110(k)(4) of the CAA, on April 26, 2013, PADEP submitted on behalf of AMS a letter committing to submit SIP revisions to address source-specific RACT controls under the 1997 8-hour ozone standard for Philadelphia County.

In the 2006 SIP revision, in lieu of adopting regulations to address VOC CTG RACT requirements, Federally-enforceable permits were included for the following four major VOC sources in Philadelphia County: (1) Philadelphia Gas Works—Richmond Station, (2) Philadelphia Energy Solutions Refinery (formerly Sunoco Philadelphia Refinery), (3) Aker Philadelphia Shipyard, and (4) Sunoco Chemicals. In Section 4 of the 2006 SIP revision, AMS certified that these permits established RACT controls that are as stringent as EPA's presumptive RACT provided in the applicable CTG documents for the specific source categories. Table 1 identifies the four major VOC sources and the applicable CTG RACT requirements covered by these permits.

However, in the 2006 SIP revision, Philadelphia Gas Works—Richmond Station and Philadelphia Energy Solutions Refinery (formerly Sunoco Philadelphia Refinery) were erroneously defined as natural gas processing plants under EPA's CTG “Control of Volatile Organic Equipment Leaks from Natural Gas/Gasoline Processing Plants,” (EPA-450/2-83-007, December 1983). Subsequently, as part of the 2010 SIP revision, AMS submitted a negative declaration demonstrating that no sources exist in Philadelphia County for this CTG source category.

In addition, the 2010 SIP revision adopts VOC RACT rules that address the following CTGs: (1) “Control Techniques Guidelines for Shipbuilding and Ship Repair Operations (Surface Coating” (61 FR 44050, August 27, 1996); (2) “Control of Volatile Organic Compound Emissions from Air Oxidation Processes in Synthetic Organic Chemical Manufacturing Industry” (EPA-450/3-84-015, December 1984); and (3) “Control of Volatile Organic Compound Emissions from Reactor Processes and Distillation Operations in Synthetic Organic Chemical Manufacturing Industry” (EPA-450/4-91-031, August 1993). Therefore, the 2010 SIP revisions addresses each of the CTG requirements listed in Table 1 and it supersedes Section 4 of the 2006 SIP revision addressing these CTG RACT requirements.

For Philadelphia Gas Works—Richmond Station and Philadelphia Energy Solutions (formerly Sunoco Refinery), which were erroneously defined as natural gas processing plants in the 2006 SIP revision, EPA approved source-specific RACT evaluations under the 1-hour ozone standard. See 66 FR 54947 and 66 FR 54942 (October 31, 2001). The 2006 and 2010 SIP revisions do not address how Philadelphia meets the “major source” RACT requirement under the 1997 8-hour ozone standard for those sources for which EPA had previously approved source-specific RACT determinations under the 1-hour ozone NAAQS. However, AMS has committed to submit additional SIP revisions to address this RACT requirement.

In addition to the 2010 SIP revision's negative declaration, the 2006 SIP revision includes a negative declaration for the VOC source category defined under EPA's CTG “Control of Volatile Organic Emissions from Existing Stationary Sources, Volume VII: Factory Surface Coating of Flat Wood Paneling” (EPA-450/2-78-032, June 1978). Table 2 below lists the negative declarations submitted by AMS in the 2006 and 2010 SIP revisions, which EPA is proposing to conditionally approve. AMS certified that these VOC CTG source categories do not exist in Philadelphia County. Therefore, AMS does not need to adopt regulations addressing the applicable CTGs for these source categories.

AMS Regulation (AMR) V (“Control of Emissions of Organic Substances From Stationary Sources”) and PADEP Regulation Title 25, Chapter 129 contain the CTG and non-CTG VOC RACT controls that were implemented and approved in Philadelphia County SIP under the 1-hour ozone NAAQS. The 2006 SIP revision identifies Philadelphia County's VOC RACT regulations for which AMS has provided the required evaluation and is certifying as currently representing RACT under the 1997 8-hour ozone NAAQS. Although alternative control technology documents (ACTs) are not regulatory documents and have no legal effect on state regulations, EPA requires that states verify that ACTs have been considered in the RACT program development process. Therefore, Philadelphia County included ACTs in their review of applicable RACT requirements in the 2006 SIP revision. Further details of Philadelphia County's RACT determination for the 1997 8-hour ozone NAAQS can be found in the technical support document (TSD) prepared for this rulemaking action.

The 2010 SIP revision adopts the following regulations to meet CTG RACT requirements: (1) AMR V, section XV “Control of Volatile Organic Compounds (VOC) from Marine Vessel Coating Operations” and (2) AMR V, section XVI “Synthetic Organic Manufacturing Industry (SOCMI) Air Oxidation, Distillation, and Reactor Processes.” These regulations are in accordance with EPA's presumptive RACT provided in the following CTGs: (1) “Control Techniques Guidelines for Shipbuilding and Ship Repair Operations (Surface Coating)” (61 FR 44050, August 27, 1996), (2) “Control of Volatile Organic Compound Emissions from Air Oxidation Processes in Synthetic Organic Chemical Manufacturing Industry” (EPA-450/3-84-015, December 1984), and (3) “Control of Volatile Organic Compound Emissions from Reactor Processes and Distillation Operations in Synthetic Organic Chemical Manufacturing Industry” (EPA-450/4-91-031, August 1993). The 2010 SIP revision also amends AMR V, section I “Definitions” for incorporating various definitions applicable to the adopted provisions in Sections XV and XVI. These definitions are in accordance with EPA's recommendations in the applicable CTGs. These amendments to AMR V were adopted by AMS on April 26, 2010 and became effective upon adoption.

AMR V, section XV is applicable to marine vessel coating operations at a facility at which the total potential VOC emissions equal or exceed 25 tons (22.75 metric tons) per year; or the actual VOC emissions from all marine vessel coating operations exceed 15 pounds (7 kilograms) per day or 2.7 tons (2,455 kilograms) per year. The regulation establishes VOC emissions limits from general use coatings and from various specialty coatings. The limits, provided in Table 3 below, are expressed in two sets of equivalent units: grams/liter coating (minus water and exempt compounds) or grams/liter of solids. The limits are identical to those recommended in the corresponding CTG document, except that the cold-weather was specified to a period of every year, November 1st through March 31st. Further, for any coating used in a marine vessel coating operation for which the regulation does not provide an emissions standard, AMR V, section XV establishes a maximum VOC content limit of 340 grams/liter (minus water and exempt solvents) or 571 grams per liter solids.

AMR V, section XV also specifies as RACT the following cleanup requirements to minimize VOC emissions: (1) Storing all waste materials containing VOC, including cloth and paper, in closed containers; (2) maintaining lids on any VOC-bearing materials when not in use; and (3) using enclosed containers or VOC recycling equipment to clean spray gun equipment.

AMR V, section XVI applies to a vent stream from an air oxidation unit processes, distillation operations, or reactor processes in the SOCMI. The regulation is limited to vent streams from reactor processes and distillation operations producing one or more of the chemicals listed in Appendix A of “Control of Volatile Organic Compound Emissions from Reactor Processes and Distillation Operations in Synthetic Organic Chemical Manufacturing Industry (SOCMI) for Reactor and Distillation CTG” (EPA-450/4-91-031, August 1993) and vent streams from an air oxidation unit process producing one or more of the chemicals listed in 40 CFR 60.617.

The owner or operator of an affected source subject to AMR V, section XVI is required to comply with the New Source Performance Standards (NSPS) requirements found in 40 CFR part 60, subpart III, subpart NNN, and/or subpart RRR, with some exceptions listed. The NSPS requirements for SOCMI sources are essentially identical to those recommendations in the applicable CTGs, and therefore are as stringent as EPA's presumptive RACT. An air oxidation unit process, a distillation operation or reactor process in SOCMI subject to AMR V, section XVI must comply with either one of the following standards: (1) Reduction of emissions of total organic compounds (TOC) (minus methane and ethane) by 98 weight-percent, or to a TOC (minus methane and ethane) concentration of 20 ppmv on a dry basis corrected to 3 percent oxygen, whichever is less stringent; (2) combustion of the emissions in a flare that meets the requirements of 40 CFR 60.18; or (3) maintenance of a total resource effectiveness (TRE) index value greater than 1.0 without use of VOC emission control devices.

The TRE index is a measure of the supplemental total resource requirement per unit of VOC reduction, associated with VOC control by a flare or incinerator. The TRE index value can be determined for each vent stream for which the off-gas characteristics are known, including: flow rate, hourly VOC emissions, corrosion properties, and net heating value. AMR V, section XVI provides two equations for calculating the TRE index value: (1) For a vent stream controlled by a flare, and (2) a vent stream controlled by an incinerator. For purposes of complying with maintaining a TRE index value greater than 1.0 without the use of VOC emission control devices, the owner or operator of a facility affected should calculate the TRE index value of the vent stream using the equation for incineration. The TRE index value of a non-halogenated vent stream is determined by calculating values using both the incinerator equation and the flare equation, and selecting the lower of the two values.

EPA finds that the provisions adopted in AMR V, sections XV and XVI and the amendments of AMR V, section I are consistent with the CTG documents issued by EPA and that they represent RACT under the 1997 8-hour ozone standard for these VOC source categories in Philadelphia County. Thus, EPA is proposing conditional approval of the 2010 SIP revision as part of Philadelphia County's RACT demonstration for the 1997 8-hour ozone NAAQS.

The 2006 SIP revision demonstrates that AMR VII (“Control of Emissions of Nitrogen Oxides From Stationary Sources”) and PADEP Regulation Title 25, Chapter 129 (“Standards for Sources”) contain NOX RACT controls that were implemented and approved in Philadelphia County SIP under the 1-hour ozone NAAQS. Table 4 lists Philadelphia County's NOX RACT controls for which AMS has provided the required evaluation and is certifying as currently representing RACT for the 1997 8-hour ozone NAAQS.

In the 2006 SIP revision, AMS also certifies that PADEP's interstate pollution transport regulations currently represent NOX RACT under the 1997 8-hour ozone NAAQS. These provisions rely on the NOX SIP Call and are found in the following PADEP regulations: 25 Pa. Code sections 145.1-145.100 (“NOX Budget Trading Program”), 25 Pa. Code sections 145.111-145.113 (“Emissions of NOX from Stationary Internal Combustion Engines”), and 25 Pa. Code sections 145.141-144 (“Emissions of NOX from Cement Manufacturing”). In light of the Court decision regarding the Phase 2 Ozone Implementation Rule, EPA has determined it cannot approve AMS' presumption that the NOX SIP Call constitutes RACT for EGU sources in Philadelphia County. There are five EGUs in Philadelphia County that relied on emissions reductions under the NOX SIP Call as RACT: (1) Exelon—Delaware Station, (2) Exelon—Richmond Station, (3) Exelon—Schuylkill Station, (4) Veolia—Edison Station (formerly Trigen—Edison Station), and (5) Veolia—Schuylkill Station (formerly Trigen—Schuylkill Station). These EGUs are all major sources of NOX. AMS has committed to submit additional SIP revisions to address RACT for these five sources in Philadelphia County by providing source-specific RACT determinations.

AMS is implementing PADEP's regulation 25 Pa. Code sections 129.91 through 129.95 as RACT for the 1997 8-hour ozone standard for all major sources of NOX and VOC not subject to any other RACT rules. The regulation requires the owners or operators of the applicable sources to provide a case-by-case evaluation to determine RACT for each source (25 Pa. Code section 129.92) or to alternatively comply with presumptive NOX standards (25 Pa. Code section 129.93).

Under the 1-hour ozone NAAQS, EPA previously approved into Pennsylvania's SIP source-specific RACT determinations for 46 major sources of VOC and NOX in Philadelphia County. See 40 CFR 52.2020(d)(1). EPA has found that the 2006 and 2010 SIP revisions do not address how AMS is currently meeting the source-specific RACT requirement under the 1997 8-hour ozone NAAQS for these 46 major sources. AMS has also identified five sources that since the approval of the 1-hour ozone source-specific RACT determinations have adopted or will adopt additional controls that represent RACT under the 1997 8-hour ozone NAAQS: (1) Philadelphia Energy Solutions Refinery (formerly Sunoco Refinery), (2) Kraft Nabisco (formerly Nabisco Biscuit Co), (3) Temple University—Health Sciences Center, (4) GATX Terminals Corporation, and (5) Honeywell International (formerly Sunoco Chemicals—Frankford Plant). AMS has committed to submit additional SIP revisions to address RACT for these major sources of NOX and VOC in Philadelphia County.

In this rulemaking action, EPA is withdrawing its August 26, 2008 NPR (73 FR 50270), which proposed to approve the 2006 SIP revision submitted by PADEP on behalf of AMS as Philadelphia County's 1997 8-hour ozone RACT demonstration in accordance with the Court's Opinion in NRDC v. EPA. See 571 F.3d 1245. EPA is also proposing to conditionally approve Philadelphia County's RACT demonstration under the 1997 8-hour ozone NAAQS, as provided in the 2006 and the 2010 SIP revisions. Pursuant to section 110(k)(4) of the CAA, this conditional approval is based upon a letter from PADEP on behalf of AMS dated April 26, 2013 committing to submit to EPA, no later than twelve months from EPA's final conditional approval of Philadelphia County's 1997 8-hour ozone RACT demonstration, additional SIP revisions to address the deficiencies in the current RACT demonstration for Philadelphia County. The SIP revisions, to be submitted by PADEP on behalf of AMS, will address source-specific RACT determinations for the following major sources in Philadelphia County: (1) Exelon—Delaware Station, (2) Exelon—Richmond Station, (3) Exelon—Schuylkill Station, (4) Veolia—Edison Station (formerly Trigen—Edison Station), (5) Veolia—Schuylkill Station (formerly Trigen—Schuylkill Station), (6) Philadelphia Energy Solutions Refinery (formerly Sunoco Refinery), (7) Kraft Nabisco (formerly Nabisco Biscuit Company), (8) Temple University, Health Sciences Center, (9) GATX Terminals Corporation, and (10) Honeywell (formerly Sunoco Chemicals, Frankford Plant); and will include a certification that previously adopted source-specific RACT controls approved by EPA in the Commonwealth of Pennsylvania's SIP under the 1-hour ozone NAAQS for the remaining sources in Philadelphia County (as listed in 40 CFR 52.2020(d)(1)) continue to adequately represent RACT for the 1997 8-hour ozone NAAQS.

Once EPA has determined that AMS has satisfied this condition, EPA shall remove the conditional nature of its approval and Philadelphia County's 1997 8-hour ozone RACT demonstration will, at that time, receive a full approval status. Should AMS fail to meet the condition specified above, the final conditional approval of Philadelphia County's 1997 8-hour ozone RACT demonstration will convert to a disapproval. EPA is soliciting public comments on the issues discussed in this document. These comments will be considered before taking final action.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely proposes to approve state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this proposed rule, pertaining to Philadelphia County's RACT under the 1997 8-hour ozone NAAQS, does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

This proposed rule, if adopted, would inform readers where to find additional information regarding bilateral or multilateral air transport agreements, to which the United States Government and the government of a foreign country are parties, and which the Department of Transportation has determined meets the requirements of the Fly America Act.

As these agreements qualify as exceptions to the use of U.S. flag air carrier service mandated by FMR section 102-117.135(a), this proposed rule, if adopted, would advise of an Internet-based source of information regarding the use of foreign air carriers under the terms of these bilateral or multilateral agreements. Additionally, this proposed rule would incorporate language regarding other exceptions to the Fly America Act and would more clearly define who would be subject to the provisions implementing the Fly America Act and the Cargo Preference Act.

The Fly America Act, 49 U.S.C. 40118, requires the use of United States air carrier service for all air cargo transportation services funded by the United States Government. The requirements of the Fly America Act apply whenever the air transportation of the cargo is funded by the U.S. Government. One exception to this requirement is transportation provided under a bilateral or multilateral air transport agreement, to which the United States Government and the government of a foreign country are parties, and which the Department of Transportation has determined meets the requirements of the Fly America Act.

The United States Government has entered into several air transport agreements that allow Federally-funded transportation services for cargo movements to use foreign air carriers under certain circumstances. For example, on April 25 and April 30, 2007, the United States-European Union (EU) Air Transport Agreement (U.S.-EU Agreement) was signed, providing EU air carriers the right to transport cargo, including household goods, on scheduled and charter flights funded by the United States Government (excluding transportation funded by the Secretary of Defense or in the Secretary of a military department), between any point in the United States and any point in an EU Member State or between any two points outside the United States for which a U.S. Government civilian Department, Agency, or instrumentality (1) obtains the transportation for itself or in carrying out an arrangement under which payment is made by the U.S. Government or payment is made from amounts provided for use of the U.S. Government; or (2) provides transportation to or for a foreign country or international or other organization without reimbursement.

The United States Government and the European Union amended the U.S.-EU Agreement with a Protocol signed on June 24, 2010. In the amended agreement, the United States further extended the rights of EU air carriers to transport cargo on scheduled and charter flights funded by the United States Government between any point in the United States and any point outside the United States, or between any two points outside the United States. Norway and Iceland joined the U.S.-EU Air transportation agreement as amended by the Protocol on June 21, 2011, granting carriers from those countries the same rights.

The United States has air transport agreements with Australia, Switzerland, and Japan, which allow carriers from those countries to transport cargo subject to the Fly America Act between their respective home countries and the United States and between two points outside the United States. The provisions in the agreements with Australia and Switzerland became effective on October 1, 2008. The provisions in the agreement with Japan took effect on October 1, 2011.

The United States previously entered into an agreement with Saudi Arabia regarding Federally-funded transportation services for cargo movements under which Saudi Arabian air carriers are permitted to transport cargo from Saudi Arabia to the United States and from the United States to Saudi Arabia when the transportation is funded by U.S. Government contractors providing services to Federal Government entities.

Accordingly, rather than amend the FMR to include language from each of these agreements, and thereafter amending the FMR each time there is a change in air transport agreements that affect U.S. Government-funded cargo transportation, GSA is issuing this proposed rule which, if adopted, would provide an Internet-based source of information (http://www.state.gov/e/eb/tra/ata/index.htm) relating to such agreements. This approach would allow GSA to provide and quickly update relevant information as new agreements are signed or current agreements are amended without invoking the regulatory process. In the future, if GSA were to determine that further guidance is necessary, GSA may issue FMR Bulletins, or involve the regulatory process, as appropriate.

Additionally, GSA is proposing to update the FMR to include additional exceptions to the Fly America Act, such as cargo transportation services that are fully reimbursed by a third party, e.g., a foreign government, an international agency, or other organization. As the Federal Government is not expending any of its own funds, such services are not covered by the Fly America Act.

In accordance with 49 U.S.C. § 40118(c), GSA is proposing regulations under which agencies may expend appropriations for cargo transportation using foreign air carriers when it is deemed necessary. There have been limited circumstances in the past where the use of a foreign air carrier was deemed necessary. For example, when the Government Accountability Office (formerly the General Accounting Office), had responsibility for implementing the Fly America Act, the Comptroller General held that when time requirements could not be met the use of a foreign flag carrier was deemed necessary. (See The Honorable Norman Y. Mineta Chairman, Subcommittee on Aviation Committee on Public Works and Transportation, House of Representatives, Comptroller General, B-210293, June 13, 1983).

The use of foreign carriers should be very limited and approval should only be granted after a determination that one or more of these circumstances exist: no U.S. flag air carrier can provide the specific air transportation needed, no U.S. flag air carrier can accomplish the agency's mission, no U.S. flag air carrier can meet the time requirements in cases of emergency, there is a lack of or inadequate U.S. flag air carrier aircraft, or to avoid an unreasonable risk to safety. This rule proposes to include a provision stating that use of a foreign air carrier is permissible in these circumstances, but these circumstances should be rare.

Further, this proposed rule would update section 102-117.135(b) to include the current telephone number, email address, and Web site for the U.S. Department of Transportation Maritime Administration (MARAD), Office of Cargo Preference and Domestic Trade. This proposed rule would also identify the Web site for agencies to go to for information that MARAD requires to be submitted by the shipping Department or Agency when cargo is shipped subject to 46 U.S.C. 55305, the Cargo Preference Act of 1954, as amended.

Finally, GSA is proposing to revise the language in FMR section 102-117.15 to state clearly that this part applies to all agencies and wholly-owned Government corporations except as otherwise expressly provided.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This is not a significant regulatory action, and therefore, would not be subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule would not be a major rule under 5 U.S.C. 804.

While these revisions are substantive, this proposed rule would not 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. The proposed rule is also exempt from the Administrative Procedure Act per 5 U.S.C. 553 (a)(2) because it applies to agency management or personnel.

The Paperwork Reduction Act does not apply because the proposed changes to the FMR would not impose recordkeeping or information collection requirements, or the collection of information from offerors, contractors, or members of the public that require the approval of the Office of Management and Budget (OMB) under 44 U.S.C. 3501, et seq.

This proposed rule is also exempt from Congressional review prescribed under 5 U.S.C. 801 since it relates to agency management or personnel.

For the reasons set forth in the preamble, GSA proposes to amend 41 CFR Part 102-117 as follows:

This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM) in WC Docket Nos. 13-97, 04-36, 07-243, 10-90 and CC Docket Nos. 95-116, 01-92, 99-200, FCC 13-51, adopted and released April 18, 2013. The full text of this document is available for public inspection during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. The document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street SW., Room CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, or via the Internet at http://www.bcpiweb.com. It is available on the Commission's Web site at http://www.fcc.gov.

2. The Communications Act of 1934, as amended (the Act), grants the Commission plenary authority over the North American Numbering Plan (NANP) within the United States. In its Numbering Resource Optimization (NRO) proceeding, the Commission adopted several optimization measures that allow it to monitor more closely how telephone numbers are used within the NANP. These measures also promote more efficient allocation and use of numbers by tying a carrier's ability to obtain them more closely to its actual need for numbers to serve its customers. In particular, to combat the inefficient use of numbers, § 52.15(g)(2)(i) of the Commission's rules requires an applicant for telephone numbers to provide evidence that it is authorized to provide service in the area in which it is requesting those numbers. The Commission interpreted this rule in its NRO First Report and Order as requiring evidence of either state certification or a Commission license.

3. Interconnected VoIP service enables users, over broadband connections, to receive calls that originate from the public switched telephone network (PSTN) or other VoIP users, and to terminate calls to the PSTN or other VoIP users. However, the Commission has not addressed the classification of interconnected VoIP services, and thus retail interconnected VoIP providers in many, but not all, instances take the position that they are not subject to regulation as telecommunications carriers, nor can they directly avail themselves of various rights under sections 251 and 252 of the Act.

4. In order to provide interconnected VoIP service, a provider must offer consumers NANP telephone numbers; otherwise, a customer on the PSTN would not have a way to dial the interconnected VoIP customer using his PSTN service. Interconnected VoIP providers often cannot obtain telephone numbers directly from the numbering administrators as they cannot provide the evidence of certification required by § 52.15(g)(2)(i)—they typically do not hold state certifications or Commission licenses. Thus, these providers generally obtain NANP telephone numbers by purchasing wholesale services from a competitive local exchange carrier (CLEC), and then using these services to interconnect with the PSTN in order to send and receive certain types of traffic between the VoIP provider's network and the carrier networks.

5. The Commission has acted to ensure consumer protection, public safety, and other important policy goals in orders addressing interconnected VoIP services, without classifying those services as telecommunications services or information services under the Communications Act.

6. As part of our focused ongoing effort to modernize our rules during a period of significant technology transition, we propose to modify our rules to allow interconnected VoIP providers to obtain numbers directly from the number administrators, subject to a variety of requirements to ensure continued network integrity, allow oversight and enforcement of our numbering regulations, and protect the public interest. We expect that granting VoIP providers direct access to numbers—subject to the number utilization provisions we propose below—will enhance the effectiveness of our number conservation efforts, and will reduce costs and inefficiencies that arise today through the mandatory use of carrier-partners. We anticipate that these proposed rule changes will encourage providers to develop and deploy innovative new technologies and services that benefit consumers.

7. We invite general comment on permitting interconnected VoIP providers to obtain phone numbers directly from the number administrators, as opposed to through carrier partners. Do commenters agree that allowing interconnected VoIP providers direct access to numbers will spur the introduction of innovative new technologies and services, increase efficiency, and facilitate increased choices for American consumers? Are there benefits to requiring carrier-partners? Are there alternate ways to accomplish these goals? We ask commenters who disagree with our proposal to address other ways the Commission's numbering policies can be utilized to achieve the outlined benefits.

8. We note that in October 2010, the Twenty-First Century Communications and Video Accessibility Act (CVAA) became law. The CVAA codified the Commission's definition of “interconnected VoIP service” contained in § 9.3 of the Commission's rules, “as such section may be amended from time to time.” We seek comment on whether any amendments to the Commission's definition of interconnected VoIP service are needed to allow direct access to numbers by interconnected VoIP providers. If so, should the amendments apply to all of the Commission's requirements that involve interconnected VoIP providers or should the Commission use the amended definition of interconnected VoIP solely for purposes of number administration?

9. In various sections of the NPRM, we seek comment on: the type of documentation that interconnected VoIP providers should provide in order to obtain numbers; the numbering administration requirements that should apply to such providers; and enforcement of our numbering rules. In other parts, we discuss and seek comment on commenters' concerns raised in the record, such as databases, call routing and termination, intercarrier compensation, IP interconnection, local number portability, number cost allocation and transitioning to direct access if interconnected VoIP providers are granted direct access to numbers, other entities that potentially could gain access to numbers, and our legal authority for imposing proposed numbering administration and other requirements on interconnected VoIP providers.

10. We seek comment on whether the Commission should expand access to numbers beyond the proposal regarding interconnected VoIP providers. For example, should the Commission expand access to numbers to VoIP providers (regardless of whether they are interconnected or one-way)? We seek comment on the types of services and applications that use numbers today, and that are likely to do so in the future. Is the lack of access to numbers a barrier to deployment of innovative services? Twilio states that making numbers more broadly available to other communications providers will lower the cost of accessing numbers and providing telecommunications services, and will encourage competition and innovation. We seek comment on these assertions.

11. We seek comment on the potential benefits and risks of expanding direct access to numbers. For example, would extending access to numbers accelerate number exhaust and if so, what steps could we take to control number exhaust? What safeguards or countermeasures should the Commission utilize, and should these be specific to innovative providers? We note above that allowing interconnected VoIP providers direct access to numbers could enhance the ability to oversee number use and control exhaust. Do these same benefits apply to other types of innovative service providers that today only receive indirect access to numbers? We also seek comment on how we can maintain the integrity and oversight of our numbering system if we broadly extend direct access to numbers. For example, we seek comment on the numbers that should be provided to these other entities. Should the Commission limit distribution in some fashion? Should the Commission permit these other entities to obtain only non-geographic numbers? We note that the Alliance for Telecommunications Industry Solutions' (ATIS) Industry Numbering Committee (INC) reported on its recent efforts, at the September NANC meeting, to revise the guidelines for assignment of non-geographic numbers to reflect increased demand for their use with machine-to-machine applications. Which machine uses require a telephone number and why? Which ones do not? As an example, could some uses simply require an IP address or device ID to be assigned? Should machine-to-machine uses be assigned one type of number, with common 10-digit area code numbers reserved for voice communications or SMS? We seek comment generally on relevant numbering limitations that should apply to innovative providers.

12. There is a wide array of services and providers that today rely on indirect access to numbers. We recognize that those uses are likely to change and expand in unpredictable ways in the future. Are there distinguishing or limiting factors that should govern whether and how specific services or providers receive certain types of numbers? For example, should the Commission prioritize access to numbers by certain types of providers, or to services that are primarily (or exclusively) voice services? We seek comment on the relevant criteria the Commission should consider when deciding whether and on what terms to allow direct access to numbers.

13. If we grant interconnected VoIP providers and other types of entities direct access to numbers, should we establish the same conditions and criteria, regardless of the service or technology? For example, should we impose the same documentation requirements and enforcement provisions on interconnected VoIP providers and other entities?

14. Twilio states that the conditions Vonage identifies in its request for waiver, including utilization and optimization requirements, are appropriate for access by other VoIP providers. We seek comment on whether these limitations are sufficient for innovative providers. What protections are necessary in order to combat potential abuses by innovative providers? What safeguards should the Commission adopt in order to promote an orderly and efficient use of numbers by innovative providers? Finally, we seek comment on the rule changes necessary to effectively allow other carriers to have access to numbers. How would the proposed rule changes in this Notice need to be modified in order for innovative providers to have access to numbers?

15. We seek comment on whether the Commission should modify § 52.15(g)(2)(i) of our rules to allow VPC providers direct access to p-ANI codes, for the purpose of providing 911 and E911 service. VPC providers are entities that help interconnected VoIP providers deliver 911 calls to the appropriate public safety answering point.

16. Under § 52.15(g)(2)(i) of our rules, applicants for numbers, including p-ANI codes, must provide evidence that they are authorized to provide service in the area in which they are requesting numbers. However, in October 2008, as part of its implementation of the NET 911 Act, the Commission granted interconnected VoIP providers the right to access p-ANI codes, without such authorization, for the purpose of providing 911 and E911 service.

17. We seek comment on whether § 52.15(g)(2)(i) should be modified to allow all providers of VPC service to directly access p-ANI codes. Would allowing VPC providers access to p-ANI codes enhance public safety by further ensuring that emergency calls are properly routed to trained responders of the PSAPs? Are there unique technical characteristics of p-ANI codes that make them different from the numbers currently included in § 52.15(g)(2)(i). Are there any cost benefits to allowing VPC providers direct access to p-ANI codes? Furthermore, would such access help encourage the continued growth of interconnected VoIP services?

18. In the NET 911 Order, the Commission determined that it has the authority to regulate VPC providers so they can perform their obligations under the NET 911 Act. We seek comment on whether there are distinctions the Commission should consider between VPC providers and interconnected VoIP providers with respect to the need to access p-ANI codes. Are there any technical or policy reasons why VPC providers should be denied direct access to p-ANI codes while interconnected VoIP providers have access under the Commission's NET 911 Order?

19. We also seek comment on whether any evidence of authorization should be required for VPC providers to access p-ANI codes. TCS argued, in seeking a waiver of our rule, that if state competitive local exchange carrier certification is required, then obtaining one state certification should be adequate for a waiver. Should § 52.15(g)(2)(i) be modified to require VPC providers to provide the RNA with state certification from at least one state? Alternatively, should a “national authorization” be provided to VPC providers from a public safety organization? Should the Commission consider any other factors, such as whether VPC providers are current on state and local emergency fees and any appropriate universal service fund contributions in granting access to p-ANI codes? Are there other obligations on which we seek comment above for VoIP provider access to numbers that should apply as well to VPC providers?

20. Section 251(e)(1) of the Act gives the Commission plenary authority over that portion of the NANP that pertains to the United States, and the Commission retains “authority to set policy with respect to all facets of numbering administration in the United States.” The Commission has concluded that the plenary numbering authority set forth in section 251(e)(1) of the Act provides ample authority for the Commission to extend numbering-related requirements to interconnected VoIP providers that obtain telephone numbers directly or indirectly, regardless of the statutory classification of interconnected VoIP service. Thus, because the Commission has plenary authority over the administration of NANP numbers in the United States, any entity that participates in that administration—including VoIP providers that obtain numbers, whether or not they are carriers—must adhere to the Commission's numbering rules. We believe that this rationale applies equally to the situation here. Thus, we believe that the Commission has authority under section 251(e)(1) to extend the numbering requirements discussed above to interconnected VoIP providers, and seek comment on this analysis.

21. We also believe that the Commission has additional authority under Title I of the Act to impose numbering obligations on interconnected VoIP providers. Ancillary authority may be employed when “(1) the Commission's general jurisdictional grant under Title 1 covers the regulated subject and (2) the regulations are reasonably ancillary to the Commission's effective performance of its statutorily mandated responsibilities.” As to the first predicate, as we have concluded in numerous orders, interconnected VoIP services fall within the subject-matter jurisdiction granted to the Commission in the Act. As to the second predicate, we seek comment on whether imposing numbering obligations on interconnected VoIP providers would be reasonably ancillary to the Commission's performance of particular statutory duties, such as those under sections 251 and 201 of the Act. For example, adopting numbering obligations for interconnected VoIP providers that obtain direct access to numbers is necessary to ensure a level playing field and foster competition by eliminating barriers to, and incenting development of, innovative IP services. We thus seek comment on whether, for these or other reasons, imposing numbering obligations on interconnected VoIP providers that get direct access to numbers are reasonably ancillary to the Commission's responsibilities to ensure that numbers are made available on an “equitable” basis, to advance the number-portability requirements of section 251, or to help ensure just and reasonable rates and practices for voice telecommunications services regulated under section 201 through market discipline from interconnected VoIP services. We also seek comment on other possible bases for the Commission to exercise ancillary authority here.

22. We note further that our proposed rules are consistent with other statutory provisions governing the Commission. For example, section 706(a) of the Telecommunications Act of 1996 directs the Commission to encourage the deployment of advanced telecommunications capability to all Americans by using measures that “promote competition in the local telecommunications market.” Permitting interconnected VoIP providers to obtain direct access to telephone numbers may encourage more VoIP providers to enter the market, enabling consumers to enjoy more competitive service offerings. This will in turn spur consumer demand for these services, thereby increasing demand for broadband connections and consequently encouraging more broadband investment and deployment consistent with the goals of section 706.

23. In the above Notice, we proposed a set of rules that would allow interconnected VoIP providers to obtain telephone numbers directly from number administrators rather than through intermediate carriers, subject to certain requirements. In this Notice of Inquiry (NOI), we seek initial comment on a broader range of numbering issues that result from ongoing transitions from fixed telephony to increased use of mobile services, from TDM to IP technologies, and from geography-based intercarrier compensation to bill-and-keep, focusing particularly on whether telephone numbers should remain associated with particular geographies.

24. With the development of mobile services and IP technology, the way that consumers use telephone numbers has evolved. Some services have already broken the historical tie between a number and a specific device. For example, Skype permits users to register a telephone number that routes to the Skype service, and Google Voice permits users to register a telephone number that acts as an overlay on a user's existing telephony services, allowing selective routing of calls from certain numbers, and listening in on voicemails before picking up the phone. Other services use a single number for multiple devices. See Nathan Ingram, iOS 6 unifies your Apple ID and phone number for improved iMessage and Facetime support, The Verge (June 11, 2012, 2:32 p.m.), http://www.theverge.com/2012/6/11/3078598/ios-6-unified-apple-id-phone-number (“Now, if someone calls your phone number for Facetime, you'll be able to answer on your Mac or iPad. The same goes for Messages—if you get an iMessage on your phone, it'll be delivered to your Mac and other iOS devices, even if the sender sent the message to your cell phone number and not your Apple ID email.”).

25. In light of these changes, in this Notice we seek comment on some of the important recommendations made by the Technological Advisory Council (TAC) regarding the future of numbering. See Technological Advisory Council, Presentation to the Federal Communications Commission, at 60 (2012) (recommending that the Commission “[i]nitiate rulemaking on the full range and scope of issues with numbers/identifiers”), available at http://transition.fcc.gov/bureaus/oet/tac/tacdocs/meeting121012/TAC12-10-12FinalPresentation.pdf. In particular, the TAC recommended that the Commission consider “[f]ully decoupl[ing] geography from number.” We seek comment on the specifics of such a transition, including how it would affect public safety communications, access to communications networks by Americans with disabilities, and reliability in routing of communications and interconnection.

26. Aside from the geography-related issues addressed in the foregoing sections, the TAC and others have raised issues concerning number administration more generally. The memorability, ubiquity, convenience, and universality of telephone numbers as identifiers suggest that they will remain relevant for quite a while. Other than shifting away from geographic assignment, should the Commission be considering long-term changes to the basic telephone numbering system?

27. The proceeding this Notice initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. See 47 CFR 1.1200 et seq. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with § 1.1206(b). In proceedings governed by § 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

28. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first and second pages of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

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

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

All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW. Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

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

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

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

29. As required by the Regulatory Flexibility Act of 1980 (RFA), the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities of the policies and rules proposed in this document. See 5 U.S.C. 603. The analysis is found in Appendix B. We request written public comment on the analysis. Comments must be filed by the same dates as listed in the first page of this document, and must have a separate and distinct heading designating them as responses to the IRFA. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, will send a copy of this Notice, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

30. This NPRM seeks comment on a potential new or revised information collection requirement. If the Commission adopts any new or revised information collection requirement, the Commission will publish a separate notice in the Federal Register inviting the public to comment on the requirement, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3501-3520). In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”

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

32. The NPRM proposes to remove unnecessary regulatory barriers to innovation and efficiency by allowing interconnected VoIP providers to obtain telephone numbers directly from the NANPA and the PA, subject to certain requirements. Telephone numbers are a valuable and limited resource, and access to and use of such numbers must be managed judiciously in order to ensure that they remain available and to protect the efficient and reliable operation of the telephone network. At the same time, the Commission is attempting to modernize its rules in light of significant and ongoing technology transitions in the delivery of voice services, with the goal of promoting innovation, investment, and competition for the ultimate benefit of consumers and businesses. In light of these twin concerns, the proposed rules allowing interconnected VoIP providers to have direct access to numbers will help modernize the Commission's policies of fostering innovation and competition and speeding the delivery of innovative services to consumers and businesses, while also preserving the integrity of the telephone network and ensuring appropriate oversight of telephone number assignments. To ensure the efficient and judicious management of telephone numbers and promote further innovation and competition, the NPRM seeks comment on these proposed rules, including the requirements that must be met in order to obtain direct access the numbers, and potential issues involving intercarrier compensation, VoIP interconnection, and LNP obligations under the proposed rules.

33. The NPRM first proposes to modify the Commission's rules to allow interconnected VoIP providers to obtain numbers directly from the NANPA and the PA, subject to a variety of requirements to ensure continued network integrity, allow oversight and enforcement of our numbering regulations, and protect the public interest. The NPRM seeks comment generally on permitting interconnected VoIP providers to obtain phone numbers directly from the number administrators and on whether allowing these parties direct access to numbers will spur the introduction of innovative new technologies and services, increase efficiency, and facilitate increased choices for American consumers. The NPRM also seeks comment on whether there are alternate ways to accomplish these goals and whether there are benefits to requiring carrier-partners.

34. In October 2010, the CVAA codified the Commission's definition of “interconnected VoIP service” in Section 9.3 of the Commission's rules, “as such section may be amended from time to time.” See Pub. L. 111-260, section 101, adding definition of “interconnected VoIP service” to Section 3 of the Act, codified at 47 U.S.C. 153(25). The Senate Report reiterates that this term “means the same as it does in title 47 of the Code of Federal Regulations, as such title may be amended from time to time.” S. Rep. No. 111-386, at 6 (2010) (“Senate Report”). The House Report is silent on this issue. H.R. Rep. No. 111-563 (2010) (“House Report”). The NPRM therefore seeks comment on whether any amendments to the Commission's definition of interconnected VoIP service are needed to allow direct access to numbers by interconnected VoIP providers.

35. The NPRM notes that under § 52.15(g)(2)(i) of the rules, an applicant for telephone numbers must provide the number administrator with evidence of the applicant's authority to provide service, such as a license issued by the Commission or a CPCN issued by a state regulatory commission. Interconnected VoIP providers may be unable to provide the evidence required by this rule because states often refuse to certify VoIP providers. After the Commission required interconnected VoIP providers to comply with the same E911 requirements as carriers, the Bureau recognized that VoIP providers would not be able to provide the same documentation as certificated carriers to obtain the non-dialable numbers necessary to provide E911 service. In that case, the Bureau permitted the administrator that disseminates p-ANI codes to accept documentation different than that required by certificated carriers. To ensure continued compliance with part 52 of the Commission's rules and with the NET 911 Act, an interconnected VoIP provider must demonstrate that it provides VoIP service and must identify the jurisdiction(s) in which it provides service. See Letter from Sharon E. Gillett, Chief, Wireline Competition Bureau, Federal Communications Commission, to Betty Ann Kane, Chair, North American Numbering Council and Ms. Amy L. Putnam, Director, Number Pooling Services, Neustar, Inc. (Dec. 14, 2010). The Bureau allowed this documentation to be in the form of pages 2 and 36 of the FCC Form 477.

36. Given these issues, the NPRM seeks comment on what, if any, documentation interconnected VoIP providers should be required to provide to the number administrator to receive numbers. Specifically, comment is sought on whether interconnected VoIP providers should be required to demonstrate that they do or plan to offer service in a particular geographic area in order to receive numbers associated with that area. Comment is sought on whether data regarding the provision of interconnected VoIP services from FCC Form 477 would service this role, or whether there are alternative means for interconnected VoIP providers to demonstrate, absent state certification, that they are providing services in the area for which the numbers are being requested. Comment is further sought on whether the Commission should adopt a process whereby it will provide the certification required by § 52.15(g)(2)(i), but only to the extent a state commission lacks authority to do so or represents that it has a policy of not doing so. The NPRM asks whether certification requirements should be different for providers of facilities-based interconnected VoIP, which is typically offered in a clearly defined geographic area, and over-the-top interconnected VoIP, which can be used anywhere that has a broadband connection. Comment is also sought on whether certification would permit the Commission to exercise forfeiture authority without first issuing a citation. The NPRM further seeks comment on the costs and burdens imposed on small entities from the rules resulting from this requirement, and how those onuses might be ameliorated. Lastly, the NPRM asks whether there are other issues or significant alternatives that the Commission should consider to ease the burden of these proposed measures on small entities.

37. Telecommunications carriers are required to comply with a variety of Commission and state number optimization requirements and are expected to follow industry guidelines. In the SBCIS Waiver Order, the Commission imposed these requirements on SBCIS as a condition of its authorization to obtain telephone numbers directly from the number administrators. The NPRM proposes to impose these same number utilization and optimization requirements and industry guidelines and practices that apply to carriers, on interconnected VoIP providers that obtain direct access to numbers. See 47 CFR part 52. These requirements include, inter alia, adhering to the numbering authority delegated to state commissions for access to data and reclamation activities, and filing NRUF Reports. Requiring interconnected VoIP providers that obtain numbers directly from the numbering administrators to comply with the same numbering requirements and industry guidelines as carriers will help alleviate many concerns about numbering exhaust and will enable the Commission to more effectively monitor the VoIP providers' number utilization. The NPRM seeks comment on these requirements and on their efficacy in conserving numbers and protecting consumers. One reason numbers that interconnected VoIP providers obtain from CLECs are not reported as “intermediate numbers” is that some reporting carriers classify interconnected VoIP providers as the “end user,” because the interconnected VoIP provider is the customer of the wholesale carrier. The NPRM therefore seeks comment on how to revise the Commission's definition of “intermediate numbers” or “assigned numbers” to ensure consistency among all reporting providers.

38. The NPRM proposes to allow interconnected VoIP providers to obtain telephone numbers only from rate centers subject to pooling, in order to reduce waste. The NPRM seeks comment on this proposal and any concerns it may raise. Comment is also sought on whether it makes sense to differentiate between traditional carriers and interconnected VoIP providers in terms of the rate centers from which they can request numbers, and whether this approach raises anti-competitive or public policy concerns. The NPRM seeks further comment on how this approach will affect existing VoIP customers with numbers not in these rate centers, if at all. Comment is sought on whether this approach is appropriately tailored to address the problems of waste and number exhaust, and whether there are any alternative measures that would be more effective in dealing with these issues. The NPRM also details an alternative proposal by the California PUC in which the Commission would grant states the right to specify which rate centers are available for VoIP number assignment. The NPRM seeks comment, in particular, on this alternative proposal.

39. In conjunction with these recommendations, the California PUC proposes a system in which all calls to VoIP providers are deemed to be local calls for numbering administration purposes. Comment is sought on the feasibility of this plan and the method by which the Commission might implement it. The NPRM also seeks comment on any drawbacks posed by this system to VoIP providers and their customers.

40. Under the Commission's rules, carriers must demonstrate “facilities readiness” before they can obtain initial numbering resources, which helps to ensure that carriers are not building inventories before they are prepared to offer service. Section 52.15(g)(2)(ii) of the Commission's rules requires that an applicant for initial numbering resources is or will be capable of providing service within sixty (60) days of the activation date of the numbering resources. 47 CFR 52.15(g)(2)(ii). The NPRM proposes to extend these “facilities readiness” requirements to interconnected VoIP providers who obtain direct access to numbers. Comment is sought on whether requiring interconnected VoIP providers to submit evidence that they have ordered an interconnection service pursuant to a tariff is appropriate evidence of “facilities readiness” or whether there are better ways to demonstrate compliance with this requirement. Comment is sought further on whether the Commission should modify this requirement to allow more flexibility, and if so, how.

41. In the SBCIS Waiver Order, the Commission required SBCIS to file any requests for numbers with the Commission and the relevant state commission at least 30 days prior to requesting numbers from the number administrators. The 30-day notice period allows the Commission and relevant state commission to monitor the VoIP providers' numbers and to take measures to conserve resources, if necessary, such as determining which rate centers are available for number assignments. The NPRM seeks comment on whether to impose this requirement on all interconnected VoIP providers that obtain direct access to numbers.

42. In addition to complying with the Commission's existing numbering requirements and the obligations set forth in the SBCIS Waiver Order, Vonage offered several commitments as a condition of obtaining direct access to numbers. Specifically, Vonage offered to: (1) Maintain at least 65 percent number utilization across its telephone number inventory; (2) offer IP interconnection to other carriers and providers; and (3) provide the Commission with a transition plan for migrating customers to its own numbers within 90 days of commencing that migration and every 90 days thereafter for 18 months. Vonage indicates that these commitments will ensure efficient number utilization and facilitate Commission oversight. The NPRM seeks comment on whether to impose some or all of these requirements on interconnected VoIP providers.

43. To enhance the ability of state commissions to effectively oversee numbers, which will in turn promote better number utilization, the Wisconsin PSC suggests that the Commission require interconnected VoIP providers to do the following in order to obtain telephone numbers: (1) Provide the relevant state commission with regulatory and numbering contacts upon first requesting numbers in that state; (2) consolidate and report all numbers under its own unique Operating Company Number (OCN); (3) provide customers with the ability to access all N11 numbers in use in a state; and (4) maintain the original rate center designation of all numbers in its inventory. The NPRM seeks comment on this proposal and whether additional oversight of the financial and managerial aspects of interconnected VoIP providers is needed. In particular, comment is sought on how providers of nomadic VoIP service could comply with a requirement to provide access to the locally-appropriate N11 numbers.

44. The NPRM further seeks comment on whether the proposal to allow direct access to numbers for interconnected VoIP providers might affect competition, and if so, how.

45. The NPRM notes that in order for the Commission to exercise its forfeiture authority for violations of the Act and its rules without first issuing a warning, the wrongdoer must hold (or be an applicant for) some form of authorization from the Commission, or be engaged in activity for which such an authorization is required. A Commission authorization is not currently required to provide interconnected VoIP service. The NPRM therefore seeks comment on whether the Commission should implement a certification or blanket authorization process applicable to interconnected VoIP providers that elect to obtain direct access to numbers. Comment is also sought on whether Commission certification would be necessary and appropriate for all providers, not just those that cannot obtain certifications from state commissions. Alternatively, comment is sought on whether it would be less administratively burdensome if the Commission amended its rules to establish “blanket” authorization for interconnected VoIP providers for access to numbering resources.

46. In addition, the NPRM seeks comment on whether there are ways to ensure that VoIP providers are subject to the same penalties and enforcement processes as traditional common carriers. More specifically, comment is sought on whether VoIP providers must consent to be subject to the same monetary penalties as common carriers as a condition of obtaining direct access to numbers. Comment is also sought on whether the Commission can and should require VoIP providers to waive any additional process protections that traditional common carriers would not receive. Lastly, the NPRM seeks comments on whether VoIP providers should be prohibited from obtaining direct access to numbers if they are “red-lighted” by the Commission for unpaid debts or other reasons. The NPRM asks if there are any other reasons for which VoIP providers should be deemed ineligible to obtain numbers.

47. The NPRM also seeks comment on the routing of calls by interconnected VoIP providers that use their own telephone numbers. Specifically, the NPRM explains that interconnected VoIP provider switches do not appear in the LERG, the database which enables carriers to send traffic to, and receive traffic from, a given telephone number. The NPRM notes that some commenters claim that, without association to a switch, carriers will not know where to route calls, likely resulting in end user confusion and interference with emergency services and response. Other commenters have responded that marketplace solutions from companies such as Level 3 or Neutral Tandem can be employed to solve these problems by, for instance, designating the switch of a carrier partner in the LERG and in the NPAC database as the default routing locations for traffic bound for numbers assigned to interconnected VoIP providers in order to route calls originated in the PSTN. The NPRM seeks comment generally on whether providing interconnected VoIP providers direct access to numbers will hinder or prevent call routing or tracking, and how such complications can be prevented or minimized. The NPRM also seeks comment on whether the marketplace solutions described by the commenters will be adequate to properly route calls by interconnected VoIP providers, absent a VoIP interconnection agreement. The NPRM further asks whether the Commission should require interconnected VoIP providers to maintain carrier partners to ensure that calls are routed properly.

48. The NPRM seeks comment on the routing limitations that interconnected VoIP providers currently experience as a result of having to partner with a carrier in order to get numbers, and on the role and scalability of various industry databases in routing VoIP traffic directly to the VoIP provider over IP links. Specifically, the NPRM asks what restrictions are imposed by the administrators of the various database services on access to the databases, and on the practices that service providers may need to alter to increase interconnection and routing efficiency. Specifically, the NPRM asks whether listing a non-facilities-based interconnected VoIP provider in the Alternate Service Provider Identification (ALT SPID) field in the NPAC database is sufficient to allow a provider to route calls directly to a VoIP provider if the VoIP provider has a VoIP interconnection agreement. Lastly, the NPRM seeks comment on how numbering schemes and databases integral to the operation of PSTN call routing will need to evolve to operate well in IP-based networks.

49. In the USF/ICC Transformation Order, the Commission adopted a default uniform national bill-and-keep framework as the ultimate intercarrier compensation end state for all telecommunications traffic exchanged with a LEC, and established a measured transition that focused initially on reducing certain terminating switched access rates. As the NPRM notes, interconnected VoIP providers with direct access to numbers could enter into agreements to interconnect with other providers. The NPRM seeks comment on how to address any ambiguities in intercarrier compensation payment obligations that may be introduced by granting interconnected VoIP providers direct access to numbers. The NPRM also seeks comment on whether granting interconnected VoIP providers direct access to numbers would improve the accuracy and utility of call signaling information for traffic originated by customers of interconnected VoIP providers. The NPRM asks further whether any intercarrier compensation impacts would be temporary, given the ongoing transition toward a bill-and-keep intercarrier compensation framework.

50. The NPRM also seeks comment on the regulatory status of competitive tandem providers, and in particular, whether any portions of competitive operations are regulated by the states or Commission. If not, the NPRM asks what intercarrier compensation obligations apply, and to what entity, for traffic that a VoIP provider originates or terminates in partnership with a competitive tandem provider that is not certified by the Commission or any state commission.

51. The NPRM seeks comment generally on the effect that direct access to numbers will have on the industry's transition to direct interconnection in IP, and on the status of IP interconnection for VoIP providers today. The NPRM also asks how many VoIP interconnection agreements currently exist and how parties to those agreements treat technical issues. Comment is further sought on whether access to numbers will increase call routing efficiency when one of the providers is a VoIP provider, and whether such efficiency will affect the likelihood of parties entering into agreements for VoIP interconnection.

52. The NPRM also seeks comment on the extent to which its proposals would promote IP interconnection. As stated in the NPRM, the Commission expects that granting VoIP providers direct access to numbers would facilitate several types of VoIP interconnection, including interconnection between over-the-top VoIP providers and cable providers, interconnection between two over-the-top providers, and interconnection between cable providers. Comment is sought on this analysis, and on whether granting VoIP providers direct access to numbers will encourage IP-to-IP interconnection by eliminating disincentives to interconnect in IP format and lowering the costs associated with implementing IP-to-IP interconnection agreements. The NPRM further asks whether direct access to numbers will affect the rights and obligations of service providers with regards to VoIP interconnection.

53. The NPRM proposes to modify the Commission's rules to include language specifying that users of interconnected VoIP services should enjoy the benefits of local number portability without regard to whether the VoIP provider obtains numbers directly or through a carrier partner. The NPRM seeks comment on this proposal.

54. In the VoIP LNP Order, the Commission clarified that carriers “must port-out NANP telephone numbers upon valid requests from an interconnected VoIP provider (or from its associated numbering partner).” Some CLECs have argued that a port directly to a non-carrier interconnected VoIP provider (that has not been certificated by a state), is not a “valid port request,” so there is no obligation to port directly to a non-carrier interconnected VoIP provider. The NPRM proposes rules that will better reflect this obligation by making clear the requirement to port directly to a non-carrier interconnected VoIP provider upon request. This proposed rule change should eliminate any argument that a request to port to a VoIP provider is invalid merely because the ported-to entity is a VoIP provider. In doing so, the proposed rule will benefit users of interconnected VoIP services by increasing the ease of portability.

55. The NPRM also notes that the Commission has established geographic limits on the extent to which a provider must port numbers. The NPRM seeks comment on the geographic limitations, if any, that should apply to ports between a wireline carrier and an interconnected VoIP provider that has obtained its numbers directly from the number administrators, or between a wireless carrier and an interconnected VoIP provider that has obtained its numbers directly from the number administrators. The NPRM asks further whether geographic limits on porting directly between an interconnected VoIP provider and another carrier are necessary. Comment is also sought on whether, as a practical matter, interconnected VoIP providers will need to partner with a carrier numbering partner to port numbers in some or all instances, even if they are granted direct access to numbers.

56. On a general level, the NPRM seeks comment on whether the changes proposed herein should be adopted on a gradual or phased-in basis. More specifically, the NPRM asks what timeframes would be appropriate for a graduated transition, and what period of time would permit the industry to adjust to the proposed changes. Comment is also sought on what steps the Commission should take to ensure that any transition to direct access to numbers by interconnected VoIP providers occurs without unnecessary disruption to consumers or the industry.

57. The NPRM notes that beyond interconnected VoIP providers, an increasingly wide array of services and applications rely on telephone numbers as the addressing system for communications, including home security systems, payment authorization services, text messaging services, and telematics. The NPRM therefore seeks comment on whether the Commission should expand access to numbers beyond the proposal regarding interconnected VoIP providers. Specifically, the NPRM asks whether access to numbers should be expanded to one-way VoIP providers. The NPRM also seeks comment on the types of services and applications that use numbers today and that are likely to do so in the future. Comment is further sought on the potential benefits and risks of expanding direct access to numbers, and any safeguards or countermeasures that could be employed to counteract any conceivable downsides. The NPRM also asks whether there are distinguishing or limiting factors that should govern whether and how specific services or providers receive certain types of numbers. Comment is sought on whether the same criteria and conditions should be implemented regardless of the service or technology offered if interconnected VoIP providers and other types of entities are granted direct access to numbers.

58. The NPRM seeks comment on whether the Commission should modify § 52.15(g)(2)(i) of its rules to allow VoIP Positioning Center (VPC) providers direct access to numbers, specifically p-ANI codes, for the purpose of providing 911 and E911 service. In the Waiver Order, the Commission found good cause to grant the petition of TeleCommunication Systems, Inc. (TCS), allowing it direct access to p-ANI codes from the RNA in states where it is unable to obtain certification while the Commission adopts final rules for direct access to numbers. The NPRM asks whether all VPC providers should be allowed direct access to p-ANI codes. Comment is further sought on whether there are any costs or benefits to allowing VPC providers direct access to p-ANI codes, and whether such access would help to encourage the continued growth of interconnected VoIP services. The NPRM also asks whether there are any technical or policy reasons why VPC providers should be denied direct access to p-ANI codes. Lastly, the NPRM asks whether any evidence of authorization should be required for VPC providers to access p-ANI codes.

59. The NPRM also seeks comment on the Commission's legal authority to adopt the various requirements proposed. Comment is sought on the Commission's plenary authority under section 251(e)(1) of the Act to impose the various proposed requirements on interconnected VoIP providers obtaining direct access to numbers. The NPRM also asks whether imposing numbering obligations on interconnected VoIP providers would be reasonably ancillary to the Commission's performance of particular statutory duties, such as those under sections 251 and 201 of the Act, to allow the Commission to impose such obligations under its Title I ancillary authority.

60. The legal basis for any action that may be taken pursuant to the NPRM is contained in sections 1, 3, 4, 201-205, 251, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 153, 154, 201-205, 251, and 303(r).

61. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. See 5 U.S.C. 603(b)(3). The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” See 5 U.S.C. 601(6). In addition, the term “small business” has the same meaning as the term “small-business concern” under the Small Business Act. See 5 U.S.C. 601(3). A small-business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. See 15 U.S.C. 632.

62. Small Businesses. A small business is an independent business having less than 500 employees. Nationwide, there are a total of approximately 27.9 million small businesses, according to the SBA. Affected small entities as defined by industry are as follows.

63. Wired Telecommunications Carriers. The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer employees. According to Census Bureau data for 2007, there were 3,188 firms in this category, total, that operated for the entire year. Of this total, 3144 firms had employment of 999 or fewer employees, and 44 firms had employment of 1000 employees or more. Thus, under this size standard, the majority of firms can be considered small.

64. Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to local exchange services. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 1,307 carriers reported that they were incumbent local exchange service providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than 1,500 employees. Consequently, the Commission estimates that most providers of local exchange service are small entities that may be affected by the rules and policies proposed in the NPRM.

65. Incumbent Local Exchange Carriers (incumbent LECs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to incumbent local exchange services. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 1,307 carriers reported that they were incumbent local exchange service providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than 1,500 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by rules adopted pursuant to the NPRM.

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

67. Competitive Local Exchange Carriers (competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. In addition, 72 carriers have reported that they are Other Local Service Providers. Of the 72, seventy have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities that may be affected by rules adopted pursuant to the NPRM.

68. Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to interexchange services. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services. Of these 359 companies, an estimated 317 have 1,500 or fewer employees and 42 have more than 1,500 employees. Consequently, the Commission estimates that the majority of interexchange service providers are small entities that may be affected by rules adopted pursuant to the NPRM.

69. Local Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 213 carriers have reported that they are engaged in the provision of local resale services. Of these, an estimated 211 have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that the majority of local resellers are small entities that may be affected by rules adopted pursuant to the NPRM.

70. Toll Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 881 carriers have reported that they are engaged in the provision of toll resale services. Of these, an estimated 857 have 1,500 or fewer employees and 24 have more than 1,500 employees. Consequently, the Commission estimates that the majority of toll resellers are small entities that may be affected by rules adopted pursuant to the NPRM.

71. Other Toll Carriers. Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling card providers, satellite service carriers, or toll resellers. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 284 companies reported that their primary telecommunications service activity was the provision of other toll carriage. Of these, an estimated 279 have 1,500 or fewer employees and five have more than 1,500 employees. Consequently, the Commission estimates that most Other Toll Carriers are small entities that may be affected by the rules and policies adopted pursuant to the NPRM.

72. Wireless Telecommunications Carriers (except Satellite). Since 2007, the SBA has recognized wireless firms within this new, broad, economic census category. Prior to that time, such firms were within the now-superseded categories of Paging and Cellular and Other Wireless Telecommunications. Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees. For this category, census data for 2007 show that there were 1,383 firms that operated for the entire year. Of this total, 1,368 firms had employment of 999 or fewer employees and 15 had employment of 1000 employees or more. Similarly, according to Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR) Telephony services. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Consequently, the Commission estimates that approximately half or more of these firms can be considered small. Thus, using available data, we estimate that the majority of wireless firms can be considered small.

73. Paging (Private and Common Carrier). In the Paging Third Report and Order, we developed a small business size standard for “small businesses” and “very small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. A “small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. Additionally, a “very small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. The SBA has approved these small business size standards. According to Commission data, 291 carriers have reported that they are engaged in Paging or Messaging Service. Of these, an estimated 289 have 1,500 or fewer employees, and two have more than 1,500 employees. Consequently, the Commission estimates that the majority of paging providers are small entities that may be affected by our action. An auction of Metropolitan Economic Area licenses commenced on February 24, 2000, and closed on March 2, 2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven companies claiming small business status won 440 licenses. A subsequent auction of MEA and Economic Area (“EA”) licenses was held in the year 2001. Of the 15,514 licenses auctioned, 5,323 were sold. One hundred thirty-two companies claiming small business status purchased 3,724 licenses. A third auction, consisting of 8,874 licenses in each of 175 EAs and 1,328 licenses in all but three of the 51 MEAs, was held in 2003. Seventy-seven bidders claiming small or very small business status won 2,093 licenses. The current number of small or very small business entities that hold wireless licenses may differ significantly from the number of such entities that won in spectrum auctions due to assignments and transfers of licenses in the secondary market over time. In addition, some of the same small business entities may have won licenses in more than one auction. A fourth auction of 9,603 lower and upper band paging licenses was held in the year 2010. Twenty-nine bidders claiming small or very small business status won 3,016 licenses. On February 1, 2013, the Wireless Telecommunications Bureau announced an auction of 5,905 lower and upper band paging licenses to commence on July 16, 2013, and sought comment for the procedures to be used for this auction.

74. Cable and Other Program Distribution. Since 2007, these services have been defined within the broad economic census category of Wired Telecommunications Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies.” The SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or fewer employees. According to Census Bureau data for 2007, there were a total of 955 firms in this previous category that operated for the entire year. Of this total, 939 firms had employment of 999 or fewer employees, and 16 firms had employment of 1000 employees or more. Thus, under this size standard, the majority of firms can be considered small and may be affected by rules adopted pursuant to the NPRM.

75. Cable Companies and Systems. The Commission has developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers, nationwide. The Commission determined that this size standard equates approximately to a size standard of $100 million or less in annual revenues. Industry data indicate that, of 1,076 cable operators nationwide, all but eleven are small under this size standard. In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Industry data indicate that, of 7,208 systems nationwide, 6,139 systems have under 10,000 subscribers, and an additional 379 systems have 10,000-19,999 subscribers. Thus, under this second size standard, most cable systems are small and may be affected by rules adopted pursuant to the NPRM.

76. Cable System Operators. The Act also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” The Commission has determined that an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Industry data indicate that, of 1,076 cable operators nationwide, all but ten are small under this size standard. We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, and therefore we are unable to estimate more accurately the number of cable system operators that would qualify as small under this size standard.

77. Internet Service Providers. Since 2007, these services have been defined within the broad economic census category of Wired Telecommunications Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies.” The SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or fewer employees. According to Census Bureau data for 2007, there were 3,188 firms in this category, total, that operated for the entire year. Of this total, 3,144 firms had employment of 999 or fewer employees, and 44 firms had employment of 1000 employees or more. Thus, under this size standard, the majority of firms can be considered small. In addition, according to Census Bureau data for 2007, there were a total of 396 firms in the category Internet Service Providers (broadband) that operated for the entire year. Of this total, 394 firms had employment of 999 or fewer employees, and two firms had employment of 1000 employees or more. Consequently, we estimate that the majority of these firms are small entities that may be affected by rules adopted pursuant to the NPRM.

78. Internet Publishing and Broadcasting and Web Search Portals. Our action may pertain to interconnected VoIP services, which could be provided by entities that provide other services such as email, online gaming, web browsing, video conferencing, instant messaging, and other, similar IP-enabled services. The Commission has not adopted a size standard for entities that create or provide these types of services or applications. However, the Census Bureau has identified firms that “primarily engaged in (1) publishing and/or broadcasting content on the Internet exclusively or (2) operating Web sites that use a search engine to generate and maintain extensive databases of Internet addresses and content in an easily searchable format (and known as Web search portals).” The SBA has developed a small business size standard for this category, which is: all such firms having 500 or fewer employees. According to Census Bureau data for 2007, there were 2,705 firms in this category that operated for the entire year. Of this total, 2,682 firms had employment of 499 or fewer employees, and 23 firms had employment of 500 employees or more. Consequently, we estimate that the majority of these firms are small entities that may be affected by rules adopted pursuant to the NPRM.

79. All Other Information Services. The Census Bureau defines this industry as including “establishments primarily engaged in providing other information services (except news syndicates, libraries, archives, Internet publishing and broadcasting, and Web search portals).” Our action pertains to interconnected VoIP services, which could be provided by entities that provide other services such as email, online gaming, web browsing, video conferencing, instant messaging, and other, similar IP-enabled services. The SBA has developed a small business size standard for this category; that size standard is $7.0 million or less in average annual receipts. According to Census Bureau data for 2007, there were 367 firms in this category that operated for the entire year. Of these, 334 had annual receipts of under $5.0 million, and an additional 11 firms had receipts of between $5 million and $9,999,999. Consequently, we estimate that the majority of these firms are small entities that may be affected by our action.

80. All Other Telecommunications. The Census Bureau defines this industry as including “establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or Voice over Internet Protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.” The SBA has developed a small business size standard for this category; that size standard is $30.0 million or less in average annual receipts. According to Census Bureau data for 2007, there were 2,383 firms in this category that operated for the entire year. Of these, 2,305 establishments had annual receipts of under $10 million and 84 establishments had annual receipts of $10 million or more. Consequently, we estimate that the majority of these firms are small entities that may be affected by our action.

81. In the NPRM, the Commission proposes to require interconnected VoIP providers seeking direct access to numbers to submit specific documentation, a requirement which may necessitate filing FCC Form 477 with the Commission. The NPRM further proposes to require these providers to comply with the same numbering obligations and industry guidelines as traditional common carriers. Specifically, interconnected VoIP providers will be required under § 52.15(f)(6) to file usage forecast and utilization (NRUF) reports on a semi-annual basis. Compliance with these reporting obligations may affect small entities, and may include new administrative processes.

82. In the NPRM, the Commission also proposes to allow interconnected VoIP providers to obtain telephone numbers only from rate centers subject to pooling. The NPRM further suggests imposing a “facilities readiness” requirement on interconnected VoIP providers seeking direct access to numbers under § 52.15(g)(2)(ii) of the Commission's rules. Under this proposal, providers would be required to provide evidence that they have ordered an interconnection service pursuant to a tariff that is generally available to other providers of IP-enabled voice services. The NPRM also proposes to require interconnected VoIP providers to file any requests for numbers with the Commission and relevant state commission at least 30 days prior to requesting numbers from the number administrators.

83. In the NPRM, the Commission further proposes to require all interconnected VoIP providers seeking direct access to numbers to: (1) maintain at least 65 percent number utilization across its telephone number inventory; (2) offer IP interconnection to other carriers and providers; and (3) provide the Commission with a transition plan for migrating customers to its own numbers within 90 days of commencing that migration and every 90 days thereafter for 18 months. Moreover, the NPRM proposes to require these providers to: (1) provide the relevant state commission with regulatory and numbering contacts upon first requesting numbers in that state; (2) consolidate and report all numbers under its own unique Operating Company Number (OCN); (3) provide customers with the ability to access all N11 numbers in use in a state; and (4) maintain the original rate center designation of all numbers in its inventory.

84. In addition, the Commission proposes to amend its rules to establish “blanket” authorization for interconnected VoIP providers for access to numbering resources, or, in the alternative, to require interconnected VoIP providers to obtain a certification from the Commission before gaining direct access to numbering resources. The NPRM also proposes rules that will make clear the requirement to port directly to a non-carrier interconnected VoIP provider upon request. Compliance with these reporting obligations may affect small entities, and may include new administrative processes. We note parenthetically that in the NPRM, the Commission seeks comment on the benefits and burdens of these proposals, on the costs that these proposals are likely to impose on small entities, and how those onuses might be ameliorated. In some instances, the NPRM asks further whether there are other issues or significant alternatives that the Commission should consider to ease the burden of these proposed measures on small entities.

85. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): “(1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rules for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.” See 5 U.S.C. 603(c)(1)-(c)(4).

86. The Commission is aware that some of the proposals under consideration will impact small entities by imposing costs and administrative burdens. For this reason, the NPRM proposes a number of measures to minimize or eliminate the costs and burdens generated by compliance with the proposed rules.

87. First, the NPRM proposes to require only those interconnected VoIP providers seeking direct access to numbers to comply with the same numbering requirements and industry guidelines as traditional common carriers, including filing semi-annual NRUF reports under § 52.15(f)(6) of the Commission's rules. Although the NPRM proposes to require such providers to submit specific documentation as a condition of obtaining numbers, the Commission has attempted to minimize this burden by proposing that this documentation take the form of pages 2 and 36 of FCC Form 477. Since interconnected VoIP providers are already required to file this form with the Commission, this proposal should not have a significant economic impact on small entities. Moreover, the NPRM further seeks comment on the costs and burdens imposed on small entities from the rules resulting from this requirement, and on how those onuses might be ameliorated. It also asks whether there are other issues or significant alternatives that the Commission should consider to ease the burden of these proposed measures on small entities

88. The NPRM also proposes to impose a “facilities readiness” requirement on interconnected VoIP providers seeking direct access to numbers. Although this may obligate providers to provide evidence that they have ordered an interconnection service pursuant to a tariff, the NPRM seeks comment on whether there are better ways to demonstrate compliance with this requirement, and whether the Commission should modify this requirement to allow providers more flexibility.

89. The NPRM also proposes to require interconnected VoIP providers seeking direct access to numbers to: (1) Maintain at least 65 percent number utilization across its telephone number inventory; (2) offer IP interconnection to other carriers and providers; and (3) provide the Commission with a transition plan for migrating customers to its own numbers within 90 days of commencing that migration and every 90 days thereafter for 18 months. Because the Commission recognizes that some of these requirements may place an administrative burden and exert an economic impact on small entities, it seeks comment on whether it should impose these requirements on interconnected VoIP providers to begin with. Moreover, these requirements are only extended to those interconnected VoIP providers seeking direct access to numbers.

90. The NPRM proposes to require interconnected VoIP providers seeking direct access to numbers to: (1) provide the relevant state commission with regulatory and numbering contacts upon first requesting numbers in that state; (2) consolidate and report all numbers under its own unique Operating Company Number (OCN); (3) provide customers with the ability to access all N11 numbers in use in a state; and (4) maintain the original rate center designation of all numbers in its inventory. While these requirements may impose administrative burdens on small entities, the Commission has limited them to interconnected VoIP providers seeking direct access to numbers. Additionally, the NPRM seeks comment on how providers of nomadic VoIP services could comply with a requirement to provide access to the locally-appropriate N11 numbers, in order to better ease the burden on such entities.

91. Although the NPRM proposes to require interconnected VoIP providers to obtain a certification from the Commission before gaining direct access to numbering resources, it also proposes, in the alternative, to amend the Commission's rules to establish “blanket” authorization for interconnected VoIP providers for access to numbering resources. This proposed alternative would decrease the administrative and cost burdens imposed on small entities.

92. The Commission expects to consider the economic impact on small entities, as identified in comments filed in response to the NPRM, in reaching its final conclusions and taking action in this proceeding. The proposed reporting requirements in the NPRM could have an economic impact on both small and large entities. However, the Commission believes that any impact of such requirements is outweighed by the accompanying benefits to the public and to the operation and efficiency of the telecommunications industry.

93. None.

94. Accordingly, it is ordered that pursuant to sections 1, 3, 4, 201-205, 251, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 153, 154, 201-205, 251, 303(r), the notice of proposed rulemaking is hereby adopted.

95. It is further ordered that pursuant to sections 1, 3, 4, 201-205, 251, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 153, 154, 201-205, 251, 303(r), the notice of inquiry is hereby adopted.

96. It is further ordered that the Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this notice of proposed rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of Small Business Administration.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 52 as follows:

The additions and revisions read as follows:

Subpart C—Number Portability

On May 14, 2012, President Obama issued Executive Order (E.O.) 13610—Identifying and Reducing Regulatory Burdens, which seeks “to modernize our regulatory system and to reduce unjustified regulatory burdens and costs.” See 77 FR 28469. The Executive Order directs each executive agency to conduct retrospective reviews of its regulatory requirements to identify potentially beneficial modifications to regulations. Executive agencies are to “give priority, consistent with the law, to those initiatives that will produce significant quantifiable monetary savings or significant quantifiable reductions in paperwork burdens while protecting public health, welfare, safety and our environment.” See id. at 28470.

FRA has initiated a review of its existing regulations in accordance with E.O. 13610 and the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq., with the goal of identifying regulations that can be amended or eliminated, thereby reducing the paperwork and reporting burden on carriers that are subject to FRA jurisdiction. One area where FRA believes it can help reduce the railroad industry's reporting burden is by eliminating the Signal System Five-Year reporting requirement. See 49 CFR 233.9.

Section 233.9 currently requires each carrier to complete and submit an FRA Form F6180.47, Signal System Five-Year Report, in accordance with the instructions and definitions on the form. The information reported on FRA Form F6180.47 is intended to update FRA on the status of a railroad's signal system. It historically has been used to monitor changes in the types of signal systems installed and the methods of operation used on the Nation's railroads.

Prior to 1997, carriers were required to submit a Signal System Annual Report by April 15 of each year. However, based on a regulatory review, FRA extended the reporting requirement to every five years rather than annually. See 61 FR 33871 (July 1, 1996). FRA determined that a five-year reporting period would significantly reduce the reporting burden on the railroads while still meeting the informational needs of the government. Therefore, in July 1996, FRA amended § 233.9 to require that “[n]ot later than April 1, 1997 and every 5 years thereafter, each carrier shall file with FRA a signal system status report “Signal System Five-[Y]ear Report” on a form to be provided by FRA in accordance with instructions and definitions provided on the report.”

For the 2012 reporting period, FRA transitioned the Signal System Five-Year Report form into an electronic format. The electronic form required all of the same information as the paper form but could be submitted via the Internet. The form was due to be submitted by no later than April 1, 2012, and pertained to signal systems in service on or after January 1, 2012. The next five-year report is not due until April 2017. The present rulemaking would eliminate the reporting requirement in its entirety for April 2017 and thereafter.

FRA believes that the Signal System Five-Year Report is no longer necessary for several reasons. The data collected in the Signal System Five-Year Report can quickly become outdated. Railroads normally modify signal systems far more frequently than once every five years. Indeed, FRA has generally found that signal system modifications occur with such frequency under 49 CFR §§ 235.5 and 235.7, that the Signal System Five-Year Report often is out-of-date by the time it is received by FRA.

Moreover, FRA has other viable means to monitor a carrier's signal system. It is better able to monitor the status of a railroad signal system through the use of more frequently collected agency data—such as the Block Signal Application, see 49 CFR 235.5—which provide the agency much more detailed and useful information. The development and expansion of electronic reporting methods also allow railroads to more frequently report to FRA information similar to that which is captured in the Signal System Five-Year Report. This ability gives FRA a better “real-time” understanding of a carrier's signal system than the agency can get from a report that is filed once every five years. As a result, FRA currently relies on the more up-to-date sources for signal system data and has little use for the information collected in the Signal System Five-Year Report.

Finally, the railroad industry and the general public do not appear to derive any useful benefit or information from the Signal System Five-Year Report. The feedback FRA has received from the industry and the general public indicates that, as expected, the data contained in the report was not useful in providing up-to-date information about railroad signal systems. As a result, FRA is confident that eliminating the report will not result in the railroad industry or the general public being less informed about railroad signal systems.

Administrative amendments are sometimes necessary to address citations that have become outdated due to the actions of Congress. This is particularly true when the basis for a legal requirement is moved to a different title, chapter, or section of the U.S. Code. Federal regulations do not “auto-correct” for these types of changes. Therefore, it is incumbent on agencies to monitor their regulations and make appropriate changes whenever feasible. FRA has identified a citation in 49 CFR 233.13(b)—referencing 49 U.S.C. 438(e)—that should be amended for this reason, and proposes to make that amendment in this rulemaking.

The subject statutory provision arises out of the former Federal Railroad Safety Act of 1970 (FRSA), which was enacted on October 16, 1970. See Public Law 91-458. Section 209 of the FRSA, as originally enacted, contained a civil penalty provision that was codified at 45 U.S.C. 438. While the statute did not contain a criminal penalty provision when it was first enacted, Congress eventually determined that there may be situations where criminal penalties are warranted for violations of the law. Accordingly, the FRSA was amended on October 10, 1980. See Public Law 96-423. Among other things, the 1980 amendment added paragraph (e) to section 209, establishing that criminal penalties may be assessed against any person who knowingly and willfully makes a false entry in a required record or report; destroys, mutilates, changes, or otherwise falsifies a required record or report; fails to enter specified facts or transactions in a required record or report; makes, prepares, or preserves a record or report in violation of an applicable regulation or order; or files a false record or report with the Secretary of Transportation. This revision to the FRSA was codified at 45 U.S.C. 438(e).

In 1984, FRA amended its Signal and Train Control Regulations, including 49 CFR Part 233. See 49 FR 3374 (Jan. 26, 1984). Section 233.13(b) was amended at this time to read “[w]hoever knowingly and willfully—[f]iles a false report or other document required to be filed by this part is subject to a $5,000 fine and 2 years imprisonment as prescribed by 49 U.S.C. 522(a) and section 209(e) of the Federal Railroad Safety Act of 1970, as amended (45 U.S.C. 438(e)).” This language reflected the added statutory authority that Congress provided in its 1980 amendment to the FRSA.

Congress, however, was not done making changes that applied to section 209(e) of the FRSA. In 1994, Congress enacted a law to “revise, codify, and enact without substantive change certain general and permanent laws, related to transportation” under title 49 of the U.S. Code. See Public Law 101-272. As a result, most Federal railroad safety laws were moved from title 45 to title 49. This included the criminal penalty provision of the FRSA, which was repealed at 45 U.S.C. 438(e) and recodified at 49 U.S.C. 21311. This statutory change rendered the citation in 49 CFR 233.13(b) outdated, and FRA has not, prior to this date, sought to amend the regulatory provision. Given that FRA has begun the present rulemaking addressing part 233, it views now as an appropriate time to update the citation in paragraph (b) of section 233.13.

FRA proposes eliminating the Signal System Five-Year Report required by this section and reserving the section for future use. Eliminating this reporting requirement will reduce the railroad industry's paperwork burden in a way that does not endanger the public health, welfare, and safety or our environment. FRA has identified three specific reasons supporting the elimination of this reporting requirement. First, the information contained in the Signal System Five-Year Report quickly becomes obsolete. Second, FRA is better able to determine the status of a railroad's signal system through other more frequently collected types of information. Third, the report does not generally appear to contain information that is useful to the railroad industry or the general public.

FRA proposes making an administrative change to paragraph (b) of this section to correct an out-of-date citation to the U.S. Code. Paragraph (b) provides that it is unlawful to knowingly and willfully file a false report required by part 233. Such conduct is punishable with a fine of $5000 and up to two years imprisonment. The paragraph cites to 45 U.S.C. 438(e) as statutory support for the criminal penalties; however, this statutory provision was repealed and recodified under a different title of the U.S. Code as part of a reorganization of the Federal railroad safety statutes by Congress. The provision is currently housed at 49 U.S.C. 21311. The proposed amendment would correct the outdated citation in paragraph (b) by replacing 45 U.S.C. 438(e) with 49 U.S.C. 21311.

Appendix A to part 233 contains a schedule of civil penalties for use in connection with this part. Because such penalty schedules are statements of agency policy, notice and comment are not required prior to their issuance. See 5 U.S.C. 553(b)(3)(A). Nevertheless, FRA intends to amend this appendix in issuing the final rule to remove and reserve the entry for § 233.9, in accordance with this proposal.

This rulemaking proposes eliminating the requirement in 49 CFR 233.9 that each railroad file with FRA a Signal System Five-Year Report. The proposed rule has been evaluated in accordance with existing policies and procedures. It is not considered a significant regulatory action under E.O. 12866 and E.O. 13563. This rule also is not significant under the DOT Regulatory Policies and Procedures. 44 FR 11034 (Feb. 26, 1979). A regulatory impact analysis addressing the economic impact of this proposed rule has been prepared and placed in the docket.

As part of the regulatory evaluation, FRA has explained the benefits of this proposed rule and provided monetized assessments of the value of such benefits. The proposed rule would eliminate the cost associated with submitting a Signal System Five-Year Report. Each railroad currently expends approximately one hour of labor to prepare and submit the report to FRA every five years. For the 20-year period analyzed, the estimated cost savings would be $234,265. The present value of this is $113,929 (using a 7 percent discount rate). This regulation only reduces the burden on railroads; it does not impose any additional costs. Therefore, the net benefit of this proposed rulemaking would be $113,929 (present value, 7 percent). FRA requests comments on all aspects of this regulatory evaluation and its conclusions.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., and E.O. 13272, 67 FR 53461 (Aug. 16, 2002), require agency review of proposed and final rules to assess their impact on small entities. An agency must prepare an initial regulatory flexibility analysis (IRFA) unless it determine and certifies that a rule, if promulgated, would not have a significant impact on a substantial number of small entities. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C. 605(b), the FRA Administrator certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities. This proposed rule would affect all railroads, including small railroads. However, the effect on these railroads would be purely beneficial and not significant, as it would reduce their labor burden by eliminating the need to file a Signal System Five-Year Report.

“Small entity” is defined in 5 U.S.C. 601 as including a small business concern that is independently owned and operated, and is not dominant in its field of operation. The U.S. Small Business Administration (SBA) has authority to regulate issues related to small businesses, and stipulates in its size standards that a “small entity” in the railroad industry is a for profit “line-haul railroad” that has fewer than 1,500 employees, a “short line railroad” with fewer than 500 employees, or a “commuter rail system” with annual receipts of less than seven million dollars. See “Size Eligibility Provisions and Standards,” 13 CFR Part 121, subpart A. Additionally, 5 U.S.C. 601(5) defines as “small entities” governments of cities, counties, towns, townships, villages, school districts, or special districts with populations less than 50,000. Federal agencies may adopt their own size standards for small entities, in consultation with SBA and in conjunction with public comment. Pursuant to that authority, FRA has published a final statement of agency policy that formally establishes “small entities” or “small businesses” as being railroads, contractors, and hazardous materials shippers that meet the revenue requirements of a Class III railroad as set forth in 49 CFR 1201.1-1, which is $20 million or less in inflation-adjusted annual revenues, and commuter railroads or small governmental jurisdictions that serve populations of 50,000 or less. See 68 FR 24891 (May 9, 2003), codified at appendix C to 49 CFR Part 209. The $20-million limit is based on the Surface Transportation Board's revenue threshold for a Class III railroad. Railroad revenue is adjusted for inflation by applying a revenue deflator formula in accordance with 49 CFR 1201.1-1. FRA is using this definition for this rulemaking.

FRA estimates that there are 719 Class III railroads, all of which would be affected by this proposed rule. However, the impact on these small railroads would not be significant. FRA estimates that each report takes approximately one labor hour to prepare and submit to FRA. The elimination of this reporting requirement would save each railroad one hour of labor every five years. Therefore, this proposed rule would have a positive effect on these railroads, saving each railroad approximately $307 (non-discounted) in labor costs over the 20-year analysis. Since this amount is extremely small and entirely beneficial, FRA concludes that this proposed rule would not have a significant impact on these railroads.

Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 601(b), FRA certifies that this proposed rule would not have a significant impact on a substantial number of small entities. Although a substantial number of small railroads would be affected by the proposed rule, the impact on these entities would be minimal and positive. FRA requests comments on all aspects of this certification.

Executive Order 13132, “Federalism”, 64 FR 43255 (Aug. 10, 1999), requires FRA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under E.O. 13132, the agency may not issue a regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, the agency consults with State and local governments, or the agency consults with State and local government officials early in the process of developing the regulation. Where a regulation has federalism implications and preempts State law, the agency seeks to consult with State and local officials in the process of developing the regulation.

This NPRM has been analyzed in accordance with the principles and criteria contained in E.O. 13132. FRA has determined that, if adopted, the proposed rule would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. In addition, FRA has determined that this proposed rule will not impose substantial direct compliance costs on State and local governments. Therefore, the consultation and funding requirements of E.O. 13132 do not apply.

However, this proposed rule could have preemptive effect by operation of law under certain provisions of the Federal railroad safety statutes, specifically the former Federal Railroad Safety Act of 1970 (FRSA), repealed and recodified at 49 U.S.C. 20106, and the former Signal Inspection Act of 1937, repealed and recodified at 49 U.S.C. 20501-20505. See Pub. L. 103-272 (July 5, 1994). The former FRSA provides that States may not adopt or continue in effect any law, regulation, or order related to railroad safety or security that covers the subject matter of a regulation prescribed or order issued by the Secretary of Transportation (with respect to railroad safety matters) or the Secretary of Homeland Security (with respect to railroad security matters), except when the State law, regulation, or order qualifies under the “local safety or security hazard” exception to section 20106.

In sum, FRA has analyzed this proposed rule in accordance with the principles and criteria contained in E.O. 13132. As explained above, FRA has determined that this proposed rule has no federalism implications, other than the possible preemption of State laws under the former FRSA. Accordingly, FRA has determined that preparation of a federalism summary impact statement for this proposed rule is not required.

The Trade Agreement Act of 1979, Public Law 96-39, 93 Stat. 144 (July 26, 1979), prohibits Federal agencies from engaging in any standards or related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and where appropriate, that they be the basis for U.S. standards. This rulemaking is purely domestic in nature and is not expected to affect trade opportunities for U.S. firms doing business overseas or for foreign firms doing business in the United States.

Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501, et seq., Federal agencies must obtain approval from the Office of Management and Budget for each collection of information they conduct, sponsor, or require through regulations. FRA has carefully reviewed the proposed rule and any potential PRA implications. Since the present rulemaking would eliminate the reporting requirement associated with § 233.9 in its entirety for April 2017 and thereafter, there is no change to the currently approved burden under OMB No. 2130-0006.

Organizations and individuals desiring to obtain a copy of the above currently approved collection of information should contact Mr. Robert Brogan or Ms. Kimberly Toone via mail at FRA, 1200 New Jersey Ave. SE., Third Floor, Washington, DC 20590. Copies may also be obtained by telephoning Mr. Brogan at (202) 493-6292 or Ms. Toone at (202) 493-6132. (These numbers are not toll-free). Additionally, copies may be obtained via email by contacting Mr. Brogan or Ms. Toone at the following addresses: Robert.Brogan@dot.gov; Kim.Toone@dot.gov.

Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4, 2 U.S.C. 1531, each Federal agency “shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Section 202 of the Act, see 2 U.S.C. 1532, further requires that “before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in 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 1 year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement” detailing the effect on State, local, and tribal governments and the private sector. The proposed rule would not result in the expenditure, in the aggregate, of $100,000,000 or more (adjusted for inflation) in any one year, and thus preparation of such a statement is not required.

FRA has evaluated this proposed rule in accordance with its “Procedures for Considering Environmental Impacts” (FRA's Procedures), 64 FR 28545 (May 26, 1999), as required by the National Environmental Policy Act, 42 U.S.C. 4321 et seq., other environmental statutes, Executive Orders, and related regulatory requirements. FRA has determined that this proposed rule is not a major FRA action (requiring the preparation of an environmental impact statement or environmental assessment) because it is categorically excluded from detailed environmental review pursuant to section 4(c)(20) of FRA's Procedures. See 64 FR 28547 (May 26, 1999).

In accordance with section 4(c) and (e) of FRA's Procedures, the agency has further concluded that no extraordinary circumstances exist with respect to this regulation that might trigger the need for a more detailed environmental review. As a result, FRA finds that this proposed rule is not a major Federal action significantly affecting the quality of the human environment.

Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” See 66 FR 28355 (May 22, 2001). Under the Executive Order, a “significant energy action” is defined as “any action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking: (1)(i) [t]hat is a significant regulatory action under Executive Order 12866 or any successor order, and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action.” FRA has evaluated this NPRM in accordance with E.O. 13211. FRA has determined that this NPRM is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Consequently, FRA has determined that this NPRM is not a “significant energy action” within the meaning of E.O. 13211.

FRA wishes to inform all potential commenters that anyone is able to search the electronic form of all comments received into any agency docket by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000, see 65 FR 19477-78, or you may visit http://www.regulations.gov/#!privacyNotice.

In consideration of the foregoing, FRA proposes to amend part 233 of chapter II, subtitle B of title 49 of the Code of Federal Regulations as follows:

4. Appendix A is amended by removing and reserving the entry for “§ 233.9 Annual reports”.