Executive Orders 12866 and 12988

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This action is not retroactive. There are no administrative procedures which must be exhausted prior to any judicial challenge to the provisions of this rule.

Pursuant to the requirement set forth in the Regulatory Flexibility Act (5 U.S.C. 601-612), AMS has considered the economic impact of this action on small entities. It has been determined that its provisions would not have a significant economic effect on a substantial number of small entities. For the purpose of the Regulatory Flexibility Act, a dairy products manufacturer is a “small business” if it has fewer than 500 employees. If a plant is part of a larger company operating multiple plants that collectively exceed the 500 employee limit, the plant will be considered a large business even if the local plant has fewer than 500 employees.

Under the Agricultural Marketing Act of 1946, as amended, (AMA) (7 U.S.C. 1621-1627), the Dairy Grading and Inspection Branch, AMS, provides voluntary Federal inspection and dairy product grading services to about 360 plants. An estimated 345 of these users are small businesses under the criteria established by the Small Business Administration (13 CFR 121.201).

This rule will raise the fees charged to businesses for voluntary plant inspections, grading services for dairy, and related products. This rule will not raise fees applicable to the European Union Health Certification Program derogation process. These actions will equally affect all businesses that use these services. Dairy processing plants participating in the voluntary plant inspection program have their facility inspected against established USDA “General Specifications for Dairy Plants Approved for USDA Inspection and Grading Service” construction and sanitation requirements. Businesses are under no obligation to use these voluntary user-fee based services and any decision on their part to discontinue the use of the services would not prevent them from marketing their products. It is estimated that the fee increases will result in an increase to plants of $0.0004 per pound of graded product. Therefore, AMS has determined that this rule will not have a significant economic impact on small businesses.

A review of reporting requirements was completed under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). The review determined that this rule would have no impact on reporting, recordkeeping, or other compliance requirements for entities currently using voluntary Federal dairy inspection and grading services because they would remain identical to the current requirements.

This action does not request additional information collection that requires clearance by OMB. The primary sources of data used to complete the forms are routinely used in most business transactions. Forms require only a minimal amount of information which can be supplied without data processing equipment or a trained statistical staff. Thus, the information collection and reporting burden is small. Requiring the same information from all participating dairy plants does not significantly disadvantage any plant that is smaller than the industry average.

Plants participating in the voluntary AMS Dairy Grading and Inspection Program process milk into dairy foods that enter commerce as retail products, ingredients for further processing, purchases for Federal food assistance programs, or exports to other countries. Services provided by the program enhance the marketability and add value to dairy and dairy-containing foods. Dairy products manufactured in facilities complying with the USDA inspection requirements are eligible to be graded against official quality standards and specifications established by AMS and certain contract provisions between buyer and seller. Dairy products tested and graded by AMS have certificates issued describing the product's quality and condition.

AMS continually reviews cost structures to assure it is operating efficiently while maintaining the resources necessary to meet the dairy industry's demand for services. Periodically, fees must be adjusted to ensure that the program remains financially self-supporting. The AMS Dairy Grading and Inspection Program has made great efforts to reduce the costs associated with providing grading and inspection services since the last fee increase in 2006 (71 FR 60805). Cost-saving initiatives to date have resulted in substantial gains in the efficiency of service delivery. In 2006, total costs for the program were $5.2 million to grade and certify 1.5 billion pounds of dairy products—a per pound cost of $0.0035. In 2011, the program's total costs were $5.3 million to grade and certify 2.0 billion pounds of dairy products—a per pound cost of product certified of $0.0026, a 25 percent improvement in efficiency. Further enhancements will continue to improve the efficiency, quality, and timeliness of providing inspection and grading services.

In an effort to minimize the costs associated with managing its workforce, the Dairy Grading and Inspection Program has restructured. The number of administrative personnel has been reduced from 14 full time employees to 5 resulting in annual savings of over $400,000. The National Field Office, located in the suburbs of Chicago, co-located with other USDA offices in Lisle, Illinois, saving about $32,000 annually. One supervisor and one training position were eliminated allowing about $170,000 to be redirected to cover cost increases for additional grading staff needed to provide requested services. In addition, system automation has resulted in improved customer service with less staff involvement, especially in the delivery of export certificates. Advances in electronic submissions and deliveries allowed nearly 20,000 export certificates to be issued with only 2 staff positions during FY 2011.

Although significant effort has been directed at reducing expenses, savings from these efforts have not offset increasing operating expenses incurred over the past 6 years. Consequently, existing fee rates are no longer adequate to cover current obligations. The program is depleting reserve funds at a rate that jeopardizes its ability to ensure effective delivery of services to meet industry needs. Fees must be adjusted to cover current and projected operating costs.

The Secretary of Agriculture is authorized by the AMA to provide voluntary Federal dairy inspection and grading services to facilitate the orderly marketing of dairy products and to enable consumers to obtain the quality of dairy products they desire. The AMA also provides for the collection of reasonable fees from users of the Federal dairy inspection and grading services to cover the cost of providing these services. AMS establishes hourly fees by distributing the program's projected operating costs over the estimated service-revenue hours provided to users. AMS continually reviews its cost structure to assure it is operating efficiently while maintaining the resources necessary to meet the dairy industry's demand for services. Periodically, fees must be adjusted to ensure that the program remains financially self-supporting.

As part of its financially self-supporting status, agency requirements necessitate that the program maintain a reserve trust fund with a minimum of 4 months of operating funds to account for program closure or an unexpected decrease in revenues. Since revenues have not covered program costs for several years, the trust fund has gradually been depleted. The fund first dipped below its mandated 4-month reserve level in FY 2010. Without a fee increase, the AMS Dairy Grading and Inspection Branch will be put in an unstable financial position that will adversely affect the ability to provide dairy inspection and grading services.

In an effort to reduce costs and delay depletion of reserve funds, AMS has continued to automate its business practices, consolidate facilities, limit personnel, and implement other efficiencies. As detailed earlier, progress to date for the AMS Dairy Grading and Inspection Program has been significant and has resulted in decreasing costs per pound of graded product from $0.0035 to $0.0026. This is equivalent to a savings of approximately $816,000 on every one billion pounds of product graded. Further enhancements in automated business practices will continue to improve the efficiency and timeliness of providing inspection and grading services as well as information to users of these services.

On January 17, 2013, the USDA published a Proposed Rule (78 FR 3851) to increase the user fees for voluntary Federal plant inspections and dairy product grading services. The Proposed Rule included a 15 percent increase in user-fees for dairy grading beginning in February 2013, and an additional 5 percent increase beginning in October 2013. Comments were due on or before February 19, 2013.

Six comments were received: One from a federation of dairy cooperative associations, two from dairy manufacturer associations, one from a non-profit trade organization and two from individuals.

One of the comments received from an individual expressed opposition to the proposed fee increase. The comment explained how adoption of the proposed fee increase would increase prices to consumers, increase employee workload, and exempt larger plants from the grading program.

The Dairy Grading and Inspection Program is voluntary. Plants who utilize the program do so in order to prove to their customers and to consumers that their product has been certified by the USDA to meet certain standards. The program is utilized by both small and large businesses. USDA estimates that the increased costs to dairy manufacturing plants resulting from the proposed fee increase for grading and inspection services to be negligible $0.0004 per pound of product graded.

Two of the comments supported the fee increase as proposed by USDA. Both comments stated that a fee increase is justified since the program has not increased fees since 2006. They also expressed how a decline in grading services from insufficient revenue would be harmful to the dairy industry, and ultimately to consumers.

Three comments supported a fee increase for the Dairy Grading and Inspection Program, but proposed a more gradual phase in. The comments stated that it is reasonable that the fee-for-service program occasionally increase its fees to cover costs in order to avoid service reductions. They also acknowledged the increased efficiencies that the Dairy Grading and Inspection Program has already achieved.

Two of these comments described how the proposed increase to grading and inspection fees would be a significant burden on dairy product manufacturers since it would increase grading fees by 20 percent in less than one year. The comments explained that grading and inspection fees are usually negotiated into sales contracts, and that these contracts are typically negotiated months in advance, thus manufacturers would have to renegotiate contracts to reflect the higher grading fee. The comments argued that this would place an undue financial burden on dairy product manufacturers who utilize the grading program. Alternatively, the comments proposed a three-part fee increase of 8 percent starting October 2013, an additional 6 percent in October 2014, and an additional 6 percent in October 2015.

The additional comment proposed that the fee increase not be implemented until October 2014, and at a lower level of 5 percent in the first year. The comment described how a longer phase-in of smaller increments would be less disruptive to the industry and consumers. The comment explained that Federal grading and inspection of dairy products can be required as part of sales agreements with customers. The comment also stated that many dairy manufacturers have no mechanism for recouping the increased grading fee from customers.

The suggested revisions to the fee increase schedule and implementation date provided by commenters led the USDA to further review the fee structure, taking into consideration the commenters concerns, as well as the budgetary realities faced by the Dairy Grading and Inspection Program. As a result of the analysis, this final rule adopts provisions that are modified from those in the proposed rule. The proposed rule provided for a 15 percent fee increase beginning in February 2013, and an additional 5 percent fee increase beginning in October 2013. This would have applied to all grading services, including EU health certification program derogation requests. This final rule, however, includes a two-part incremental fee increase consisting of a 10 percent increase beginning in August 2013, which is seven months later than initially proposed, with an additional 10 percent increase beginning in February 2014.

Two of the comments also stated that the fee increase should not apply to the standard two-hours of non-resident service per European Union (EU) Health Certification Program derogation for somatic cell count and standard plate count. They explained how users of the EU Health Certification Program have invested significant resources to streamline the application process by creating electronic transfer programs to apply for derogations as a group. The comments explained how these systems should have already reduced USDA's processing time to less than two-hours per derogation, and requested that USDA examine its current cost structure for derogations to see if the rate could be reduced.

Beginning January 1, 2012, the U.S. dairy industry began transitioning to a farm level milk sampling program to verify somatic cell count and standard plate count compliance with EU regulations for products exported to the EU. Currently, the EU maximum SCC level is 400,000 and the U.S. SCC standard is 750,000. In an effort to facilitate trade, AMS implemented a derogation program to provide a level of flexibility for farms that exceed EU SCC requirements. Milk from farms granted a derogation can still be manufactured into products that are exported to the EU.

The commenters stated the USDA processing time for derogations has been reduced as a result of the industry developing an electronic transfer program to simultaneously submit a group of derogation applications. While this development may reduce time for the submitter, USDA must unbundle the group submission and individually review each application, resulting in no reduced staff time. Furthermore, now that the derogation program is in its second year applications must be compared with previously submitted applications to ensure that farms are working towards compliance with the EU standard. Upon further review, USDA determined that the current fee is appropriate and as a result, the fee applicable to derogations is unchanged.

Currently, the fees are $63.00 per hour for continuous resident services and $68.00 per hour for non-resident services. The increases outlined in this final rule result in fees of $69.00 per hour for continuous resident services effective August 2013 and $76.00 per hour effective February 2014. The fee for non-resident services between the hours of 6 a.m. and 6 p.m. is $75.00 per hour beginning August 2013 and $82.00 per hour as of February 2014. The fee for non-resident services between the hours of 6 p.m. and 6 a.m. is $82.40 per hour effective August 2013 and $90.20 as of February 2014. For services performed in excess of 8 hours per day and for services performed on Saturday, Sunday, and legal holidays, 11/2 times the base fees will apply and result in increases to $104.00 per hour for resident grading beginning August 2013 and $114.00 per hour effective February 2014. Similarly, a fee of $112.40 per hour for non-resident grading services effective August 2013 and $123.00 as of February 2014 also apply. Lastly, a fee of $68.00 per hour at the standard two-hour per derogation application will still apply. The following table summarizes the fee changes:

AMS estimates that dairy grading and inspection fees, including the adopted increases, will generate the following revenue (in thousands of dollars): FY 2013 ($6,869); FY 2014 ($7,430); FY 2015 ($7,546); and FY 2016 ($7,342). Program costs are estimated as follows (in thousands of dollars): FY 2013 ($6,051); FY 2014 ($6,459); FY 2015 ($6,536); FY 2016 ($6,615). The additional cost to the industry will still represent less than $0.0004 per pound of product certified as described in the proposed rule. At this increased rate, program analysis estimates that required minimum trust fund reserves will be reached by FY 2015. Based on the above assumption, trust fund reserves are estimated as follows (in thousands of dollars): FY 2013 ($1,385); FY 2014 ($2,356); FY 2015 ($3,366); FY 2016 ($4,093).

For the reason set forth in the preamble, 7 CFR part 58 is amended as follows:

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on April 9, 2013 (78 FR 21072). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM (78 FR 21072, April 9, 2013) or on the determination of the cost to the public.

We reviewed the relevant data and determined that air safety and the public interest require adopting the AD as proposed except for minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM (78 FR 21072, April 9, 2013) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (78 FR 21072, April 9, 2013).

We estimate that this AD will affect 114 products of U.S. registry. We also estimate that it will take about 1 work-hour per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts will cost about $0 per product.

Based on these figures, we estimate the cost of the AD on U.S. operators to be $9,690, or $85 per product.

In addition, we estimate that any necessary follow-on actions will take about 1 work-hour and require parts costing $400, for a cost of $485 per product. We have no way of determining the number of products that may need these actions.

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

For the reasons discussed above, I certify this AD:

(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.

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

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

Transport Canada, which is the aviation authority for Canada, has issued AD CF-2009-07, dated March 6, 2009 (AD CF-2009-07), to correct an unsafe condition for the BHTC Model 407 helicopters with a tailboom assembly, part number (P/N) 407-030-801-201, -203, or -205. Transport Canada states that a stress analysis of the chemically milled tailboom skin “revealed a possibility of skin cracking due to high stress concentration areas.” Transport Canada advises that this condition, if not detected, could result in “serious damage to the tailboom.”

On February 1, 2013, at 78 FR 7308, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 to include an AD that would apply to BHTC Model 407 helicopters, with tailboom assembly part number (P/N) 407-030-801-201, 407-030-801-203, or 407-030-801-205. The NPRM proposed to require, at specified intervals, inspecting the tailboom assembly for a crack, loose rivet, or other damage. The proposed requirements were intended to prevent a crack in the tailboom assembly, failure of the tailboom, and subsequent loss of control of the helicopter.

We gave the public the opportunity to participate in developing this AD, but we received no comments on the NPRM (78 FR 7308, February 1, 2013).

These helicopters have been approved by the aviation authority of Canada and are approved for operation in the United States. Pursuant to our bilateral agreement with Canada, Transport Canada, its technical representative, has notified us of the unsafe condition described in its AD. We are issuing this AD because we evaluated all information provided by Canada and determined that an unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

The Transport Canada AD states to perform the inspections of the tailboom “in accordance with inspection procedures as per applicable part” of the ASB. This proposed AD references only specific sections of the ASB for accomplishing the requirements.

BHTC has issued Alert Service Bulletin No. 407-08-84, dated August 18, 2008 (ASB), which specifies a new inspection schedule for the tailboom assemblies. BHTC states it has not received any field reports indicating cracked skin in service on the tailboom assemblies. However, in the interest of safety, BHTC states it has elected to introduce a new inspection schedule for the tailboom assemblies. The ASB specifies the new inspection schedule. Transport Canada classified this ASB as mandatory and issued AD CF-2009-07 to ensure the continued airworthiness of these helicopters.

We estimate that this AD will affect 551 helicopters of U.S. registry, and estimate the cost of compliance for the first year as follows:

• We assume 1 initial 100-hour TIS inspection and 2 recurring inspections, which will each take about 2.5 hours. At an average labor rate of $85 per hour, this will result in a cost of about $213 per inspection per helicopter or a total annual inspection cost for 3 recurring inspections of about $639 per helicopter.

• We assume 1 initial inspection and thereafter 4 recurring inspections per year for helicopters with a tailboom assembly that has 6,900 or more hours TIS, which will each take 3 hours at the average labor rate of $85 per hour or $255 per helicopter. Multiplying this $255 times the 5 recurring inspections, the total annual cost will be $1,275 per helicopter.

• We assume 1 initial inspection and 12 recurring inspections per year for helicopters with a tailboom assembly that has 8,600 or more hours TIS. If each inspection takes 3.25 hours, at the average labor rate of $85 per hour, each inspection will cost about $276. Multiply $276 times the 13 recurring inspections will result in a total annual inspection cost of $3,588 per helicopter. We expect the cost of pilot checks to be minimal.

• Replacing the tailboom will take 10 work hours at an average labor rate of $85 per hour for a total labor cost of $850 per helicopter. Parts will cost $82,850 for a total cost per helicopter of $83,700. Assuming that 5 helicopters per year will need a replacement tailboom, the fleet replacement cost will total $418,500.

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 helicopters identified in this rulemaking action.

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

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

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

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

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; 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.

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM published in the Federal Register on March 7, 2013 (78 FR 14719). That NPRM proposed to require repetitive inspections for cracking of the fuselage skin above certain lap splice locations, and repair if necessary.

We gave the public the opportunity to participate in developing this AD. We have considered the comment received. Boeing supported the NPRM (78 FR 14719, March 7, 2013).

We reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting the AD as proposed-except for minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM (78 FR 14719, March 7, 2013) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (78 FR 14719, March 7, 2013).

We estimate that this AD affects 4 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We have received no definitive data that would enable us to provide coststimates for the on-condition actions specified in this AD.

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

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

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

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

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

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

(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 amends 14 CFR part 39 as follows:

We issued a supplemental notice of proposed rulemaking (SNPRM) to amend 14 CFR part 39 to supersede AD 2000-04-01, amendment 39-11583 (65 FR 8649, February 22, 2000). AD 2000-04-01 applies to the specified products. The SNPRM published in the Federal Register on March 7, 2013 (78 FR 14726). The NPRM (77 FR 60062, October 2, 2012) proposed to increase the applicability of the AD and place a life-limit of 3,000 hours time-in-service (TIS) on the engine oil pressure switch, requiring replacement when the engine oil pressure switch reaches its life limit. The SNPRM proposed to change the applicable serial numbers ranges and place a life-limit of 3,000 hours TIS on the engine oil pressure switch, requiring replacement when the engine oil pressure switch reaches its life limit.

We gave the public the opportunity to participate in developing this AD. We received no comments on the SNPRM (78 FR 14726, March 7, 2013) or on the determination of the cost to the public.

We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the SNPRM (78 FR 14726, March 7, 2013) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the SNPRM (78 FR 14726, March 7, 2013).

We estimate that this AD affects 6,156 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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

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

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

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

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

(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 amends 14 CFR part 39 as follows:

On April 30, 2013, the FAA published in the Federal Register a notice of proposed rulemaking (NPRM) to amend Class E airspace at Live Oak, FL (78 FR 6258) Docket No. FAA-2013-0001. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received. Subsequent to publication, the FAA found an error in the geographic coordinates of Suwannee County Airport, and the point in space coordinates for Suwannee Hospital Emergency Heliport, and corrects both. Except for editorial changes, and the changes noted above, this rule is the same as published in the NPRM.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.9W dated August 8, 2012, and effective September 15, 2012, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 amends Class E airspace extending upward from 700 feet above the surface within a 7-mile radius at Suwannee County Airport, Live Oak, FL. New Standard Instrument Approach Procedures have been developed for the airport for the continued safety and management of IFR operations within the Live Oak, FL, airspace area. The geographic coordinates for Suwannee Hospital Emergency Heliport are adjusted from “lat. 30°17′29″ N., long. 83°0′24″ W.”, to “lat. 30°17′29″ N., long. 83°00′14″ W.”; and for Suwannee County Airport from “lat. 30°18′01″ N., long. 83°01′29″ W.”, to “lat. 30°18′01″ N., long. 83°01′28″ N.”, to coincide with the FAAs aeronautical database.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial and unlikely to result in adverse or negative comments. It, therefore, (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends controlled airspace in the Live Oak, FL, area.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1E, “Environmental Impacts: Policies and Procedures,” paragraph 311a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

On March 14, 2013, the FAA published in the Federal Register a notice of proposed rulemaking (NPRM) to amend Class E airspace at Robert Sibley Airport, Selmer, TN. (78 FR 16202). Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.9W dated August 8, 2012, and effective September 15, 2012, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 amends Class E airspace extending upward from 700 feet above the surface within a 6.7-mile radius of Robert Sibley Airport, Selmer, TN. Airspace reconfiguration is necessary due to the decommissioning of the Sibley NDB and cancellation of the NDB approach, and for continued safety and management of IFR operations at the airport. The geographic coordinates of the airport also are adjusted to be in concert with FAAs aeronautical database.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial and unlikely to result in adverse or negative comments. It, therefore, (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends controlled airspace at Robert Sibley Airport, Selmer, TN.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1E, “Environmental Impacts: Policies and Procedures,” paragraph 311a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment

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

Chapter 52 of the Internal Revenue Code of 1986 (IRC) contains excise tax and related provisions pertaining to tobacco products and cigarette papers and tubes. Section 5701 of the IRC (26 U.S.C. 5701) imposes various rates of tax on such products manufactured in, or imported into, the United States. Section 5704 of the IRC (26 U.S.C. 5704) provides for certain exemptions from those taxes. Sections 5712 and 5713 of the IRC (26 U.S.C. 5712 and 5713) provide that manufacturers and importers of tobacco products or processed tobacco and export warehouse proprietors must apply for and possess a permit in order to engage in such businesses. Section 5712 also allows for the promulgation of regulations prescribing minimum manufacturing and activity requirements for such permittees, and section 5713 also sets forth standards regarding the suspension and revocation of permits. Section 5754 of the IRC (26 U.S.C. 5754) sets forth restrictions on the importation of previously exported tobacco products. Section 5761 of the IRC (26 U.S.C. 5761) sets forth civil penalties for, among other things, selling, relanding, or receiving any tobacco products or cigarette papers or tubes that were labeled or shipped for exportation.

Regulations implementing the Chapter 52 provisions are contained in chapter I of title 27 of the Code of Federal Regulations (27 CFR). Those regulations include: Part 40 (Manufacture of tobacco products, cigarette papers and tubes, and processed tobacco); part 41 (Importation of tobacco products, cigarette papers and tubes, and processed tobacco); and part 44 (Exportation of tobacco products and cigarette papers and tubes, without payment of tax, or with drawback of tax).

Prior to January 24, 2003, the former Bureau of Alcohol, Tobacco and Firearms (ATF) administered these statutory and regulatory provisions. These provisions are now administered by the Alcohol and Tobacco Tax and Trade Bureau (TTB) (see section 1111 of the Homeland Security Act of 2002, Pub. L. 107-296, 116 Stat. 2274).

Section 9302 of the Balanced Budget Act of 1997 (BBA), Public Law 105-33, 111 Stat. 251, 671-676, enacted on August 5, 1997, amended sections 5704(b), 5712, and 5713 of the IRC and added IRC sections 5754 and 5761(c). These statutory changes, among other things:

• Placed new restrictions on the importation of previously exported tobacco products;

• Required that importers of tobacco products apply for and obtain a permit before commencing business as an importer, with a transitional rule to allow existing importers of tobacco products, who filed an application for a permit with ATF before January 1, 2000, to continue in such business pending final action on their applications;

• Required markings, as prescribed by regulations, on tobacco products and cigarette papers and tubes removed or transferred without payment of Federal excise tax;

• Provided penalties for selling, relanding, or receiving, within the jurisdiction of the United States, tobacco products or cigarette papers and tubes that were labeled or shipped for exportation and that were removed on or after the effective date of the section 9302 amendments, that is, January 1, 2000; and

• Authorized the Secretary of the Treasury (the Secretary) to prescribe minimum capacity or activity requirements as a criterion for issuance of a permit.

The above statutory changes are discussed in more detail below.

Section 9302(h)(1)(E)(i) of the BBA added section 5754 to the IRC, which at that time provided that previously exported tobacco products and cigarette papers and tubes may be imported or brought into the United States only as provided in section 5704(d). At that time, section 5704(d) provided that tobacco products and cigarette papers and tubes previously exported and returned could be released from customs custody, without payment of internal revenue tax, for delivery to a manufacturer of tobacco products or cigarette papers and tubes or to the proprietor of an export warehouse, in accordance with such regulations and under such bond as the Secretary shall prescribe.

Section 9302(h)(2) of the BBA amended sections 5712 and 5713 of the IRC to require, in part, that importers of tobacco products apply for and obtain a permit before commencing business as such importers. The BBA also provided a transitional rule to allow existing importers of tobacco products, who filed applications for a permit with ATF before January 1, 2000, to continue in such businesses pending final action on their applications.

Prior to the BBA's being enacted, section 5704(b) of the IRC provided that, in accordance with regulations promulgated by the Secretary:

“(1) A manufacturer or export warehouse proprietor may transfer tobacco products and cigarette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, without payment of tax, for shipment to a foreign country, Puerto Rico, the U.S. Virgin Islands, or a possession of the United States, or for consumption beyond the jurisdiction of the U.S. internal revenue laws; and

(2) A manufacturer may similarly remove such articles for use of the United States.”

Section 9302(h)(1)(A) of the BBA added a sentence at the end of section 5704(b) of the IRC to provide that tobacco products and cigarette papers and tubes may not be transferred or removed under 5704(b) unless they bear such marks, labels, or notices as the Secretary shall prescribe by regulation. The authority of the Secretary to prescribe regulations regarding the marks, labels, and notices that must appear on packages of tobacco products and cigarette papers and tubes, before removal, is also contained in section 5723(b) of the IRC (26 U.S.C. 5723(b)).

Section 9302(h)(1)(B) of the BBA added a new subsection (c) to section 5761 of the IRC to impose a civil penalty on persons, other than manufacturers or export warehouse proprietors operating in accordance with sections 5704(b) and (d) of the IRC, who sell, reland, or receive within the jurisdiction of the United States tobacco products or cigarette papers or tubes that have been labeled or shipped for exportation under chapter 52 of the IRC. The civil penalty is the greater of $1,000 or five times the amount of tax imposed on the product. Section 9302(h)(2)(A) of the BBA amended sections 5762(a)(1) and 5763(b) and (c) to apply criminal penalties and forfeiture provisions to importers of tobacco products.

Section 9302(h)(5) of the BBA amended section 5712 of the IRC by adding an additional factor for rejecting an application and denying a permit. The new provision stated that the application may be rejected and the permit denied if “the activity proposed to be carried out at such premises does not meet such minimum capacity or activity requirements as the Secretary may prescribe.”

On December 22, 1999, ATF published in the Federal Register (64 FR 71918) a temporary rule, T.D. ATF-421, amending or adding various provisions within 27 CFR parts 200 (now part 71), 270 (now part 40), 275 (now part 41), and 290 (now part 44) to implement the statutory amendments made by section 9302 of the BBA other than the new importer permit requirements which were addressed in a separate temporary rule, T.D. ATF-422, described later in this document. When earlier rulemaking documents are discussed in this preamble, any references to section numbers and regulatory texts are as they existed when that earlier rulemaking document was published. Specifically, T.D. ATF-421 adopted regulatory amendments pertaining to:

• Marks, labels, and notices;

• Minimum manufacturing activity requirements;

• Import restrictions on previously exported tobacco products, and cigarette papers, and tubes;

• Penalty and forfeiture provisions;

• Repackaging, and

• Form numbers, manufacturer and export warehouse proprietor records, and definitions.

As noted above, the Secretary is authorized to prescribe the type of marks, labels, and notices that must appear on packages of tobacco products and cigarette papers and tubes, including on products that are exempt from Federal excise taxation under 5704(b) of the IRC. In the preamble of T.D. ATF-421, ATF noted that Congress, by adopting section 9302(h)(1)(A) of the BBA, wanted to:

• Specifically authorize ATF to determine required marks, labels, and notices for products exempt from taxation under section 5704(b) to ensure protection of the Federal excise tax revenue;

• Ensure that non-taxpaid products intended for exportation bear the proper markings; and

• Require that taxpaid products that are ultimately sold on the domestic market not bear export markings. ATF noted in this regard that allowing products with export markings on the domestic U.S. market would hinder the enforcement of lawfully due taxes and cause confusion as to whether the product had been taxpaid.

Accordingly, in T.D. ATF-421, ATF amended 27 CFR 270.233, 290.61, and 290.181 to require that tobacco products and cigarette papers and tubes bear the required marks, labels, and notices in order to qualify for transfer or removal of the product without payment of tax.

• Section 270.233 was amended to provide that tobacco products may not be transferred in bond unless they bear all required marks, labels, and notices.

• Section 290.61 was amended to provide that tobacco products and cigarette papers and tubes may not be removed for exportation without payment of tax unless they bear all required marks, labels, and notices.

• Section 290.181 was amended to provide that all tobacco products and cigarette papers and tubes must, before removal or transfer, bear the required marks, labels, or notices. Under the authority of the Secretary in section 5723(a) of the IRC to prescribe rules for the packages in which tobacco products and cigarette papers and tubes must be put up before removal, § 290.181 was further amended to clarify that the “package” upon which the marking, labeling, and notice requirements are to appear, does not include any cellophane wrapping material that may enclose a package. A package, thus, is only intended to include the actual material that holds and encloses the tobacco products and cigarette papers or tubes. This amended definition clarified placement requirements of marks, labels, and notices. In keeping with Congressional intent to prevent diversion of tobacco products, ATF wanted to ensure that marks, labels, and notices on products destined for export were clear and not easily destroyed.

Based on the language that section 9302 of the BBA added to section 5712 of the IRC, ATF concluded that it was authorized to establish minimum capacity or activity requirements and to deny a permit application based on an applicant's failure to meet such minimum capacity or activity requirements. ATF noted in T.D. ATF-421 that Congress enacted the provisions in question to ensure that those who apply for a permit actually intend to engage in the bona fide business of manufacturing tobacco products in a manner that would adequately protect the revenue and comply with the law and regulations.

In promulgating regulations that establish minimum capacity or activity requirements, ATF considered several issues. ATF did not want to establish criteria that would effectively exclude small tobacco products manufacturers from obtaining a permit. In addition, ATF wanted to establish criteria that would ensure that only those actually engaged in the business of manufacturing tobacco products would be able to obtain a permit. Accordingly, ATF established criteria that effectively excluded any person who is not a legitimate manufacturer and whose primary interest in obtaining a manufacturer's permit is to obtain the tax deferral benefits that a permit might facilitate (those tax deferral benefits are otherwise referred to as “downstreaming of taxes”) by setting up premises covered by a permit where the only business purpose of the premises was to store non-taxpaid products that were transferred in bond to such premises.

ATF noted that section 5712 of the IRC requires that prior to engaging in the business of manufacturing tobacco products, a person must obtain a permit from ATF. ATF believed that any applicant who proposes to engage in the business of manufacturing of tobacco products, regardless of size, should be eligible to receive a permit, so long as the applicant meets the definition of manufacturer in section 5702(d) and has fulfilled the other conditions in the law and regulations. ATF noted that it had issued permits to some small manufacturers of tobacco products, such as those who manufacture hand-rolled cigars, and for this reason ATF did not want to establish minimum capacity or activity criteria that would exclude small tobacco products manufacturers.

As noted above, ATF wanted to ensure that permits were not issued to persons who intended to use the permit to delay tax payment. Prior to the publication of T.D. ATF-421, ATF had received inquiries from persons who wanted to obtain a permit and establish bonded premises for the primary purpose of receiving tobacco products in bond and delaying payment of Federal excise taxes.

ATF noted that the Federal excise tax on tobacco products attaches to the products as soon as they are manufactured, and that the manufacturer is liable for the tax on tobacco products held in bond. Under section 5703 of the IRC the manufacturer is required to pay the tax when the tobacco product is removed from bond. ATF noted that tobacco products generally are distributed under a three-tier distribution system: at the first level, the manufacturer pays Federal excise tax after removal of the products from bonded premises; then the products are transferred to a wholesaler, which is the second level in the distribution system; and finally to the retailer, who is the customer of the wholesaler and the third level in this three-tier system.

However, as noted above, section 5704 of the IRC provides that tobacco products may be transferred from one manufacturer or export warehouse proprietor to another manufacturer or export warehouse proprietor without payment of tax. ATF noted that because of this exemption from taxation, a business could attempt to set up one or more wholesale warehouses with some de minimis production capability, and obtain a manufacturer's permit for each wholesale warehouse. Using the in bond transfer provision provided by section 5704, each warehouse would then be eligible to receive tobacco products in bond at each wholesale warehouse, without payment of the excise tax. The taxes on the product would not be due until the product was distributed from the wholesale level to the retail level. This downstreaming of taxes moves the collection point for the excise tax from the production level to the wholesale level. ATF noted that while this is potentially beneficial for manufacturers since they can effectively delay taxpayment until the product is removed from the wholesale level, it has an adverse effect on Federal tax receipts since it delays payment of the Federal excise tax.

ATF stated that it wanted to prevent the downstreaming of taxes because it undermines the effect and purpose of obtaining a permit to engage in the business of manufacturing tobacco products and because it also contravenes the safeguards in obtaining a permit, that is, to protect and collect Federal excise tax revenues. Additionally, ATF was concerned with the potential number of new taxpayers (that is, wholesalers qualifying as manufacturers), and the proliferation of tax payment points, if this approach became widely used. ATF stated that it had found that the collection of excise taxes is best achieved at the highest level within the three-tier distribution chain (that is, the manufacturer's level). ATF noted in this regard that when the Federal excise tax is collected at the manufacturer's level, the agency has fewer taxpayers to monitor and thus has more efficient tax collections and fewer administrative costs.

Recognizing these concerns, ATF wanted to ensure that the new minimum manufacturing criteria would prevent issuance of permits to businesses that principally want to receive tobacco products in bond and delay Federal excise tax payments. Thus, ATF stated that it amended the regulations whereby it would continue to issue permits to small manufacturers of tobacco products, despite limited production capacity, and would deny permits to persons who seek a permit for the principal purposes of receiving in bond untaxed tobacco products.

The following summarizes ATF's explanation of the regulatory changes.

In T.D. ATF-421, ATF amended the regulations at 27 CFR 270.61 to provide that a permit would only be granted to those persons whose principal business activity under such permit would be the original manufacture of tobacco products. A permit would not be granted to any person whose proposed principal activity under such permit would be the receipt or transfer of non-taxpaid tobacco products in bond. Furthermore, to qualify for a permit, the amount of tobacco products manufactured under a permit must exceed the amount transferred or received in bond under such permit. For example, a person who only manufactures 1,000 cigarettes per month may receive a maximum of 999 cigarettes in bond during the month under that permit. Likewise, a person who manufactures 10,000,000 cigarettes a month could receive up to 9,999,999 cigarettes in bond during the month under that permit.

ATF noted that it believed that these changes to the regulations effectively accommodated small manufacturers while protecting the timely assessment and collection of the Federal excise tax revenue. T.D. ATF-421 also amended 27 CFR 200.49b to include this activity criterion as a basis for rejecting an application for a permit. ATF stated that it did not amend 27 CFR 200.46, regarding revocation or suspension of tobacco permits, because compliance with regulations issued under the IRC was already required.

ATF noted that it did not require a minimum capacity or activity criterion for importers or export warehouse proprietors. ATF did not believe that either an importer or export warehouse permittee would or could engage in misuse of its permit for downstreaming of taxes in a manner similar to the way that a manufacturer might misuse its permit. However, ATF did state that it would consider imposing minimum manufacturing or activity criteria on importers and export warehouse proprietors if the need should arise.

ATF noted that when the BBA was enacted section 5704(d) of the IRC allowed previously exported tobacco products to be lawfully transferred to any manufacturer of tobacco products or cigarette papers and tubes, or to any export warehouse proprietor; and section 5704(d) did not mandate that the previously exported products return to the original manufacturer or export warehouse proprietor. Also, ATF noted that, under new IRC section 5754 as described above, previously exported tobacco products and cigarette papers and tubes could only be imported or brought into the United States by release from customs custody to a manufacturer or an export warehouse proprietor as an in bond transfer. ATF further noted that section 5754 precluded the importation and tax payment of such products by an importer since the law was very clear and left no discretion to ATF in that regard. Section 5754 at that time clearly stated that such products could only be imported or brought into the United States by the method provided in section 5704(d) of the IRC (26 U.S.C. 5704(d)), that is, a transfer, without payment of tax, to a manufacturer or export warehouse.

Based on the above, T.D. ATF-421 amended the following sections in 27 CFR part 275:

• 27 CFR 275.1: Section 275.1 was revised to include a general discussion of importation of tobacco products and cigarette papers and tubes.

• 27 CFR 275.81: Paragraph (a) of § 275.81 was revised to distinguish between tobacco products and cigarette papers and tubes that were imported, and those that had been previously exported from the United States and returned.

• 27 CFR 275.82: Section 275.82 was added to discuss the new restrictions on the return of exported products.

Except for a qualified manufacturer of tobacco products or cigarette papers and tubes or an export warehouse proprietor, new section 5761(c) imposed civil penalties on persons who sell, reland, or receive within the jurisdiction of the United States any tobacco products that are labeled or shipped for export.

In T.D. ATF-421, ATF noted that it had considered ways to enforce new section 5761(c) of the IRC, since the domestic market would contain tobacco products that had been lawfully removed on or before December 31, 1999, as well as products marked for export that had been unlawfully introduced into the domestic market (that is, unlawfully removed) after December 31, 1999, and thus subject to the new civil penalty. To differentiate between the products that had been lawfully removed and those that had been unlawfully removed, ATF considered whether or not to change the export marking requirements under 27 CFR 290.185 for products manufactured after December 31, 1999. In T.D. ATF-421, ATF discussed this alternative, but declined to make these changes since it would impose major burdens on tobacco manufacturers. ATF decided that voluntary commercial marks already placed on packages by the tobacco industry would enable ATF to distinguish between these products. Further, ATF stated that if future investigations disclosed the need to do so, it would consider changing the export marking requirements on products manufactured after December 31, 1999, to differentiate between products removed.

With reference to new sections 5754 and 5761(c) of the IRC discussed above, ATF in T.D. ATF-421 noted that although manufacturers and export warehouse proprietors were authorized to receive relanded tobacco products or cigarette papers or tubes from customs custody without payment of the Federal excise tax, there were limitations on what manufacturers and export warehouse proprietors could do with such products. After noting that such products could be destroyed or re-exported, or (in the case of a manufacturer) repackaged and removed for sale in the domestic market, ATF noted the following in regard to these requirements, as they existed at that time:

Export warehouse: Section 5702 of the IRC defines “export warehouse” to mean “a bonded internal revenue warehouse for the storage of tobacco products and cigarette papers and tubes, upon which the internal revenue tax has not been paid, for subsequent shipment to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States.” An export warehouse proprietor is defined in section 5702 as any person who operates an export warehouse. Export warehouse proprietors are only authorized to store non-taxpaid tobacco products and cigarette papers and tubes for subsequent exportation. Export warehouses are specifically established under the law to facilitate the exportation of tobacco products without payment of the excise tax. There is no authority for an export warehouse proprietor to pay the excise tax and distribute tobacco products into the domestic U.S. market. An export warehouse proprietor may only lawfully receive relanded tobacco products, transfer them to a qualified manufacturer, re-export them or destroy them.

Manufacturers: In accordance with section 5703, manufacturers are authorized under the IRC to pay excise tax on and distribute tobacco products into the domestic market. However, the IRC also requires that, before removal from a manufacturer's factory, tobacco products must be put up in packages and bear the marks, labels, and notices required by the Secretary.

As noted above, the Secretary has the general authority to prescribe packaging and marking requirements for tobacco products under section 5723(a) and (b) of the IRC. Under this authority, prior to the issuance of T.D. ATF-421, ATF had prescribed regulations under 27 CFR 290.185 which require that products removed for exportation exempt from taxation must bear export markings. Such markings include the words, “Tax-exempt. For use outside U.S.” or “U.S. Tax-exempt. For use outside U.S.” These export markings signify that the product is not subject to Federal taxes and that it is not intended for distribution within the United States. ATF stated in T.D. ATF-421 that it relied on these markings to identify these products as a tax-exempt export for enforcement purposes. In addition, ATF had prescribed regulations under 27 CFR 290.222 which require that tobacco products and cigarette papers and tubes on which tax has been paid and a drawback claim has been made must have a label affixed reading “For Export With Drawback of Tax.”

ATF further noted in T.D. ATF-421 that previously exported products that are relanded in the United States also bear the export markings required under §§ 290.185 and 290.222 and may be intended for distribution in the domestic market. Because ATF could not tell if a particular product on the market had been lawfully taxpaid and removed from customs custody, or if it was smuggled into the U.S., the efficacy of the export marking requirements was severely reduced if these products were allowed in the domestic market. ATF concluded that since relanded tobacco products were marked in accordance with the tobacco export regulations at 27 CFR 290.185 and bore a statement that said “Tax-exempt. For use outside U.S.” or “U.S. Tax-exempt. For use outside U.S.” or in accordance with § 290.222 bore a statement that said “For Export With Drawback of Tax,” they were not properly marked for distribution in the domestic U.S. market. Further, if products with export markings were allowed in the domestic market, this practice would hinder enforcement of the IRC and jeopardize the revenue. ATF stated that its goal was to protect the revenue, and to determine whether the Federal excise tax on a relanded product had been paid. ATF considered various options for removing these export markings and bringing relanded products into compliance with the domestic marking and labeling requirements. In particular, ATF considered:

• Allowing such products to be overstamped;

• Allowing the obliteration of the tax-exempt marking; or

• Allowing stickers to be placed over the markings.

However, ATF concluded in T.D. ATF-421 that the options of overstamping, obliteration, or use of stickers would negate the value of these markings as a tax enforcement tool. Overstamping, obliteration, or placing stickers over the tax-exempt notice would not necessarily mean that the Federal excise tax had been paid on the relanded product because any person could obtain product that had not been federally taxpaid, place stickers over the “tax exempt” notice on packages, and distribute them in the domestic market.

After careful consideration of the issue, ATF concluded that a manufacturer who distributes relanded tobacco products into the domestic market must remove the product from its original packages (bearing export markings) and repackage them into new packages with the proper mark and notice requirements for domestic U.S. distribution as prescribed in 27 CFR part 270. ATF determined that in order to protect the Federal excise tax revenue, it is essential to require the repackaging of these reimported products before they are introduced in domestic commerce.

Thus, ATF concluded that, under 26 U.S.C. 5761(c), products labeled for export may not be sold in the domestic U.S. market. However, manufacturers were eligible to receive relanded tobacco products and cigarette papers and tubes and sell them in the domestic market if such products were completely repackaged under the laws and regulations for products not intended for exportation. Accordingly, 27 CFR 275.82(b) was added and prescribed requirements for repackaging under these circumstances. Also, T.D. ATF-421 added 27 CFR 270.213, which notified manufacturers that tobacco products marked for export are not eligible for distribution in the domestic market, and of the need to repackage such products.

Finally, ATF noted in T.D. ATF-421 that, like an export warehouse proprietor, a manufacturer was allowed to transfer tobacco products to another manufacturer or to an export warehouse proprietor, re-export the relanded tobacco products, or destroy the relanded tobacco products.

In addition to the changes discussed above that were necessitated by the BBA statutory amendments, T.D. ATF-421 made several administrative changes to the ATF tobacco regulations:

Form numbers: The texts of 27 CFR 290.61a, 290.142, 290.198 through 290.208, 290.210, 290.213, and 290.256 through 290.267 were amended to change references from obsolete form number ATF F 2149/2150, to the new form number ATF F 5200.14. The regulations in 27 CFR 290.152 through 290.154 were amended to change all references from the obsolete form number ATF F 2635 to the new form number ATF F 5620.8. Also, 27 CFR 290.62 was amended to delete obsolete references to a customs form and regulatory citation.

Record retention of ATF forms: Minor changes were made in the regulations to reflect the correct number of years that ATF form numbers 5700.14 and 5620.8 must be retained. The regulations were amended to change the records retention period from 2 years to 3 years.

Manufacturer's records: The recordkeeping requirement for a manufacturer of tobacco products prescribed in 27 CFR 270.183 was amended to include the term “roll-your-own tobacco” and to include records of transfers to, and receipts from, foreign trade zones.

Export warehouse records: The recordkeeping requirements in 27 CFR 290.142 were amended to require that records include information regarding the manufacturer and brand name of products that were received, removed, transferred, destroyed, lost, or returned to manufacturers or customs bonded warehouses. In addition, the records must include the number of containers and unit type (e.g., cartons, cases).

Definitions: To clarify the regulations, T.D. ATF-421 added several definitions to the “meaning of terms” sections in 27 CFR 275.11 and 290.11. Section 275.11 was amended by adding definitions for the terms “Export warehouse,” “Export warehouse proprietor,” “Manufacturer of tobacco products,” “Manufacturer of cigarette papers and tubes,” and “Relanding”. Section 290.11 was amended by adding a definition for “Zone restricted status.”

On April 18, 2000, the United States District Court for the District of Columbia in the civil action World Duty Free Americas, Inc. v. Treasury (D.D.C. No. 00-00404 (RCL); 94 F. Supp. 2d 61 (D.D.C. 2000) issued a temporary injunction enjoining the Treasury Department from enforcing the temporary regulations in T.D. ATF-421 at 27 CFR 275.11 and 275.83, to the extent that they prohibited the importation of cigarettes purchased in U.S. duty free stores up to the limit allowed by the personal use exemption provided by 19 U.S.C. 1555 and subheadings 9804.00.65, 9804.00.70, and 9804.00.72 of the Harmonized Tariff Schedule of the United States (HTSUS), 19 U.S.C. 1202.

On November 9, 2000, the President signed into law the Tariff Suspension and Trade Act of 2000, Public Law 106-476, 114 Stat. 2101, which included the Imported Cigarette Compliance Act of 2000 (ICCA). Sections 5704, 5754, and 5761(c) of the IRC, which had been added or amended by section 9302 of the BBA as discussed above, were amended by the ICCA to:

• Provide in section 5704(d) that tobacco products and cigarette papers and tubes manufactured in the United States and previously exported and returned may be released from customs custody without payment of tax only to the original manufacturer or to an export warehouse proprietor authorized to receive them by the original manufacturer;

• Provide in section 5754(a)(1)(C) that tobacco products and cigarette papers and tubes labeled for exportation may not be sold or held for sale for domestic consumption in the United States unless they are removed from their export packaging and repackaged by the original manufacturer into new packaging that does not contain an export label; and

• Require in section 5761(c) the forfeiture and destruction of all relanded tobacco products and cigarette papers and tubes, except as provided under sections 5704(b) and (d).

On December 21, 2000, the President signed into law the Consolidated Appropriations Act, 2001 (CAA), Public Law 106-554, 114 Stat. 2763, which further amended section 5761(c) to allow travelers entering the United States to claim a personal use tax exemption for tobacco products manufactured within United States and labeled for export that are brought back into the United States. Under the CAA amendment, travelers may bring U.S. manufactured and export labeled tobacco products back into the United States under a personal use exemption free of Federal excise tax up to the limit allowed under Chapter 98 of the HTSUS. In addition, travelers entering the United States and claiming a personal use exemption for U.S. manufactured and export labeled tobacco products may voluntarily relinquish any articles in excess of the quantity allowed without incurring the penalty prescribed under section 5761(c).

Notwithstanding the view of ATF that the described above changes made by the ICCA and the CAA were clear and left no discretion in implementation, in view of the pendency of the World Duty Free Americas, Inc. case, ATF decided to issue a notice of proposed rulemaking prior to issuance of a final rule to implement those statutory changes. Accordingly, on March 26, 2001, ATF published in the Federal Register (66 FR 16425) Notice No. 913 to solicit comments on proposed implementing regulations. In response to that comment solicitation ATF received one comment, which urged prompt adoption of the proposed regulations without change. Subsequently, on August 29, 2001, ATF published in the Federal Register (66 FR 45613) a final rule, T.D. ATF-465, adopting the proposed regulatory amendments to implement the changes made to the IRC by the ICCA and the CAA. In addition to some changes not relevant to the present rulemaking, these regulatory amendments included a complete revision of the texts of §§ 275.82 and 275.83, which had been added by T.D. ATF-421. In addition, T.D. ATF-465 amended the definition of “Relanding,” which had been added by T.D. ATF-421, by removing the second sentence. On November 27, 2001, United States District Court for the District of Columbia vacated the injunction that prohibited the Treasury Department from enforcing the temporary regulations in T.D. ATF-421 referred to above.

The regulations contained in 27 CFR part 275 were later amended by T.D. ATF-444, a temporary rule published in the Federal Register (66 FR 13849) on March 8, 2001. These regulations eliminated ATF onsite supervision of tobacco products and cigarette papers and tubes of Puerto Rican manufacture that are shipped from Puerto Rico to the United States. This Treasury decision also amended the definition of “Records” added to § 275.11 by T.D. ATF-422 (discussed in greater detail below) and revised in their entirety, and thus superseded, the changes made by T.D. ATF-422 to §§ 275.106, 275.110, and 275.111. The definition of “Records” set forth in this new temporary rule incorporates the amendment made by T.D. ATF-444. The temporary rule in T.D. ATF-444 was finalized by T.D. TTB-68, which was published in the Federal Register (73 FR 16757) on March 31, 2008.

On the same day that T.D. ATF-421 was published, December 22, 1999, ATF also published in the Federal Register (64 FR 71927), a notice of proposed rulemaking, Notice No. 887, soliciting comments on the temporary regulatory amendments contained in T.D. ATF-421. The original comment period for Notice No. 887 lasted 60 days and closed on February 22, 2000.

During the comment period, ATF received several requests to extend the comment period on T.D. ATF-421 to provide interested parties with sufficient time to submit their comments. On March 21, 2000, ATF published Notice No. 893 (65 FR 15115) which reopened the comment period for an additional 30 days until April 20, 2000.

During the comment period, ATF also received a request to hold a public hearing regarding the temporary regulations but declined to do so. ATF determined that the two notices requesting public comment, totaling 90 days, provided sufficient time for interested parties to submit written comments and that any oral comments that could be made during a public hearing could be provided in writing within the 90 day comment period.

ATF received 26 comments from 24 different interested parties concerning the temporary regulations published in T.D. ATF-421. The comments are discussed below.

Fifteen comments opposed the position taken by ATF in T.D. ATF-421 that the BBA did not provide for a personal use exemption for previously exported tobacco products. The commenters argued that Congress did not intend for the amendments in section 9302 of the BBA to apply to people traveling into the United States with previously exported non-taxpaid U.S. manufactured cigarettes for personal use. Section 5704(d) of the IRC at that time provided that tobacco products and cigarette papers that were previously exported could only be brought back into the United States and released from customs custody to a manufacturer or export warehouse proprietor, and ATF interpreted this provision as precluding the adoption of a personal use exemption by regulation.

TTB notes that the personal use exemption issue has been addressed by the enactment of the CAA, which included a personal use exemption, and by the subsequent promulgation of T.D. ATF-465, as discussed above.

Section 5754 of the IRC as adopted by the BBA allowed previously exported tobacco products and cigarette papers and tubes to be brought back into the United States and released from customs custody as provided in section 5704(d), that is, to a manufacturer of tobacco products or cigarette papers and tubes or to an export warehouse proprietor. ATF received several comments requesting that it change the regulations to provide that only the “original” manufacturer of previously exported tobacco products and cigarette papers and tubes would be eligible to receive reimported products.

The subsequent amendment of section 5704(d) of the IRC by the ICCA and the resulting regulatory amendments adopted in T.D. ATF-465, as discussed above, addressed this issue.

Several comments noted that the temporary regulations permitted the domestic sale of export-labeled tobacco products removed prior to January 1, 2000, and that there was no “cut-off date” by which the sale of these products in domestic commerce must cease. These comments recommended that ATF require all tobacco products made in the United States and bearing an export label to be removed from domestic commerce by a specific date.

TTB notes that section 4002 of the ICCA amended the IRC to provide that previously exported articles that were imported before January 1, 2000, for sale in the domestic market could not be legally sold or held for sale after February 7, 2001, unless they were removed from their export packaging and repackaged by the original manufacturer into new packaging that does not contain an export label. This change was discussed in the preamble of T.D. ATF-465. TTB believes that the ICCA adequately addressed the issue raised by the commenters.

As noted above, the BBA amended section 5712 of the IRC by adding a provision for minimum capacity or activity requirements, as prescribed by the Secretary, as an additional factor for rejecting an application and denying a permit. T.D. ATF-421 amended § 270.61 (now § 40.61), to state that a permit to manufacture tobacco products will only be granted to those persons whose principal business activity under that permit will be the original manufacture of tobacco products, and that a permit will not be granted to any person whose principal activity under that permit will be to receive or transfer non-taxpaid tobacco products in bond. Furthermore, to qualify for a permit, the amount of tobacco products manufactured under a permit must exceed the amount transferred or received in bond under that permit.

Three comments were received in response to the minimum manufacturing activity requirements adopted in T.D. ATF-421. One expressed approval of the regulation. Two comments expressed concern that the new qualification to obtain a permit did not require a manufacturer to sell its products in the United States. The commenters asserted that the absence of this requirement creates a loophole under which unauthorized reimporters may circumvent the provisions of the BBA by qualifying as “manufacturers” simply by setting up equipment and producing a substandard “cigarette” product that was not intended to be sold in the United States. As a means of addressing this potential problem, one comment recommended that ATF define the term “manufacture of tobacco products” to include the “physical manufacturing of cigarettes from basic components, as well as shipping of those cigarettes into the market for sale or consumption.”

One commenter further expressed concern that ATF did not propose regulations providing for the “inspection of facilities for purposes of verifying that a purported manufacturer is (1) legitimately manufacturing and selling product and (2) not receiving more previously exported cigarettes than is permitted under the Temporary Regulations.”

Based on TTB's enforcement experience, TTB does not believe that the current regulatory text contains a loophole that allows a person to set up a sham operation as contended. TTB believes that the permit application review process and the Bureau's audit and investigation activities are sufficient to identify persons who are not engaging in the original manufacture of tobacco products and, as such, do not qualify for a TTB permit. TTB further notes that the section of the regulations in question was subsequently amended by T.D. TTB-78 and subject to its accompanying notice and public comment procedures. Therefore, it is unnecessary to further address this section in this document.

As noted above, the BBA added section 5754 to the IRC entitled “Restriction on importation of previously exported tobacco products.” Under section 5754, tobacco products and cigarette papers and tubes previously exported from the United States may be imported or brought into the United States only as provided in section 5704(d), that is, by release from customs custody, without payment of tax, to a manufacturer or to an export warehouse proprietor in accordance with such regulations and under such bonds as the Secretary shall prescribe. ATF's position, as stated in the preamble of T.D. ATF-421, was that section 5754 precluded an importer from importing previously exported products, paying tax, and selling them in the domestic market, and that the statutory text was clear and left no discretion. There were two comments from the same person in strong opposition to ATF's interpretation of this statutory provision.

TTB notes that sections 5704(d) and 5754 were subsequently amended by the ICCA to limit the parties that could receive reimported products and to require the repackaging of such products prior to sale in the United States. T.D. ATF-465 incorporated these statutory changes in the regulations in § 275.82(c) (now § 41.82(c)). Thus, the clear, limited wording of the statutory provisions in question precludes the adoption of a regulation that would contravene the position taken by ATF.

Several commenters stated that the regulations published in T.D. ATF-421 should address problems associated with cigarettes manufactured outside of the United States. TTB believes that the issues raised in these comments are beyond the scope of this rulemaking action.

Consistent with the provisions of the BBA, T.D. ATF-421 included a provision requiring that reimported tobacco products and cigarette papers and tubes bearing export marks must be stripped of their original packaging and repackaged with the proper marks and notices as the Secretary prescribes for the domestic U.S. market. Two comments were received in response to this requirement. Both commenters agreed with the new requirement, but one suggested the inclusion of a provision whereby manufacturers could only repackage previously exported cigarettes that were originally manufactured in their own manufacturing facilities.

TTB notes that, as discussed above, the ICCA addressed this issue by providing that previously exported tobacco products and cigarette papers and tubes could be released from customs custody only to the original manufacturer of the articles in question or to an authorized export warehouse proprietor and could be repackaged by the original manufacturer. This provision was incorporated in the regulations by T.D. ATF-465.

One commenter suggested that the terms, “Sells,” “Relands,” and “Receives” as used in § 275.83 (now § 41.83) should be defined to clearly indicate the nature of the activities subject to citation under this provision. The commenter stated that “[t]his would encompass all direct importers and each activity in the chain of importation including the offshore seller (if jurisdiction can be obtained), wholesalers, merchandise brokers, retailers, and consumers of illegally reintroduced cigarettes.”

TTB notes that the wording of § 41.83 is basically a verbatim recitation of the language found in section 5761(c) of the IRC. TTB believes that the statutory and regulatory texts are sufficiently clear and that therefore no further regulatory change is necessary.

The same commenter suggested that ATF define the term “Person” more broadly to include: “in the case of a corporate participant, any more than 50%-owned affiliated corporation, and in the case of a closely held corporation, its shareholders or directors. In the case of a partnership, joint venture, or limited liability company, the term person should be defined to include operating partners or managers.”

TTB believes that the term “Person” is sufficiently defined in 27 CFR 41.11 and notes that the regulatory definition is consistent with the IRC at 26 U.S.C. 7701(a).

In T.D. ATF-421, ATF stated: “It has been determined that this temporary rule is not a significant regulatory action as defined by Executive Order 12866 because any economic effects flow directly from the underlying statute and not from this temporary rule. Therefore, a regulatory assessment is not required.”

One commenter stated: “This position is incorrect because the effect of the Proposed Regulation exceeds the statutes that control, and which the Proposed Regulation is purported to augment. In addition, the effect of the Proposed Regulation has significant impact (by eliminating certain business entities from doing business in the re-importation of tobacco products) and has significant economic and tax impact on such entities.”

ATF did not, and TTB does not, have the discretion in administering 26 U.S.C. 5754 to determine who can reimport tobacco products. In fact, the regulations that implement section 5754 merely repeat, essentially verbatim, the language of the statute. The regulations do not exceed the authority contained in the statute as the commenter suggests, and TTB continues to believe that the regulation is not a significant regulatory action as defined by Executive Order 12866 (as discussed in more detail below).

In addition to the changes made by T.D. ATF-465, published in the Federal Register (66 FR 45613) on August 29, 2001, the following subsequent regulatory amendments adopted by ATF and TTB affected some of the sections of the regulations that were added or amended by T.D. ATF-421:

• T.D. ATF-424, published in the Federal Register (64 FR 71929) on December 22, 1999, revised the introductory text of § 270.183 (now § 40.183).

• T.D. ATF-460, published in the Federal Register (66 FR 39091) on July 27, 2001, recodified 27 CFR part 270 as part 40.

• T.D. ATF-463, published in the Federal Register (66 FR 42731) on August 15, 2001, recodified 27 CFR part 200 as part 71.

• T.D. ATF-464, published in the Federal Register (66 FR 43478) on August 20, 2001, recodified 27 CFR part 290 as part 44.

• T.D. ATF-467, published in the Federal Register (66 FR 49531) on September 28, 2001, revised the definition of “Manufacturer of cigarette papers and tubes” in 27 CFR 275.11 (now § 41.11). This definition does not appear in this document.

• T.D. TTB-16, published in the Federal Register (69 FR 52421) on August 26, 2004, recodified 27 CFR part 275 as part 41.

• T.D. TTB-44, published in the Federal Register (71 FR 16918) on April 4, 2006, made nomenclature changes to 27 CFR chapter I to reflect organizational changes that resulted from the Homeland Security Act of 2002. These nomenclature changes included replacing references to the “Director” with “Administrator”, and “ATF” with “TTB”, and specific office or officer titles with “appropriate TTB officer.”

• T.D. TTB-75, published in the Federal Register (74 FR 14479) on March 31, 2009, to implement certain changes made to the IRC by sections 701 and 702 of the Children's Health Insurance Program Reauthorization Act (CHIPRA), amended 27 CFR 40.183(e), and 27 CFR 41.81(c)(4)(ii) and (iii).

• T.D. TTB-78, published in the Federal Register (74 FR 29401) on June 22, 2009, to implement other changes made by section 702 of the CHIPRA, amended 27 CFR 40.61, the definition of “Export warehouse” in 27 CFR 41.11, 41.201, 41.202, 41.206 and 41.208, and removed 27 CFR 41.192, 41.205 and 41.207.

On December 22, 1999, ATF published another temporary rule, T.D. ATF-422, in the Federal Register (64 FR 71947) setting forth regulatory changes to 27 CFR part 275 (now part 41) implementing the changes made by section 9302 of the BBA pertaining to tobacco product importer permits.

In accordance with the transitional rule contained in section 9302(i)(2) of the BBA, ATF stated in T.D. ATF-422 that persons who were already engaged in the business as an importer of tobacco products could continue in such business after January 1, 2000, provided they had filed an application for a permit with ATF before January 1, 2000. Such persons would be issued a temporary permit, which would remain valid for a period of one year or until a final determination was made on their application, if a final determination was not made within that time. ATF stated that all others must obtain a permit before engaging in the business as an importer of tobacco products or cigarette papers and tubes beginning January 1, 2000.

In T.D. ATF-422, ATF noted that only manufacturers and export warehouse proprietors may import tobacco products in bond. Hence, a bond is not required to be filed by any other importer of tobacco products in conjunction with the permit because such importers are not authorized to import tobacco products without payment of tax upon release from customs custody.

ATF took the position in T.D. ATF-422 that fully qualified applicants would be issued a permit limited to a three-year duration. ATF explained that the three-year duration had been determined to be a reasonable method to avoid the proliferation of numerous unused permits, which would pose administrative difficulties and potential jeopardy to the revenue. ATF stated that keeping track of unused permits would strain limited resources and that such permits could eventually fall into the hands of unqualified persons who would be unknown and unaccountable to ATF. ATF said that administrative controls would be put in place to facilitate timely renewals by permittees.

The tobacco product importer permit provisions were added to part 275 as new subparts K (tobacco products importer) and L (changes after original qualification of importers), which were modeled on the permit qualification provisions applicable to tobacco product manufacturers but with some differences to reflect the principles applicable to importers noted above. In addition, T.D. ATF-422 added, revised or otherwise amended the following sections in part 275 to conform them to the new importer permit provisions or, unrelated to the importer permit provisions, for purposes of updating the regulatory texts: §§ 275.11, 275.25, 275.40, 275.41, 275.50, 275.62, 275.81, 275.85, 275.85a, 275.86, 275.106, 275.110, 275.111, 275.115a, 275.140, and 275.141.

Because the amendments made by T.D. ATF-422 to §§ 275.105, 275.106, 275.110, 275.111, and 275.121 (now §§ 41.105, 41.106, 41.110, 41.111, and 41.121) were superseded by the revision of those sections by T.D. ATF-444 and finalized by T.D. TTB-68, those amendments are not included in this new temporary rule.

Because §§ 275.205 through 275.208 (now §§ 41.205 through 41.208) added by T.D ATF-422 were revised or removed in the publication of T.D. TTB-78, those sections are not included in this temporary rule.

In conjunction with the publication of T.D. ATF-422, ATF published a notice of proposed rulemaking, Notice No. 888, in the Federal Register (64 FR 71955) on December 22, 1999. This notice invited comments on the regulations prescribed in T.D. ATF-422. The original comment period for Notice No. 888 lasted 60 days and closed on February 22, 2000. On April 3, 2000, ATF published Notice No. 894 (65 FR 17477), which reopened the comment period for Notice No. 888 until May 3, 2000.

After the publication of T.D. ATF-422, ATF published two corrections and one amended correction to the temporary regulations published as T.D. ATF-422. The corrections were published as T.D. ATF-422a (65 FR 15058), T.D. ATF-422b (65 FR 45523), and T.D. ATF-422c (65 FR 63545). None of the changes contained in these correction documents affect this temporary rule.

During the comment period for Notice No. 888, ATF received comments from two different parties. The comments concerned recordkeeping and reporting requirements and the preparation and submission of one ATF form. These comments are summarized, and TTB's responses to them are set forth, below.

One commenter noted that § 275.204 (now § 41.204), which sets forth the general requirement that tobacco product importers keep records and submit reports, also states that such records and reports are not required with respect to tobacco products while in customs custody. The commenter recommended that this regulation also exclude from reporting and recordkeeping tobacco products entered under a temporary importation bond (TIB). (TIBs involve entry of merchandise under Chapter 98 of the HTSUS, and under regulations administered by United States Customs and Border Protection, without payment of duty and tax; merchandise imported under a TIB must be re-exported or destroyed within one year after importation unless an extension of the one year period is granted.) In addition, the commenter asserted that the same section should exclude from the importer recordkeeping and reporting requirements tobacco products imported and delivered to export warehouses because recordkeeping and reporting requirements for those products are prescribed in 27 CFR part 290 (now 27 CFR part 44).

With regard to products under a TIB, TTB has viewed such products to be under constructive customs custody for purposes of § 41.204, that is, the statement in § 41.204, that records and reports will not be required under part 41 with respect to tobacco products while in customs custody, applies to such products covered by a TIB. TTB may review its importer reporting and recordkeeping requirements, and specifically the issue of products covered by a TIB, to ensure that adequate documentation on imported tobacco products is available and sufficient to ensure appropriate tax payment where applicable. The provision in question may be subject to future notice and public comment but is not part of this rulemaking or accompanying notice.

With regard to products imported and delivered to export warehouses, the importer is not relieved of its responsibility to maintain records and submit reports covering products it has delivered to an export warehouse, even where the importer is also the export warehouse proprietor. The importer's records and reports must include all products that are shipped or consigned to the importer, under its importer permit. The export warehouse proprietor must maintain records and submit reports that cover all products on hand, received, removed, transferred, and lost or destroyed, under its export warehouse permit. In some cases, where an importer and export warehouse proprietor are the same person, the same commercial records may serve as records for both purposes but, for adequate protection of the revenue, the activities occurring under the authority of each permit must be fully reflected in the records and reports related to that permit.

The commenter also stated that ATF should require additional information about tobacco products on the reports prescribed in part 275 (now part 41). The commenter suggested that importers be required to maintain records and to submit reports that are as rigorous as those required for domestic manufacturers. For example, the commenter suggested that importers record the cigarette brand, the name of the manufacturer of the cigarettes and the manufacturing address, and whether the cigarettes are purchased directly or indirectly from the manufacturer.

As noted above, TTB may review the current recordkeeping and reporting requirements for importers of tobacco products to ensure the requirements are sufficient to protect the revenue. If TTB determines that more restrictive requirements are necessary, any proposed changes would be made available for public comment. TTB believes it is not appropriate to include more restrictive requirements in this document without prior notice and opportunity to comment. With regard to the specific records suggested by the commenter, we note that brand information is currently required of both domestic manufacturers and importers only with regard to recording the sale price (by brand) of large cigars. The other records suggested by the commenter must be carefully considered in the context of importation, particularly with regard to whether such records are necessary for the collection of the Federal excise tax on imported products.

The second commenter stated that it routinely imports small quantities of previously exported cigarettes for testing in the United States and that the requirement to prepare and submit form ATF F 2145 (now TTB F 5200.11), Notice of Release of Tobacco Products, Cigarette Papers, or Cigarette Tubes, in order to obtain the release of a few cartons of returned cigarettes is unwarranted and burdensome. The commenter stated that requiring the preparation and submission of this form in this situation “forces the importer to incur administrative costs and expenses that are inconsistent with the value of the goods” to be imported and “unnecessarily adds to the importer's reporting burden.” Furthermore, the commenter noted, “securing the required certifications takes time and delays the release and testing of the goods.”

The commenter requested that ATF amend the temporary regulations to permit a domestic manufacturer to import up to six cartons of previously exported cigarettes for testing without having to prepare and submit ATF F 2145 (currently TTB F 5200.11). As an alternative, the commenter suggested that ATF allow manufacturers importing small quantities of test cigarettes to submit a “blanket” ATF F 2145 that would cover such imports for a calendar month or quarter.

As discussed above, the ICCA was enacted after the publication of T.D. ATF-422, and provided that tobacco products and cigarette papers and tubes manufactured in the United States and previously exported and returned may be released from customs custody without payment of tax only to the original manufacturer or to an export warehouse proprietor authorized to receive them by the original manufacturer. This statutory provision in effect significantly decreased the number of persons who could import previously exported tobacco products and cigarette papers and tubes. Further, since the original publication of this provision, TTB has worked with and continues to work with industry members on a case-by-case basis to facilitate such removals without risk to the revenue. For example, in some cases, based on case-specific circumstances and the compliance history of the importer, an importer may submit copies of TTB F 5200.11 and receive certification on those forms in anticipation of releasing tobacco products or cigarette papers or tubes from customs custody without payment of tax. TTB believes that such flexibility reduces the regulatory burden of this requirement. Accordingly, we are not changing the regulatory text in this temporary rule action to incorporate the commenter's suggestion.

ATF did not take action to adopt, as a final rule, the T.D. ATF-421 and T.D. ATF-422 temporary regulations. TTB notes that the regulatory amendments adopted in T.D. ATF-421 and T.D. ATF-422 were significantly altered by the subsequent statutory and regulatory amendments discussed above. In view of this and the significant period of time that has elapsed since those two temporary rule documents were published, TTB believes that the best approach at this juncture is to publish one temporary rule that, in effect, reissues the regulatory texts adopted in T.D. ATF-421 and T.D. ATF-422 with changes to the texts to conform them to the later changes noted earlier in this document. In addition, in accordance with the requirements of 26 U.S.C. 7805(e)(1), TTB is publishing, in the proposed rules section of this issue of the Federal Register, a notice of proposed rulemaking inviting comments from the public on this new temporary rule.

With the exceptions as stated above and outdated references to form numbers in part 44, this temporary rule includes the following regulatory provisions issued in T.D. ATF-421 (with appropriate section number changes to reflect the recodification of 27 CFR parts 200, 270, 275, and 290 as mentioned above).

• The record requirements of tobacco product manufacturers in § 40.183 paragraphs (a), (b), (c), (d), (f), (g), (h), and (i), which were revised by T.D. ATF-421 are being reissued;

• Section 40.213, which was added by T.D. ATF-421 to cover the repackaging of tobacco products labeled for export when they are destined to be sold in the U.S. market, is being reissued in this temporary rule;

• Section 40.233 was amended by T.D. ATF-421 and is reissued in this temporary rule to require that all required marks, labels, or notices appear on tobacco products shipped under bond to a tobacco manufacturer or an export warehouse;

• Section 41.1 was revised by T.D ATF-421 and is reissued in this temporary rule to outline the scope of the part;

• In § 41.11, T.D. ATF-421 added, and this temporary rule is reissuing the definition for the term “Export warehouse proprietor” and similarly is reissuing, with some minor wording changes, the definitions for the terms “Export warehouse” and “Relanding”;

• In § 44.11, T.D. ATF-421 added, and this temporary rule is revising and reissuing a definition of “Zone restricted status”;

• Sections 44.61 and 44.181 were revised by T.D. ATF-421 and are reissued, with a revision to § 44.61, in this temporary rule to require that all products bear the required marks, labels, or notices before removal or transfer;

• The fifth sentence in § 44.62 regarding the restriction on deliveries of products to vessels and aircraft as supplies was revised by T.D. ATF-421 and is revised and reissued in this temporary rule; and

• Section 44.142, requiring export warehouse records to include several new items of information, was revised in T.D. ATF-421 and is revised and reissued in this new temporary rule.

• With the above-stated exceptions and with the exception of 27 CFR 41.39, which was removed by T.D. ATF-422 and later reissued, this temporary rule includes the following regulatory provisions issued in T.D. ATF-422 (with appropriate section number changes to reflect the recodification of 27 CFR part 275 as mentioned above). This temporary rule also reaffirms the removal of certain sections that were removed by T.D. ATF-422 (§§ 41.101(d) and (e), 41.107, 41.108, 41.117, 41.118, and 41.135 through 41.138). In § 41.11, the definitions for the terms “Customs officer,” “Records”, “Removal or remove”, and “Port Director of Customs” are being revised and reissued;

• Section 41.85 was revised and is being further revised and reissued to, among other things, to clarify that its application is limited to tobacco products and cigarette papers and tubes that are not put up in packages and to remove the reference to importations prior to December 16, 1986;

• Sections 41.11, 41.25, 41.40, 41.41, 41.50, 41.62, 41.81, 41.85, 41.85a, 41.86, 41.106, 41.110, 41.111, 41.115a, 41.140, and 41.141 were revised and are being reissued with clarifying, editorial, procedural, and technical amendments;

• In subpart K, §§ 41.190, 41.191, 41.193, 41.194, 41.195, 41.196, 41.197, 41.199, 41.200, 41.201, 41.202, 41.203, and 41.204, were added. These provisions concern application, issuance, duration, renewal, and retention requirements that apply to tobacco product importer permits. These sections are being reissued with clarifying, editorial, procedural, and technical changes, including changes to 41.201 and 41.202 to extend the duration of importer permits, as described below; and

• In subpart L, §§ 41.220 through 41.228 were revised. These sections prescribe procedures for amending a tobacco product importer permit or providing notice when changes occur to the name, ownership and control, or location or address of a permittee. These sections are being reissued with editorial changes to enhance readability of the texts.

As noted above, the regulations promulgated under T.D. ATF-422 provided for the expiration of a tobacco products importer permit three years from the date of issuance. An importer could, within 30 days of the expiration date, apply for its renewal of the permit. The reason for a limited-duration permit was to ensure that permits were issued to, and remained in the hands of, persons actively engaged in the importation of tobacco products under that permit. TTB has now reconsidered the three-year permit duration, particularly with a view to reducing the burden on industry members and more efficiently allocating agency resources, and has determined that the purposes of the limited-duration permit could still be met if the permit duration was changed from three years to five years.

Accordingly, this temporary rule amends §§ 41.201 and 41.202 to provide that permits issued on or after the effective date of this temporary rule will be valid for a period of five years from the date of issuance. So long as a timely application for renewal is filed (that is, within 30 days prior to the expiration date), the permit will continue in effect until TTB has taken final action on the application for renewal. Consistent with the minimum manufacturing and activity requirements of the operations regulations for tobacco products and processed tobacco, permit renewal would not be available to a person who did not import tobacco products under the permit within the one-year period immediately prior to the application to renew.

These temporary regulations also address permits that pre-date the effective date of this document. A person who is operating as an importer of tobacco products, who holds such a permit, and who wishes to continue in business must apply for and receive a new five-year permit. The application must be submitted to TTB within 150 days after the effective date of this temporary rule, or 30 days prior to the expiration date shown on the permit form, whichever is later. If a person timely files an application but that application is not complete (that is, the applicant has not submitted information or documentation sufficient for TTB to take action on the permit), and if the applicant has not provided the missing information within one year of a written request for it or within any shorter time period specified in the written request, the permit application will be deemed abandoned and the applicant will be notified in writing that no permit will be issued in response to the incomplete application. Provided that a timely application is filed, the person may continue operations until TTB takes final action on the application.

Any person that is operating under a permit that pre-dates the effective date of this temporary rule, and that has applied for a renewal of the permit but whose application for renewal is still pending on the effective date of this temporary rule, must reapply for a permit within 150 days after the effective date of the temporary rule. TTB will work with such applicants to obtain any supplementary documentation and information needed to complete the application for a new permit. These changes will, among other things, enable TTB to purge its record of inactive permits and ensure TTB has complete, accurate, and up-to-date information on entities that hold five-year permits.

Any application for an original permit (rather than for a renewal of an existing permit) that was received prior to the effective date of this temporary rule and that is still pending on the effective date of this rule will be processed as though it were filed on or after the effective date of this temporary rule, that is, as an application for a five-year permit. The changes contained in this rulemaking do not impose any new documentation or information requirements on those applying for an original permit.

For the same reasons noted above, TTB intends to also extend the duration of the permits it issues to importers of processed tobacco. TTB notes that a number of importers of tobacco products have amended their permits to provide for the importation of processed tobacco and, because the permits are often connected in this way, TTB believes that it would be administratively preferable to amend at the same time the regulations applicable to importers of processed tobacco at 27 CFR 41.240, 41.241, and 41.242 which provide for the issuance, duration, and renewal of permits for the importation of processed tobacco. These amendments mirror the new texts of §§ 41.200, 41.201, and 41.202. The same considerations described above that apply to a pending application for permit renewal or to a pending application for an original permit apply equally to importers of processed tobacco.

The regulatory amendments contained in T.D. TTB-78, referred to above, included an amendment to the definition of “Sale price” in 27 CFR 41.11. This amendment, which involved the addition of the words “United States” before the word “manufacturer,” was merely intended to reflect the long-standing agency position regarding what sale transaction is the basis for the determination of tax on the large cigars. However, TTB inadvertently failed to make a corresponding change to the reference to “sale price” in the operative regulation, 27 CFR 41.39. This temporary rule makes this technical correction and also adds a new sentence at the end of § 41.39 to direct the reader to 27 CFR 41.40 for circumstances in which a domestic manufacturer would be liable for the tax on imported tobacco products.

On July 6, 2012, the President signed into law the Moving Ahead for Progress in the 21st Century Act (“MAP-21”), Public Law 112-141. Section 100122 of MAP-21 amended the definition of “Manufacturer of tobacco products” at 26 U.S.C. 5702(d) to include any person who for commercial purposes makes available for consumer use (including the consumer's personal consumption or use) a machine capable of making tobacco products. The definition as amended also states that a person making such a machine available for consumer use shall be deemed the person making the removal, as that term is defined by 26 U.S.C. 5702(j), with respect to any tobacco products manufactured by such machine.

The definition as amended further states that a person who sells a machine directly to a consumer at retail for a consumer's personal home use is not making a machine available for commercial purposes if such machine is not used at a retail premises and is designed to produce tobacco products only in personal use quantities. This temporary rule amends the definition of “Manufacturer of tobacco products” where it appears in the “Meaning of terms” sections at §§ 40.11, 41.11, and 44.11 to reflect this statutory change.

To submit comments on the temporary regulations contained in this document, please refer to the related notice of proposed rulemaking (Notice No. 137) published in the Proposed Rules section of this issue of the Federal Register.

Pursuant to the requirements of the Regulatory Flexibility Act (5 U.S.C. chapter 6), we certify that these regulations will not have a significant economic impact on a substantial number of small entities. Any effects of this rulemaking on small businesses flow directly from the underlying statutes. Accordingly, a regulatory flexibility analysis is not required. The temporary regulations also reduce the administrative burden on importers of tobacco products and processed tobacco by requiring that they renew their permits only every five years rather than every three years. Pursuant to 26 U.S.C. 7805(f), TTB will submit the temporary regulations to the Chief Counsel for Advocacy of the Small Business Administration for comment on the impact of the temporary regulations on small businesses.

This is not a significant regulatory action as defined in E.O. 12866. Therefore, it requires no regulatory assessment.

The collections of information in the regulations contained in this reissued temporary rule have been previously reviewed and approved by Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3504(h)) and assigned control numbers 1513-0068, 1513-0070, 1513-0078, 1513-0106, and 1513-0107. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB. There is no new collection of information imposed by this temporary rule.

Comments concerning suggestions for reducing the burden of the collections of information should be directed to Mary A. Wood, Alcohol and Tobacco Tax and Trade Bureau, at any of these addresses:

• P.O. Box 14412, Washington, DC 20044-4412;

• 202-453-2686 (facsimile); or

• formcomments@ttb.gov (email).

TTB is issuing this temporary final rule without prior notice and comment pursuant to authority under section 4(a) of the Administrative Procedure Act (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” We believe prior notice and comment is unnecessary because we expect the affected industry members will benefit from an extension of the permit duration which will reduce the industry members' ongoing regulatory burdens. In addition, TTB believes that good cause exists to provide the industry with this temporary rule because, in addition to the extension of the duration of the permit, the temporary rule incorporates statutory amendments that are already in effect. TTB is soliciting public comment on the regulatory provisions contained in this temporary rule in a concurrently issued notice of proposed rulemaking.

Kara T. Fontaine and other Regulations and Rulings Division staff, Alcohol and Tobacco Tax and Trade Bureau, drafted this document.

Accordingly, for the reasons set forth in the preamble, 27 CFR parts 40, 41, and 44 are amended as set forth below.

Electronic and Facsimile Availability

This document and additional information concerning OFAC are available from OFAC's Web site (www.treasury.gov/ofac). Certain general information pertaining to OFAC's sanctions programs also is available via facsimile through a 24-hour fax-on-demand service, tel.: 202/622-0077.

The Office of Foreign Assets Control (“OFAC”) administers three sanctions programs with respect to terrorists and terrorist organizations. The Terrorism Sanctions Regulations, 31 CFR part 595 (the “TSR”), implement Executive Order 12947 of January 23, 1995, in which the President declared a national emergency with respect to “grave acts of violence committed by foreign terrorists that disrupt the Middle East peace process.” The Global Terrorism Sanctions Regulations, 31 CFR part 594 (the “GTSR”), implement Executive Order 13224 of September 23, 2001, in which the President declared a national emergency more generally with respect to “grave acts of terrorism and threats of terrorism committed by foreign terrorists.” The Foreign Terrorist Organizations Sanctions Regulations, 31 CFR part 597 (the “FTOSR”), implement provisions of the Antiterrorism and Effective Death Penalty Act of 1996.

Executive Order 13372 of February 16, 2005, amended section 3 of Executive Order 12947 and section 4 of Executive Order 13224 to clarify that the prohibitions contained in those sections on the making of donations of the types of articles specified in section 203(b)(2) of the International Emergency Economic Powers Act (50 U.S.C. 1702(b)(2)) apply to donations “by, to, or for the benefit of” and not just “to” persons whose property and interests in property are blocked pursuant to those orders. OFAC is amending sections 594.204 and 594.409 of the GTSR and sections 595.204 and 595.408 of the TSR to incorporate this clarification into its regulations.

OFAC also is adding new interpretive sections 594.412 and 595.410 to the GTSR and TSR, respectively, to clarify that a person whose property and interests in property are blocked pursuant to those programs has an interest in all property and interests in property of an entity in which it owns, directly or indirectly, a 50 percent or greater interest. The property and interests in property of such an entity, therefore, are blocked, and such an entity is a person whose property and interests in property are blocked pursuant to the relevant sanctions program, regardless of whether the entity itself is listed in an annex to an Executive order or designated pursuant to statutory or regulatory authorities. Further, OFAC is adding references to these new interpretive sections to note 2 to paragraph (a) of section 594.201 of the GTSR and new note 1 to section 595.311 of the TSR.

OFAC is amending the TSR to define the term “financial, material, or technological support,” as used in those regulations. Paragraph (a)(2)(ii) of section 595.311 of the TSR implements section 1(a)(ii)(B) of Executive Order 12947 by including within the definition of “specially designated terrorist” foreign persons designated by the Secretary of State, in coordination with the Secretary of the Treasury and the Attorney General, because they are found to have assisted in, sponsored, or provided financial, material, or technological support for, or services in support of, acts of violence that have the purpose or effect of disrupting the Middle East peace process.

New section 595.317 in subpart C of the TSR defines the term “financial, material, or technological support” to mean any property, tangible or intangible, and includes a list of specific examples. The corresponding definition already appears in the GTSR, in existing section 594.317. The term is not used in the FTOSR.

In addition, OFAC is revising paragraph (b) of section 595.203 of the TSR to set at 180 days the maximum term of maturity for instruments in which funds within an interest-bearing account, as defined within that paragraph, may be invested or held. Previously, the maximum term of maturity for such instruments was set at 90 days, which is not consistent with the maximum term of maturity set out in analogous provisions under the regulations for other OFAC-administered sanctions programs contained in the various parts of 31 CFR chapter V.

Finally, OFAC is making certain technical edits to definitions contained in the GTSR and TSR and revising the note to section 597.301 of the FTOSR to correct a clerical error.

Because these amendments to 31 CFR parts 594, 595, and 597 involve a foreign affairs function, Executive Order 12866 and the provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

For the reasons set forth in the preamble, the Department of the Treasury's Office of Foreign Assets Control amends 31 CFR parts 594, 595, and 597 as follows:

Table of Acronyms DHS Department of Homeland Security FR Federal Register NPRM Notice of Proposed Rulemaking A. Regulatory History and Information

On March 26, 2013, we published a notice of proposed rulemaking (NPRM) entitled “Special Local Regulations; Red Bull Flugtag National Harbor Event, Potomac River; National Harbor Access Channel, MD” in the Federal Register (78 FR 18274). We received no comments on the proposed rule. No public meeting was requested, and none was held.

The legal basis for the rule is the Coast Guard's authority to establish special local regulations: 33 U.S.C. 1233. The purpose of the rule is to ensure safety of life on navigable waters of the United States during the Red Bull Flugtag National Harbor event.

On September 21, 2013, The Peterson Companies of National Harbor, Maryland, is sponsoring the Red Bull Flugtag National Harbor event, a competition held along the Potomac River at National Harbor, Maryland. Approximately 30 competing teams will operate homemade, human-powered flying devices launched from a ramp constructed at National Harbor, located downriver from the Woodrow Wilson Memorial (I-495/I-95) Bridge, in Maryland. The competitors will be supported by sponsor-provided watercraft. The sponsor estimates 10,000 spectators during the event. The Coast Guard anticipates a large spectator vessel fleet present during the event.

The Coast Guard received no comments in response to the NPRM. No public meeting was requested and none was held.

The Coast Guard is establishing special local regulations on specified waters of the Potomac River. The regulations will be effective from 9 a.m. to 7 p.m. on September 21, 2013. The regulated area, approximately 600 yards in length and 500 yards in width and extends across the entire width of the National Harbor Access Channel, includes all waters of the Potomac River, contained within lines connecting the following points: From the shoreline at position latitude 38°46′51″ N, longitude 077°01′31″ W, thence northerly to position latitude 38°47′02″ N, longitude 077°01′35″ W, thence easterly to position latitude 38°47′05″ N, longitude 077°01′22″ W, thence southeasterly to the shoreline at position latitude 38°46′56″ N, longitude 077°01′07″ W. An event area and a designated spectator area exist within this regulated area. The event area, where all persons and vessels, except those persons and vessels participating in the competition, are prohibited from entering, transiting through, anchoring in, or remaining within, includes all waters of the Potomac River, contained within lines connecting the following points: From the shoreline at position latitude 38°46′51″ N, longitude 077°01′31″ W, thence northerly to position latitude 38°46′52″ N, longitude 077°01′31″ W, thence easterly to position latitude 38°46′54″ N, longitude 077°01′17″ W, thence northerly to position latitude 38°46′59″ N, longitude 077°01′14″ W, thence southeasterly to the shoreline at position latitude 38°46′56″ N, longitude 077°01′07″ W. The designated spectator area, where all vessels are prohibited from transiting in excess of wake speed unless authorized by the Captain of the Port Baltimore or his designated representative and persons and vessels may request authorization to enter, transit through, anchor in, or remain within, includes all waters of the Potomac River, within lines connecting the following positions: from 38°46′53″ N, longitude 077°01′32″ W, thence northerly to latitude 38°47′02″ N, longitude 077°01′35″ W, thence easterly to position latitude 38°47′05″ N, longitude 077°01′22″ W, thence southeasterly to position latitude 38°47′02″ N, longitude 077°01′16″ W, thence southwesterly to position latitude 38°46′58″ N, longitude 077°01′18″ W, thence southwesterly to position latitude 38°46′55″ N, longitude 077°01′22″ W, thence westerly to position latitude 38°46′53″ N, longitude 077°01′32″ W.

The effect of this rule will be to restrict general navigation in the regulated area during the event. Vessels intending to transit the Potomac River through the regulated area, including the National Harbor Access Channel, will only be allowed to safely transit the regulated area when the Coast Guard Patrol Commander has deemed it safe to do so. Due to the need for vessel control during the event, the Coast Guard will temporarily restrict vessel traffic in the event area to provide for the safety of participants, spectators and other transiting vessels. The Coast Guard will provide notice of the special local regulations by Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene designated representatives.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes and executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.

The economic impact of this rule is not significant for the following reasons: (1) The special local regulations will be enforced for only 10 hours; (2) although persons and vessels will not be able to enter, transit through, anchor in, or remain within the event area, without authorization from the Captain of the Port Baltimore or his designated representative, they may operate in the surrounding area during the enforcement period; (3) persons and vessels may still enter, transit through, anchor in, or remain within the designated spectator area during the enforcement period; (4) persons and vessels may still enter and transit through the National Harbor Access Channel, within the regulated area during the enforcement period, with prior authorization from the Captain of the Port Baltimore or his designated representative and without loitering; and (5) the Coast Guard will provide advance notification of the special local regulations to the local maritime community by Local Notice to Mariners and Broadcast Notice to Mariners.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rule. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule may affect the following entities, some of which may be small entities: The owners or operators of vessels intending to enter, transit through, anchor in, or remain within that portion of Potomac River encompassed within the special local regulations from 9 a.m. until 7 p.m. on September 21, 2013. For the reasons discussed in the Regulatory Planning and Review section above, this rule will not have a significant economic impact on a substantial number of small entities.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT, above.

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

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

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

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

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

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

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

This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves special local regulations issued in conjunction with a regatta or marine parade. This rule is categorically excluded from further review under paragraph 34(h) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because doing so would be impracticable. The final details for this Tall Ships parade were not known to the Coast Guard until there was insufficient time remaining before the event to publish an NPRM. Thus, delaying the effective date of this rule to wait for a comment period to run would be impracticable because it would inhibit the Coast Guard's ability to protect spectators, participants, and vessels from the hazards associated with this event.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register. For the same reasons discussed in the preceding paragraph, waiting for a 30 day notice period run would be impracticable and contrary to the public interest.

Although this is the Coast Guard's first regulatory act for the celebration specific to Bay City, MI, the Coast Guard recently published a separate NPRM in the Federal Register seeking to establish safety zones around each tall ship participating in various events throughout the Great Lakes this summer, to include the Tall Ships Celebration Bay City. Specifically, on May 1, 2013, the Coast Guard published in the Federal Register an NPRM titled Safety Zone; Tall Ship Safety Zones; War of 1812 Bicentennial Commemoration, Great Lakes (78 FR 25410), proposing to establish temporary safety zones around each of the twenty-one tall ships participating in the Tall Ships Challenge Great Lakes 2013 from June 13, 2013 to September 17, 2013.

Between 12:30 p.m. until 4:30 p.m. on July 11, 2013, the Tall Ships Celebration Bay City 2013 parade will take place in a portion of Saginaw Bay and the Saginaw River. This portion of waterway will need to be clear of vessel traffic during the parade.

Even though the Coast Guard has separately proposed a 100 yards radius safety zone around each tall ship participating in events throughout the Great Lakes, to include Bay City's celebration, the Captain of the Port Detroit has determined that these safety zones will be insufficient on their own to safeguard navigational safety in a portion of Saginaw Bay and the Saginaw River during the Tall Ships Celebration parade on July 11, 2013. The high possibility that tall ships participating in the parade on July 11, 2013 will encounter recreational and commercial vessels in the relatively narrow navigable channel of the Saginaw River, compounded with the decreased maneuverability of these tall ships, poses extra and unusual hazards to public safety and property. Moreover, the Captain of the Port Detroit has determined that the existing navigational rules of the road are not sufficient to protect the public against these extra and unusual hazards. Thus, the Captain of the Port Detroit has determined that establishing a Special Local Regulation, pursuant to the authority in 33 U.S.C. 1233, throughout the parade course will help ensure the safety of life during this event.

In light of the aforesaid hazards, the Captain of the Port Detroit has determined that a special local regulation is necessary to ensure the safety of spectators, vessels, and participants. This special local regulation will be enforced from 12:30 p.m. until 4:30 p.m. on July 11, 2013. The special local regulation will encompass all waters throughout the federal navigational channel of Saginaw Bay from Light Buoy 11 at position 43°43′54″ N, 083°46′52″ W and Light 12 at position 43°43′56″ N, 083°46′57″ W to the Saginaw River, and on all waters of the Saginaw River from its mouth to the Veterans Memorial Bridge in Bay City, MI at position 43°35′46″ N, 083°53′36″ W. All geographic coordinates are North American Datum of 1983 (NAD 83). Entry into, transiting, or anchoring within the proposed regulated area while it is being enforced is prohibited unless authorized by the authority of the Captain of the Port Detroit or his designated on-scene representative. The Captain of the Port or his designated on-scene representative may be contacted via VHF Channel 16.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes or executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under that Orders. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We conclude that this rule is not a significant regulatory action because we anticipate that it will have minimal impact on the economy, will not interfere with other agencies, will not adversely alter the budget of any grant or loan recipients, and will not raise any novel legal or policy issues.

The Coast Guard's use of this special local regulation will be of relatively small size and short duration, and it is designed to minimize its impact on navigation. Furthermore, vessels may, when circumstances allow, obtain permission from the Captain of the Port to transit through the area affected by this special local regulation. Overall, the Coast Guard expects minimal impact to vessel movement from the enforcement of this special local regulation.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which might be small entities: the owners or operators of vessels intending to transit or anchor in a portion of Saginaw Bay beginning at Light Buoy 11 at position 43°43′54″ N, 083°46′52″ W and Light 12 at position 43°43′56″ N, 083°46′57″ W to the Saginaw River, and on a portion of the Saginaw River from its mouth to the Veterans Memorial Bridge in Bay City, MI at position 43°35′46″ N, 083°53′36″ W between 12:30 p.m. and 4:30 p.m. on July 11, 2013.

This special local regulation will not have a significant economic impact on a substantial number of small entities for the following reasons: This regulated area will only be in effect and enforced for four hours on one day. Additional vessel traffic may be allowed to pass through the zone with the permission of the Captain of the Port. The Captain of the Port can be reached via VHF channel 16. The Coast Guard will give notice to the public via a Broadcast Notice to Mariners that the regulation is in effect, allowing vessel owners and operators to plan accordingly.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If this rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

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

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

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

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

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

This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule involves a special local regulation issued in conjunction with a regatta or marine parade, and, therefore it is categorically excluded from further review under paragraph (34)(h) of Figure 2-1 of the Commandant Instruction. During the annual permitting process for this event an environmental analysis was conducted, and thus, no preliminary environmental analysis checklist or Categorical Exclusion Determination are required for this rulemaking action.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

Table of Acronyms DHS Department of Homeland Security FR Federal Register NPRM Notice of Proposed Rulemaking A. Regulatory History and Information

The Coast Guard is issuing this final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard did not receive finalized details about these events until it was too late to undertake an NPRM. These safety zones are necessary to protect spectators and participants from the hazards associated with fireworks displays.

For the same reasons as noted earlier, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register. Any delay in the effective date of this rule would be impracticable and contrary to the public interest because immediate action is necessary to provide for the safety of life and property on the navigable waters.

The legal basis for the proposed rule is 33 U.S.C 1231; 46 U.S.C Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, 160.5; Public Law 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1, which collectively authorize the Coast Guard to establish safety zones.

Fireworks displays create hazardous conditions for the maritime public because of the large number of vessels that congregate near the displays as well as the noise, falling debris, and explosions that occur during the event. The establishment of a safety zone around displays helps to ensure the safety of the maritime public by prohibiting all persons and vessels from coming too close to the fireworks display and the associated hazards.

This rule establishes three safety zones for the following firework displays: Celebrate America Festival on July 3, 2013, in Holmes Harbor near Freeland, WA; Invictus Christening on July 6, 2013 in Elliot Bay, Pier 90; and Tuxedo and Tennis Shoes Event on July 20, 2013, near Alki Point Light. All persons and vessels will be prohibited from entering the safety zones during the dates and times they are effective unless authorized by the Captain of the Port or his Designated Representative.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes and executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. This rule is not a significant regulatory action because it creates safety zones that are minimal in size and short in duration.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit through the established safety zones during the times of enforcement. This rule will not have a significant economic impact on a substantial number of small entities because the temporary safety zones are minimal in size and short in duration, maritime traffic will be able to transit around them and may be permitted to transit them with permission from the Captain of the Port or his designated representative.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT, above.

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

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INTFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

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

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

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

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

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

This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves the establishment of safety zones. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

The Coast Guard is issuing this final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because publishing an NPRM would be impracticable. The Coast Guard did not receive necessary information from the event sponsor in time to publish a notice of proposed rulemaking. The event is scheduled to take place, and as such, immediate action is necessary to ensure the safety of vessels, spectators, participants, and others in the vicinity of the marine event on the dates and times this rule will be in effect.

Under 5 U.S.C. 553(d)(3), for the same reasons mentioned above, the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register. Delaying the effective date would be contrary to the public interest, since immediate action is needed to ensure the public's safety.

The legal basis for this temporary rule is the Ports and Waterways Safety Act which authorizes the Coast Guard to establish safety zones (33 U.S.C sections 1221 et seq.).

Fireworks America is sponsoring the San Diego Symphony Summer POPS, which will include a fireworks presentation from a barge in San Diego Bay. The fireworks display is scheduled to occur between 9 p.m. on June 27, 2013, to 10 p.m. on September 1, 2013. This rule will be enforced from 9 p.m. on June 27, 2013 to 10 p.m. on September 1, 2013. This rule will be enforced from 9 p.m. to 10 p.m. on the following evenings: June 27 through June 29, July 5, 6, 12, 13, 19, 20, 26, and 27, August 2, 3, 9 10, 16, 17, 23, 24, 30, 31, and September 1, 2013. This safety zone is necessary to provide for the safety of the crew, spectators, participants, and other vessels and users of the waterway.

The Coast Guard is establishing a safety zone that will be enforced from 9 p.m. on June 27, 2013, to 10 p.m. on September 1, 2013. This rule will be enforced from 9 p.m. on June 27, 2013, to 10 p.m. on September 1, 2013. This rule will be enforced from 9 p.m. to 10 p.m. on the following evenings; June 27 through June 29, July 5, 6, 12, 13, 19, 20, 26, and 27, August 2, 3, 9 10, 16, 17, 23, 24, 30, 31, and September 1, 2013. The safety zone will cover all navigable waters within 400 feet of the fireworks barge, located in approximate position 32°42′16″ N, 117°09′59″ W. The safety zone is necessary to provide for the safety of the crew, spectators, participants, and other vessels and users of the waterway. When this safety zone is being enforced, persons and vessels are prohibited from entering into, transiting through, or anchoring within this safety zone unless authorized by the Captain of the Port, or his designated representative.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes and executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. This determination is based on the size, location and timing of the safety zone. The safety zone will be enforced for a relatively short time, 60 minutes, late at night when vessel traffic is low. It impacts a very small area of San Diego Bay, a circle about 800 feet in diameter. Commercial vessels will not be hindered by the safety zone. Recreational vessels can transit around the safety zone.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit or anchor in a portion of San Diego Bay between 9 p.m. on June 27, 2013 to 10 p.m. on September 1, 2013. This rule will be enforced from 9 p.m. on June 27, 2013 to 10 p.m. on September 1, 2013. This rule will be enforced from 9 p.m. to 10 p.m. on the following evenings: June 27 through June 29, July 5, 6, 12, 13, 19, 20, 26, and 27, August 2, 3, 9 10, 16, 17, 23, 24, 30, 31, and September 1, 2013.

This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: The safety zone will only be in effect for one hour and 10 minutes late in the evening when vessel traffic is low. It impacts a very small area of San Diego Bay, a circle about 800 feet in diameter. Vessel traffic can transit safely around the safety zone.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT, above.

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

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

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

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

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

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

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

This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves establishment of a temporary safety zone. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

Organization of this document: The following outline is provided to aid in locating information in this preamble.

On January 23, 2013 (78 FR 4800), EPA published a Notice of Proposed Rulemaking (NPR) for the State of Connecticut. That action proposed approval of a State Implementation Plan (SIP) revision request submitted by the Connecticut Department of Environmental Protection on December 8, 2006, consisting of information documenting how Connecticut complied with the reasonably available control technology requirements for the 1997 8-hour ozone standard.1 Additionally, our January 23, 2013 NPR proposed approval of three single source orders establishing reasonably available control technology for controlling volatile organic compound emissions that Connecticut submitted to EPA on July 20, 2007.

On December 8, 2006, the Connecticut Department of Environmental Protection, which was subsequently reorganized and is currently known as the Connecticut Department of Energy and Environmental Protection (CT DEEP), submitted a demonstration that its regulatory framework for stationary sources meets the criteria for RACT as defined in EPA's Phase 2 Implementation rule.2 The state held a public hearing on the RACT program on October 18, 2006.

The state's submittal identifies the specific control measures that have been previously adopted to control emissions from major sources of VOC emissions, reaffirms negative declarations for some control technique guideline (CTG) categories, and describes updates made to two existing rules to strengthen them so that they will continue to represent VOC RACT. Connecticut notes that sections 22a-174-20 and 22a-174-32 of the Regulations of Connecticut State Agencies (RSA) are the principal regulations that apply to stationary sources of VOC emissions. Connecticut's submittal makes negative declarations for the following CTG sectors:

1. Automobile coating;

2. Large petroleum dry cleaners;

3. Large appliance coating;

4. Natural gas and gas processing plants;

5. Flat wood paneling coating; and

6. Control of VOC leaks from petroleum refineries.

Connecticut's submittal addresses NOX emissions as well as VOC emissions. In particular, Connecticut identified Regulations of Connecticut State Agencies (RCSA) section 22a-174-22, “Control of Nitrogen Oxide Emissions,” as its primary NOX RACT regulation. In addition, RCSA section 22a-174-38 regulates NOX emissions from Connecticut's six municipal waste combustors (MWCs), which constitute roughly thirty percent of the state's annual NOX emissions from major NOX sources. Connecticut indicates that section 22a-174-38 is as stringent as the maximum achievable control technology (MACT) requirements EPA promulgated in 2006, and that this rule thus represents RACT for MWCs in Connecticut.

EPA has reviewed Connecticut's determination that it has adopted VOC and NOX control regulations for stationary sources that constitute RACT, and determined that the Connecticut regulations cited above constitute RACT for purposes of the 1997 8-hour ozone standard.

Additionally, EPA has determined that Connecticut's two ozone nonattainment areas attained the 1997 8-hour ozone standard by their attainment date, based on quality assured air monitoring data. These determinations were published on August 31, 2010 (75 FR 53219) for the Greater Connecticut area, and on June 18, 2012 (77 FR 36163) for the New York City area. The improvements in air quality represented by these clean data determinations were brought about, in part, by the RACT program implemented by Connecticut.

Other specific requirements of Connecticut's RACT certification and the rationale for our action are explained in the NPR and will not be restated here.

EPA received one comment, from the Sierra Club, on our proposal to approve Connecticut's RACT certification. The Sierra Club argues that it is “impermissible for EPA to allow [CT DEEP] to rely in any part on the Clean Air Interstate Rule (`CAIR') to meet Reasonably Available Control Technology (`RACT') requirements for nitrogen oxides (`NOX').”

In response to the Sierra Club's comment, we are clarifying the basis for our determination that Connecticut has adopted regulations that satisfactorily address the NOX RACT requirement for a moderate nonattainment area under the 1997 8-hour ozone standard. As set forth in detail below, EPA did not propose to do, and is not now taking final action to do, what the Sierra Club argues would be impermissible. EPA is not allowing CT DEEP to “rely in any part on CAIR” to meet NOX RACT requirements. However, we are supplying this clarification for two reasons. First, the basis for our determination (which has not changed from the proposal to this final action) differs slightly from the explanation that CT DEEP itself set forth in the narrative portion of its SIP submission. Second, we now recognize that the explanation of the basis for that determination that we provided in the proposal was potentially subject to a misreading, which we now dispel.

EPA agrees with the commenter that RACT is a mandatory requirement. EPA also acknowledges that in NRDC v. EPA, 571 F.3d 1245 (D.C. Cir. 2009), the court held that “the RACT requirement calls for reductions in emissions from sources in the area” and that, therefore, “participation in the NOX SIP Call could constitute RACT only if participation entailed at least RACT-level reductions in emissions from sources within the nonattainment area.” Id. at 1256. In other words, compliance with an unrestricted interstate emissions trading program, such as the NOX SIP Call, could not be said to satisfy a RACT requirement absent an analysis demonstrating that any such program achieves “greater emissions reduction in a nonattainment area than would be achieved if RACT-level controls were installed in that area.” Id. at 1258.

In this action, EPA is finalizing our approval of Connecticut's RACT SIP. This action is based on EPA's determination that CT DEEP has adopted regulations that satisfactorily address the applicable NOX RACT requirement. Specifically, EPA's determination that the SIP satisfies the applicable RACT requirement for electric generating units (EGUs) and other major sources of NOX emissions, is based on our determination that the two sections of the Regulations of Connecticut State Agencies—sections 22a-174-22 (Control of Nitrogen Oxides Emissions), and 22a-174-38 (Municipal Waste Combustors)—require all major sources of NOX in the state, including EGUs, to have RACT level controls. These regulations are independent of Connecticut's current and past regulations that allow interstate trading, namely Connecticut's CAIR regulation (section 22a-174-22c), and two now-repealed interstate trading programs, sections 22a-174-22b (Post-2002 Nitrogen Oxides (NOX) Budget Program) and 22a-174-22a (NOX Budget Program).

EPA approved sections 22a-174-22 and 22a-174-38 into Connecticut's SIP in 1997 and 2001 respectively. See 62 FR 52016; 66 FR 63311. Moreover, EPA's “Phase 2” implementation rule for the 1997 8-hour ozone standard specifically provided that states could meet the RACT requirement “through a certification that previously required RACT controls represent RACT for 8-hour implementation purposes.” 70 FR 71617. Connecticut's December 8, 2006 submittal did just this, and certified that previously required RACT controls represent RACT for 8-hour implementation purposes:

Connecticut's analysis then proceeds to enumerate, over the course of five pages, the specific requirements applicable to various categories of sources. In particular, Connecticut's analysis explains that its six municipal waste combustors are regulated by Section 22a-174-38, and that “[a]ny facility in Connecticut that has the potential to emit at least fifty tons per year of NOX” is regulated by Section 22a-174-22. Id. at 11.

It is important to clarify that EPA is not approving any reliance by CT DEEP on the CAIR emission trading programs. In addition, EPA's own determination that CT DEEP has adopted regulations that satisfactorily address the applicable NOX RACT requirement is not based on the CAIR emission trading programs, the Connecticut state regulation (section 22a-174-22c) that requires participation by certain Connecticut sources in those programs, or compliance by sources in Connecticut with those programs. In short, the CAIR programs are irrelevant to EPA's approval of these CT SIP submissions. EPA acknowledges that the SIP submission from Connecticut could be read to suggest that its participation in CAIR satisfies NOX RACT for EGUs. However, we do not interpret Connecticut's submission to rely on this theory, given both Connecticut's introductory statement that its RACT analysis is based on review and submission of previously-adopted RACT controls, and its discussions of those controls (e.g., section 22a-174-22). Moreover, EPA's proposal explained that “EPA has reviewed Connecticut's determination that it has adopted VOC and NOX control regulations for stationary sources that constitute RACT, and determined that the set of regulations cited by the state constitute RACT for purposes of the 1997 8-hour ozone standard. Additionally, we are proposing to approve the three VOC RACT orders submitted by the state on July 20, 2007.” 78 FR 4802. Our proposal then enumerated the specific Connecticut control requirements upon which EPA relied for our proposal to find that Connecticut has satisfied the RACT requirement.4 Neither the CAIR trading programs, nor the Connecticut regulation requiring participation by certain Connecticut sources in those programs was identified in this list. Our proposal did mention Connecticut's own references to its CAIR regulation, but only as explanatory notes regarding additional state NOX regulations. See id.

In general, EPA approval of a state SIP submission does not imply endorsement of every single statement contained in the narrative portion of that submission. However, in the interest of clarity, we specifically note here that EPA is not approving the portions of Connecticut's SIP submission that cite the presumption or determination in the Phase 2 ozone implementation rule that compliance with CAIR could, in certain circumstances, satisfy NOX RACT for EGUs.

Rather, we are approving Connecticut's RACT analysis because we agree with Connecticut's determination that sections 22a-174-22 and 22a-174-38, which were developed under the 1-hour ozone NAAQS to control NOX emissions from major sources, continue to represent RACT for major NOX sources in Connecticut for purposes of the 1997 8-hour ozone standard. In particular, section 22a-174-22 is Connecticut's primary NOX RACT regulation, and it contains requirements applicable to EGUs and other major sources of NOX. A brief summary of this rule is provided below, and additional information can be found within our October 6, 1997 final rule approving the rule into the Connecticut SIP. See 62 FR 52016.

Connecticut's NOX RACT regulation 5 contains a combination of NOX emission limitations, performance standards, and compliance options, including provisions for sources to meet emission limitations through intra-state emissions trading (i.e., trading limited exclusively to trading among sources within Connecticut), known in Connecticut as “emissions reduction trading” and generally implemented through source-specific orders.

Subsection (d) of the rule lists compliance options available to sources. These options are compliance with emission limitations, fuel switching, a 40% emission reduction, source reconstruction, schedule modification, or intra-state emission reduction trading. Requirements for each method of compliance are detailed in subsections (f) through (j).

Subsection (e) establishes emission limits with specific limits for: Turbines; cyclone furnaces; fast-response double-furnace Naval boilers; fluidized-bed combustors; reciprocating engines; waste combustors; fuel burning equipment firing fuels other than gas, oil, or coal; glass melting furnaces; and other sources providing direct heat. Subsection (e) also contains an emission limit for “all other sources” not having a specifically defined emission limitation. The specific RACT limits for all major NOX sources, including EGUs, is shown in Table 1 below. Connecticut's EGUs are required to comply with, at a minimum, the emission limit that corresponds to their particular fuel and unit type shown in Table 1, although for most EGUs Connecticut has mandated via permit condition stricter limits than those found within section 22a-174-22. Table 2 below summarizes the NOX control equipment in place at Connecticut's largest EGUs, along with the emission rates for these units.

Subsection (j) (“Emissions reduction trading”) establishes the requirements for sources complying with subsection (e) emission limitations through intra-state emissions trading. Under subsection (d)(4), CT DEEP must submit any permit or order implementing an intra-state emissions trade under subsection (j) to EPA for approval. See also CAA § 110(i). Therefore, any use of intra-state emissions trading under subsection (j) for compliance with subsection (e) limits would have to be presented to EPA as a new SIP revision, which would be reviewed and processed in a separate regulatory action. See, e.g., 77 FR 71140.

Subsection (k) covers requirements for emission testing and monitoring. Subsection (l) covers recordkeeping and reporting requirements concerning operating hours, fuel usage, NOX emissions, equipment maintenance, continuous emissions monitoring (CEMS) records, and emissions testing information. Sources must retain these records for five years. Subsection (m) contains provisions requiring the submittal of compliance plans for sources subject to the provisions of section 22a-174-22.

Table 1 below summarizes the NOX emission limits within section (e) of section 22a-174-22. The following abbreviations are used in the table: gm/bk hp-hr = grams per brake horsepower-hour; lb/mmBTU = pounds per million British Thermal Units; NA = not applicable; and ppmvd = parts per million volume, dry.

Table 2 below provides the NOX control equipment and related information for Connecticut's 10 largest emitting EGUs in 2009. This data is from EPA's Air Markets Program database. Within Table 2, the following abbreviations are used: LNB = Low NOX burners; FGR = Flue gas recirculation; OFA = Over-fired air; SCR = Selective catalytic reduction; and SNCR = Selective non-catalytic reduction.

EPA defined RACT as being the lowest emission limitation that a particular source is capable of meeting by the application of control technology that is reasonably available considering technological and economic feasibility. See 44 FR 53762, September 17, 1979. The NOX controls noted within Table 2 have all been demonstrated to be effective at reducing NOX emissions from EGUs, and this is demonstrated by the low NOX emission rates shown within the table. Based on EPA's experience interpreting and applying the RACT standard, we find reasonable Connecticut's determination that the requirements discussed above are consistent with RACT. Consequently, we agree with Connecticut's determination that its already-approved regulations discussed herein impose a RACT level of control on EGUs, and as described elsewhere in this notice, all major sources of NOX. Since our approval of Connecticut's RACT SIP does not rely in any way on CAIR, the remainder of the Sierra Club's comments regarding CAIR are not relevant to this action and we are therefore not specifically addressing the remainder of those comments pertaining to the status of CAIR.

On July 20, 2007, Connecticut submitted VOC RACT orders for the Curtis Packaging Corporation in Newtown, Sumitomo Bakelite North America, Incorporated, located in Manchester, and Cyro Industries in Wallingford. Our January 23, 2013 NPR contains a summary of the RACT requirements established for each facility, and our analysis of these requirements. In summary, we have reviewed these single source VOC RACT orders and agree that they represent a RACT level of control for each facility. Therefore, we are approving these orders into the Connecticut SIP.

Other specific requirements of these three VOC RACT orders and the rationale for our action are explained in the NPR and will not be restated here. No public comments were received on this aspect of our NPR.

EPA is approving Connecticut's December 8, 2006 RACT certification for the 1997 8-hour ozone standard, and VOC RACT orders for Cyro Industries, Sumitomo Bakelite North America, and the Curtis Packaging Corporation, as revisions to the Connecticut SIP.

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act 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 approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this 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 Clean Air Act; 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 rule 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.

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 26, 2013. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:

This action may be of interest to you if you apply pesticides to or over, including near, waters of the United States. Potentially affected entities, as categorized in the North American Industry Classification System (NAICS), may include, but are not limited to:

Sections 1819(b)(4)(A)(i) and 1919(b)(4)(A)(i) of the Social Security Act (the Act) state that, to the extent needed to fulfill all plans of care described in sections 1819(b)(2) and 1919(b)(2) of the Act, a skilled nursing facility (SNF) or nursing facility (NF) must provide, or arrange for the provision of, nursing and related services and specialized rehabilitative services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident. The Omnibus Budget Reconciliation Act (OBRA) of 1986 permitted States to add a hospice benefit to their State Medicaid plans, and specified that such care could be provided to an individual while such individual was a resident of a SNF or intermediate care facility (Pub. L. 99-272 (1986), section 9505(a)(2)). Additionally, eligible residents of long-term care (LTC) facilities may elect to receive services under the Medicare hospice benefit.

Medicare does not have a separate payment rate for routine hospice services provided in a nursing home. Because hospice services are typically provided to patients in their homes, the routine home care hospice rate does not include any payment for room or board. For routine home care services provided to patients in LTC facilities, hospices receive the Medicare routine home care rate, which is a fixed amount per day for the services provided by the hospice, regardless of the volume or intensity of the services provided. Accordingly, when the hospice patient resides in an LTC facility, the patient generally remains responsible for payment of the LTC facility's room and board charges. If, however, a patient receiving Medicare hospice benefits in an LTC facility is also eligible for Medicaid, Medicaid will pay the hospice at least 95 percent of the State's daily LTC facility rate, and the hospice is then responsible for paying the LTC facility for the beneficiary's room and board. The specific services included in the daily rate payment are determined by the State's Medicaid program and may vary from State to State. In addition to the room and board payment, a hospice may contract with the nursing home for the nursing home to provide non-core hospice services (that is, those services which the hospice is not required by law to provide itself) to its hospice patients.

LTC facilities and hospices are required to provide many of the same services to residents who have elected to receive the hospice benefit. The LTC facility regulations clearly specify what services the facility is required to provide to residents. Those services include nursing services (including aide services), dietary services, physician services, dental services, pharmacy services, specialized rehabilitative services if appropriate, laboratory services, and social services. Similarly, if a resident chooses to elect the hospice benefit, hospice providers are required to provide many of the same services as the LTC facility. As required at 42 CFR 418.100(c), a hospice must provide certain specified care and services and must do so in a manner that is consistent with accepted standards of practice. Those services include nursing services (including aide services), medical social services, physician services, counseling services (spiritual, dietary, and bereavement), volunteer services, therapy services as appropriate, short-term inpatient care, and medical supplies.

Due to so many of the same services being provided by both LTC facilities and hospice providers, there is a clear potential for residents to receive duplicative and/or conflicting services. The Department of Health and Human Services' Office of Inspector General (OIG) has recently raised a number of concerns about Medicare hospice care for nursing facility residents. OIG found that 31 percent of Medicare hospice beneficiaries resided in nursing facilities in 2006 and that 82 percent of hospice claims for these beneficiaries did not meet Medicare coverage requirements. (OIG, Medicare Hospice Care: Services Provided to Beneficiaries Residing in Nursing Facilities, OEI-02-06-00223, September 2009). Additionally, OIG reported that, unlike private homes, nursing facilities are staffed with professional caregivers and are often paid by third-party payers, such as Medicaid. These facilities are required to provide personal care services, which are similar to hospice aide services that are paid for under the hospice benefit. (OIG, Medicare Hospices that Focus on Nursing Facility Residents, OEI-02-10-00070, July 2011). To address this issue, we are establishing a requirement that will ensure LTC facilities that choose to arrange for the provision of hospice care through an agreement with one or more Medicare-certified hospice providers will have in place a written agreement with the hospice that will specify the roles and responsibilities of each entity. These clarifications will increase coordination of care for patients as well as help foster a stronger channel of communication between the two providers assisting patients and their families. We believe that a clear division of responsibilities and increased communication required by this rule will help eliminate duplication of and/or missing services.

This final rule sets forth requirements consistent with requirements in the June 5, 2008 final rule (73 FR 32088) titled “Medicare and Medicaid Program: Hospice Conditions of Participation.” The hospice care final rule set forth new requirements that a Medicare-certified hospice provider must meet when it provides services, including the provision of hospice care to residents of an LTC facility who elect the hospice benefit. In regulations at 42 CFR 418.112(c), we specify what must be included in a written agreement between a Medicare-certified hospice provider and an LTC facility. In this final rule, we have made the requirements for LTC facilities consistent with the June 2008 final rule.

This final rule also supports current LTC requirements that protect a resident's right to a dignified existence, self-determination, and communication with, and access to, persons and services inside and outside the facility.

Our intent in finalizing these requirements for LTC facilities is to ensure they are in accord with our existing requirements at § 418.112 for hospices that provide services to residents of LTC facilities. Our requirements for LTC facilities to have agreements with hospices and to collaborate and communicate with hospices to provide care for LTC facility residents largely parallels the language and intent of the hospice requirements. There are, however, instances where employing the same language will not reflect the distinct roles of each entity or where we believe it is important to provide clarity and detail without disturbing the substance or the proper interpretation of the requirements. In some instances, we are finalizing different requirements because we believe they are in the best interests of the residents of LTC facilities. For instance, we are requiring at § 483.75(t)(2)(ii)(E)(3) that the LTC facility notify the hospice about a need to transfer the resident from the facility for any condition. As a slight variation, the hospice is currently required at § 418.112(c)(2)(iii) to provide in an agreement with a SNF/NF or ICF/IID that the SNF/NF or ICF/IID will notify the hospice of a need to transfer a patient from the SNF/NF or ICF/IID, and the hospice makes arrangements for, and remains responsible for necessary continuous care or inpatient care related to the terminal illness and related conditions. While these provisions are similar, the hospice regulations also highlight the hospice's continued responsibility for care related to the terminal illness. We believe that these provisions, which are tailored to the unique needs and circumstances of each provider type, will promote higher quality of care and safety for the resident.

The rationale for both of these rules is to require a written agreement between the hospice and the LTC facility, which will help ensure safe and quality care if provided to the residents. (See § 418.112 (c)(1) through (9) for hospice and § 483.75(t)(2)(ii) (A) through (K) finalized in this rule for LTC facilities.) While the rules have slight differences in language, substantively, the requirements are the same. We believe it is appropriate for the remainder of the rule, including the coordination of care requirements at § 483.75(t)(3)(i) through (v) for LTC facilities and § 418.112(e) for hospice, to reflect the difference in the roles between these two providers in delivering resident care. Therefore, we are finalizing requirements for communication and collaboration specific to the LTC facility that do not entirely mirror the language in the hospice requirements. Rather, the final rule for LTC facilities will complement the hospice requirements, and together, these rules will allow for better coordination of care and quality of care for LTC facility residents who elect to receive the hospice benefit.

This final rule reflects the Centers for Medicare and Medicaid Services' (CMS') commitment to the principles of the President's Executive Order 13563, released on January 18, 2011, titled “Improving Regulation and Regulatory Review.” It will improve quality and consistency of care between hospices and LTC facilities in the provision of hospice care to LTC residents.

We published a proposed rule in the Federal Register on October 22, 2010 (75 FR 65282). In that rule, we proposed to revise the requirements that an institution would have to meet in order to qualify to participate as a skilled nursing facility (SNF) in the Medicare program, or as a nursing facility (NF) in the Medicaid program.

We provided a 60-day public comment period, during which we received approximately 30 timely comments from individuals, advocacy organizations, and industry associations. Summaries of the proposed provisions, as well as the public comments and our responses, are set forth below. We originally proposed the standard regarding LTC facility/Hospice cooperation at § 483.75(r); however, during the process of finalizing this rule, CMS published a separate interim final rule, titled “Requirements for Long-Term Care (LTC) Facilities; Notice of Facility Closure” (76 FR 9503). The interim final rule added separate standards at §§ 483.75(r) and (s). Since the designations (r) and (s) are now in use, we are finalizing this standard at § 483.75(t). However, in this discussion, we will continue to refer to the proposed regulations text at § 483.75(r).

Notwithstanding our analysis that this rule and 2008 final hospice rule are complimentary and substantively similar, and in view of the slight differences between these rules, we requested public comment on whether the differences found in the proposed rule would create a barrier to forming agreements between LTC facilities and hospices, or interfere in coordination of residents' care between LTC facilities and hospices. We received a few comments regarding the differences between the two rules. Those comments and our response are set forth below.

Comment: Several commenters had concerns that the proposed rule, as written, has the potential of creating a barrier to agreements between LTC facilities and hospice providers. Commenters noted that this requirement imposes responsibility and liability on the LTC facilities to make decisions regarding whether or not a hospice provider is meeting professional standards and principles. Those duties and responsibilities are the province of the State licensing agency and CMS, and should not be placed on LTC facilities.

Response: The requirements in the final rule will ensure that LTC facilities that chose to arrange for the provision of hospice care through an agreement with one or more Medicare-certified hospice providers will have in place a written agreement with the hospice that specified the roles and responsibilities of each entity. If an LTC facility is establishing an agreement for the provision of services, the LTC facility should be monitoring the delivery of the services to a resident in order to assure that professional standards and principles are followed in the provision of the services within their facility. The LTC facility is responsible for assuring that services and care provided meet the assessed needs of each resident.

Comment: The majority of commenters support the rule. Several commenters stated that having a mandated set of written expectations between LTC facilities and hospice providers would help clarify specific responsibilities of each entity. The commenters also stated that clarifications will increase coordination of care for patients as well as help foster a stronger channel of communication between the two providers assisting patients and their families. With a clear division of responsibilities and increased communication, this rule will help eliminate duplication of and/or missing services.

Response: We appreciate the support from the commenters on this proposal. We believe that having a consistent set of regulatory requirements that establish the expectations for both hospices (§ 418.112(e)) and LTC facilities (§ 483.75(t)) will help both entities clarify their specific patient/resident-care roles and responsibilities. The regulatory clarity will also help to eliminate duplication of and/or missing services.

Comment: One commenter suggested extending the deadline for the implementation of the rule to allow hospices and LTC facilities more time to develop agreements to be reached, reviewed, and signed along with training of LTC and hospice staff to be conducted.

Response: The rule will be effective on August 26, 2013. We believe this is an adequate timeframe since hospices already have to meet this requirement.

Comment: Several commenters suggested the final rule should include the creation of a liaison position. Commenters suggested the on-staff, clinically trained professional should serve as a point of contact and mediator collaborating directly with hospice and LTC facility staff members to coordinate effective patient care. Some commenters suggested that the point of contact person be on the LTC facility's staff, while other commenters suggested the position be filled by a member of the hospice staff. Commenters suggested that the liaison position should help to eliminate division of services and ensure that all appropriate medical care safety precautions were being observed and provided.

Response: We believe the requirement that we are finalizing, which designates a member of the LTC facility's interdisciplinary team as a point of contact who will directly collaborate with hospice to coordinate effective patient care sufficiently, addresses the commenter's suggestion. Likewise, current hospice regulations (§ 418.112(e)(1)) require the designation of a person who is responsible for coordinating the care of the resident provided by the LTC facility and hospice staff.

Comment: One commenter stated that SNFs and NFs should provide hospice services to residents in their facilities and there should be reimbursement for the care.

Response: The current regulations do not prohibit an LTC facility from providing palliative care to its residents with its own staff. However, we do not have the statutory authority to modify LTC facility payments to include the full range of hospice services. In addition, in order to receive Medicare payment for hospice services, the hospice provider must meet Medicare hospice requirements, including the statutory requirement that a hospice be primarily engaged in providing the hospice care and services set out at section 1861(dd)(1) of the Act. Therefore, under the above statutory requirements an LTC facility could not receive Medicare hospice benefit payments because it is not primarily engaged in providing hospice services and does not meet the definition of a hospice. If a provider does not meet the definition of a “hospice” it cannot be Medicare-certified and therefore, cannot receive payment under the Medicare hospice benefit.

Comment: One commenter mentioned that they disagreed with the increased responsibility that the proposed rule placed on LTC facilities. Another commenter suggested that the focus of the proposed rule was incorrect. Rather than the expense and additional regulation that the proposed rule would generate, the commenter would like each State to provide the guidance for facilities desiring to provide hospice services.

Response: We do not believe that the written agreement and resident care requirements increase an LTC facility's responsibilities. An LTC facility's responsibilities for the care of its residents already exist in regulation at § 483.25, which states that “each resident must receive and the facility must provide the necessary care and services to attain or maintain the highest practicable physical, mental, and psychosocial well-being, in accordance with the comprehensive assessment and plan of care.” The requirements of this final rule simply clarify the roles and responsibilities of LTC facilities when they choose to contract with hospices to serve their residents. For more than a decade, States have regulated the overlapping relationship between LTC facilities and hospice providers. As we explained in the proposed rule, there is clear and consistent evidence of a lack of care coordination and persistent ambiguities in care responsibilities when LTC residents are also hospice patients. Both a 2002 Department of Health and Human Services' (DHHS) Advisory Committee Report (http://regreform.hhs.gov/finalreport.htm) and a 2003 Hastings Center Report (True Ryndes, Linda Emanuel, The Hastings Center Report, Hastings-on-Hudson: March/April 2003, page S45) addressed the need for more care coordination. We believe it is in the best interest of the patients to regulate this overlapping relationship in order to improve the safety and quality of care provided to LTC residents who receive hospice services. Information gathered from surveys in both LTC facilities and hospice providers has informed our policy making for this rule. Furthermore, as this regulation is a companion rule to the current hospice CoPs, the industry has voiced support for this rule because it clarifies the responsibilities of both providers.

Comment: One commenter questioned how this rule affects hospice provision in other types of facilities in which an individual may reside (for example, Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICFs/IID), formerly referred to as ICFs/MR). The commenter asked if the exclusion of other facilities, for example ICFs/IID, implies that a State could not provide the hospice benefit, or does it imply that a State has the option to provide hospice?

Response: This regulation specifically clarifies the responsibilities of LTC facilities and hospice providers that choose to have in place a written agreement for hospice services. Therefore, the requirements in this rule will only apply to LTC facilities. However, we believe the commenters concerns regarding hospice services in ICFs/IID are addressed in the current hospice regulations. Section 418.112(c) “Written agreement,” sets forth the requirements for a written agreement between hospice and ICFs/IID. Since this regulation only affects LTC facilities we did not intend to imply anything regarding the State's ability to provide hospice services.

We proposed a new standard at § 483.75(r), titled “Hospice services.” At § 483.75(r)(1), we proposed that LTC facilities could either arrange for the provision of hospice services through an agreement with one or more Medicare-certified hospice providers or not arrange for such services and assist a resident in transferring to a facility that would arrange for the provision of these services when the resident requested such a transfer.

Comment: Some commenters believed LTC facilities should be required to provide notice to residents upon admission as to whether hospice care will be available at the facility along with the names of the Medicare-certified hospice providers with which the facility has agreements. Additionally, commenters suggested that LTC facilities should also be required to give notice to their residents should substantial changes occur regarding their agreements with Medicare-certified hospice programs. If the facility has no agreement for the provision of hospice care, commenters suggested that the admission notice should explain to the resident that hospice care is not available at the facility and include information regarding the facility's responsibility to assist with transfer should the resident become terminally ill and wish to elect the hospice benefit.

Response: We agree with the commenters that notifying residents of services that an LTC facility provides is important. However, we believe that the current requirements at § 483.10(b)(6) sufficiently address this issue. Section 483.10(b)(6) currently requires an LTC facility to inform each resident before, or at the time of admission, and periodically during the resident's stay, of all services available in the facility. From past experience with LTC facilities, we would assume that information regarding available hospice services would be discussed at the time in which the resident wishes to utilize the hospice benefit.

Additionally, while it is uncommon for residents to enter an LTC facility and have need of hospice services right away, it can sometimes occur. A resident transferring into an LTC facility with the intention of using his or her hospice benefit right away is more than likely either being discharged from a hospital, or already receiving hospice care at home and in need of care in an LTC facility because the caregiver can no longer meet the individual's custodial care needs. In the event that the resident is being discharged from a hospital and entering an LTC facility opting to use their hospice benefit, the hospital would be responsible for developing an appropriate discharge care plan to an LTC facility that provides hospice services. If the resident is already receiving hospice services at home and chooses to move to an LTC facility, the hospice, through its medical social services, would assist the individual and family in selecting an appropriate LTC facility with a hospice agreement.

At § 483.75(r)(2)(i) and (ii), we proposed specific requirements for LTC facilities choosing to have hospice care provided by a Medicare-certified hospice in their facility. The LTC facility would be required to ensure that the hospice services met professional standards and principles that would apply to individuals providing services in the facility, and the timeliness of the services. We also proposed requiring that, before any hospice care was provided to a facility resident, a written agreement would have to be signed by both an individual authorized by the hospice administration and an individual authorized by the LTC facility administration.

Comment: Seven commenters recommended that we clarify the meaning of “timeliness of services.” Commenters also suggested that the interdisciplinary team be responsible for ensuring that the hospice provider is meeting the requirements. Another commenter suggested that the proposed requirement was duplicative of existing conditions of participation (CoPs) for LTC facilities and should be deleted from the final rule.

Response: The term, “timeliness of services” means that the LTC facility will be required to ensure that the Medicare-certified hospice will provide services to the resident in a way that meets their needs in a timely manner, for example, by increasing the resident's pain medication to ensure an optimal comfort level. We anticipate that LTC facilities will address timeliness of services in their agreements with hospices, based on resident needs. Although the existing LTC facility standard at § 483.75(h)(2)(ii) requires the facility to assure the timeliness of the current services that an LTC facility provides, this provision does not specifically apply to the content of written agreements for hospice services. Therefore, the requirement at § 483.75(t)(2)(i) is not duplicative. We are finalizing the language as proposed.

We proposed under § 483.75(r)(2)(ii)(A) through § 483.75(r)(2)(ii)(D) that the written agreement include, at least, descriptions of the services the hospice will provide; the hospice's responsibilities for determining the appropriate hospice plan of care as specified in § 418.112(d); the services the LTC facility would continue to provide, based on each resident's care plan; and a communication process, including how the communication will be documented between the LTC facility and the hospice provider, to ensure that the needs of the resident were addressed and met 24 hours per day.

Comment: One commenter suggested that it would be helpful if there was a standardized communication form that hospice providers and LTC facilities could use to inform each other of new orders and changes, and if it indicated whether or not the primary physician and family member had been notified. Another commenter suggested that the facility document family engagement, consent, acknowledgement of an agreement with the patient's care plan, and any changes requested by the patient or their family in the patient's medical record. This would assist the family and the caregivers in identifying when there was a deviation from the plan of care.

Response: The written agreements between the hospice and the LTC facilities require communication between the two entities regarding the provision of care to the resident receiving hospice services. The LTC facility and hospice must collaborate on how they will communicate information regarding the resident's care and staff must be aware of the system and/or form for communication that will be used. The development of a system and/or form for communication is the responsibility of the hospice and LTC facility. Additionally, we believe that the commenter's suggestion regarding documentation in the resident's medical record is sufficiently addressed at § 483.75(l)(5). That requirement sets forth the information LTC facility clinical records must contain.

Comment: One commenter suggested that CMS update the instructions used by the State Agencies responsible for LTC facility survey and certification to ensure that sufficient emphasis is placed on surveyor review of a facility's clinical and administrative documentation. The commenter stated that this update would assure proper communication between all caregivers, regardless of their employer, and that issues of concern expressed in that documentation would be appropriately addressed by the LTC facility and other providers serving the facility's residents.

Response: We appreciate the commenter's suggestion regarding updates for surveyors. We expect shortly after the publication of the rule that updates to the State Operations Manual (SOM), which among other things provides interpretive guidelines for our surveyors, will be made regarding the new requirements. The instructions to surveyors for reviewing the care of a resident receiving hospice services are found in the interpretive guidelines for § 483.25, “Quality of Care.” (TAG #F309 in Appendix PP of the SOM). This guidance provides instruction for the surveyor for the review and observation of the delivery of care, and for the review of the collaboration of the services between the hospice and the nursing home, including the coordination of care, the plan of care and the communication between the two entities.

Under § 483.75(r)(2)(ii), we proposed the inclusion of other duties and responsibilities that must be delineated by the LTC facility and the hospice in their written agreement. Under § 483.75(r)(2)(ii)(E), we proposed that the agreement contain a provision that the LTC facility notify the hospice provider immediately regarding a significant change in the resident's physical, mental, social, or emotional status, any clinical complication(s) that suggests a need to alter the plan of care, a condition unrelated to the terminal condition that might require transfer of the resident from the facility, or the resident's death.

Comment: A few commenters stated that hospice providers should be notified of any transfer of a resident receiving hospice services, regardless of whether it was related to the terminal illness or not. Therefore, commenters suggested amending the rule to read, “a need to transfer the resident from the facility for any condition.”

Response: We agree with the commenters and have revised the regulation at § 483.75(t)(2)(ii)(E)(3) to remove the phrase “that is not related to the terminal condition” in order to clarify that the LTC facility immediately notifies the hospice regarding a need to transfer the resident from the facility for any condition.

We proposed at § 483.75(r)(2)(ii)(F) that the hospice assume responsibility for determining the appropriate course of hospice care, including the determination to change the level of services provided.

Comment: One commenter stated that there was often disagreement between hospice staff and LTC facility staff due to hospice providers changing orders unrelated to the terminal diagnosis and/or palliative care. In addition, the commenter stated that hospice providers did not always provide rationale for changed orders. Another commenter expressed difficulty receiving information from local hospice providers in a timely manner; therefore, the commenter thought that this requirement would be difficult to fulfill.

Response: In accordance with the hospice regulations at § 418.112(c)(3), the hospice is responsible for establishing and updating the hospice plan of care, which encompasses all issues related to the terminal illness and all related conditions. We encourage LTC facilities and hospices to establish procedures for communicating patient care between both providers, more specifically to determine which provider is responsible for the care planning. For example, both hospice staff and LTC facility staff need to be aware of conditions related to the resident's terminal illness, which are handled under the hospice's care planning. Additionally, they need to be aware of conditions not related to the resident's terminal illness, which are handled under the LTC facility's care planning. Effective communication among both LTC facilities and hospices is, we believe, the most appropriate way for both providers to address this issue. The regulations for the written agreements for the hospice regulations at § 418.112(c)(1) and the LTC facility regulations at § 483.75(t)(2)(ii)(D) require both entities to establish, in writing, the manner in which they are to communicate with one another, and the method(s) that will be used to document such communications.

We proposed at § 483.75(r)(2)(ii)(G) that the LTC facility must continue to provide 24-hour room and board care, meet the resident's personal care and nursing needs in coordination with the hospice representative, and ensure that the level of care provided is appropriate based on the individual resident's needs.

Comment: A commenter stated that most hospice care, whether in the home or in an LTC facility, is provided at the routine level of care. If an LTC resident elects the Medicare hospice benefit and is receiving a routine level of care, Medicare does not pay for the resident's room and board. This billing caveat frequently creates a great deal of confusion for Medicare beneficiaries and their families. One commenter suggested that before the start of hospice care in the LTC facility and the consequent financial liability of the Medicare beneficiary for the cost of the room and board, the LTC facility should be required by regulation to provide notice to the beneficiary clearly explaining the liability for room and board and the estimated cost of that liability.

Response: At § 418.52(c)(7) of the hospice CoPs, hospice providers are required to ensure that residents receive information about the services covered under the hospice benefit. Likewise, § 483.10(b)(6) of the LTC facility regulations, require LTC facilities to inform each resident before, or at the time of admission, and periodically during the resident's stay, of services available in the facility and of charges for those services, including any charges for services not covered under Medicare or by the facility's per diem rate. Therefore, we believe that the current LTC and hospice regulations address the concerns of the comments.

At § 483.75(r)(2)(ii)(H), we proposed that the written agreement include a delineation of additional hospice responsibilities, which would include, but not be limited to, providing medical direction and management of the patient; nursing; counseling (including spiritual, dietary, and bereavement); social work; and the provision of medical supplies, durable medical equipment, and drugs necessary for the palliation of pain and symptoms associated with the terminal illness and related conditions. In addition, the written agreement would delineate all other hospice services that would be necessary for the care of the resident's terminal illness and related conditions.

Comment: Several commenters had concerns with the lack of clarity as to whether the LTC facility or the hospice provider would take the lead as the primary decision maker. Two commenters suggested that the attending physician maintain oversight of care of the resident and ensure that the care providers are in compliance with the documented plan in the patient's medical record. One commenter also stated that the hospice medical director should serve as a consultant and advisor to correct problems with the delivery of hospice services by LTC facility personnel. Another commenter suggested that only one physician should approve or disapprove all documented orders for patient care and that doctor must be credentialed in the LTC facility.

Response: There is no Federal regulation precluding the LTC staff from taking orders for care from the hospice physician regarding a resident's terminal illness and related condition. The written agreement should identify how the LTC staff communicate and receive orders from the hospice physician in relation to the terminal care.

The hospice regulations at § 418.112(c)(3) through § 418.112(c)(7) describe the role of the hospice in caring for an LTC resident. The hospice is responsible for all decisions related to the care provided for the terminal illness and related conditions. The LTC facility maintains responsibility for all other care decisions. In accordance with the requirements at § 418.56(c)(2), hospices are responsible for communicating with the patient/resident, family members, and attending physician at all points during the decision-making process to develop and update the content of the hospice plan of care. The hospice medical director, as the individual responsible for the medical component of the hospice's patient care program, is available to provide expertise in all necessary cases.

In addition, hospices are required to provide physician services (§ 418.64(a)) in conjunction with the patient's attending physician to manage the patient's hospice care and to provide additional non-hospice physician services when the patient's attending physician is not available. Therefore, we believe care coordination is explicit in the regulation.

Comment: One commenter suggested that the reference to “all other hospice services that are necessary . . .” in § 483.75(r)(2)(ii)(H) of the proposed rule should be elaborated to include `home health aide/nursing assistant services and therapy.' The commenter noted that these services have posed the biggest challenges regarding determination of responsibility. For example when the hospice plan of care has included placement of a home health aide/nursing assistant in the facility, the entities have been confused regarding their obligations for personal care.

Response: We understand the commenter's concern with the abbreviated list not including all possible services that the hospice would provide. We do not view those services not listed as less important, however, the list of services provided is an abbreviated list; we did not intend it to be all-inclusive. Hospice is responsible for providing all hospice services including the provision of hospice aide services, if these services are determined necessary by the Interdisciplinary Group (IDG) to supplement the nurse aide services provided by the facility. In entering into a written agreement with each other, each provider clearly delineates responsibilities for the quality and appropriateness of the care it provides in accordance with their respective laws and regulations. Both providers must comply with their applicable conditions or requirements for participation in the Medicare and/or Medicaid programs. The facility's services must be consistent with the plan of care developed in coordination with the hospice, and the facility must offer the same services to its residents who have elected the hospice benefit as it furnishes to its residents who have not elected the hospice benefit. Therefore, the hospice patient residing in a facility should not experience any lack of services or personal care because of his or her status as a hospice patient.

We proposed at § 483.75(r)(2)(ii)(I) that the agreement include a provision that the hospice may use LTC facility personnel, where permitted by State law and as specified by the LTC facility, to assist in the administration of prescribed therapies included in the hospice plan of care. We did not receive any comments on this proposal. Therefore, we are adopting it in this final rule without change.

We proposed at § 483.75(r)(2)(ii)(J) that the written agreement contain a provision that the LTC facility report all alleged violations involving mistreatment, neglect, or verbal, mental, sexual, and physical abuse, including injuries of unknown source, and misappropriation of patient property by hospice personnel, to the hospice administrator immediately when the LTC facility becomes aware of the alleged violation.

Comment: One commenter believed that the proposed rule lacked direction in reporting alleged abuse and what the LTC facility's liability would be if the situation was not corrected and documented within the patient's records. The commenter suggested that the final rule require that a resolution process be documented in the patient's care plan, enabling those who are accountable for the care of the patient to be aware of their roles and responsibilities as well as increasing patient safety and improving quality of care.

Response: The written agreement specifies that the LTC facility must report alleged violations by hospice personnel to the hospice administrator immediately when the LTC facility becomes aware of the alleged violation. This is to assure that the hospice administrator is not only aware of the alleged violation, but also begins an investigation as required in the hospice CoPs at § 418.52(b)(4). We disagree with the commenter's suggestion regarding reporting alleged abuse in the resident's plan of care. The plan of care is a treatment plan that is developed according to the needs of the residents upon admission. Changes to the plan of care are made according to changes in the resident's condition and treatment needs. Moreover, the LTC facility must follow our regulations at § 483.13(c), “Staff Treatment of Residents,” which require the facility to protect its residents from abuse; to identify, investigate, and report any alleged violations; and to take appropriate corrective action. Additionally, § 483.13(c) currently includes requirements for abuse documentation; therefore it would be duplicative to include an additional requirement in this final rule.

We proposed at § 483.75(r)(2)(ii)(K) that the agreement also include a delineation of the responsibilities of the hospice and the LTC facility to provide bereavement services to LTC facility staff.

Comment: Several commenters had concerns with this requirement in the proposed rule. One commenter suggested that the requirement should be removed, stating that the hospice agency should not be held responsible for providing bereavement counseling for LTC facility staff. It was suggested instead that LTC facilities should be held responsible for providing bereavement counseling for their own staff members. A few commenters requested additional information to be added regarding the duration and location of the services and whether one-on-one or group services would be acceptable. Additionally, commenters requested information clarifying which hospice would be responsible for providing the services in an LTC facility in the event that the facility contracts with more than one hospice for services.

Response: We understand the concerns expressed by the commenter regarding the removal of the bereavement requirement for hospices. However, this requirement is consistent with hospice requirements at § 418.112(c)(9) and changes to the hospice regulations are beyond the scope of this regulation. The agreement between the hospice and the LTC facility should detail how the services will be coordinated and provided by the hospice provider for the LTC staff. The bereavement services are based upon the relationship between the care provider and the hospice resident. The hospice and the LTC facility should collaborate and communicate in order to determine which LTC staff will benefit from the bereavement services. In the cases of several hospices offering services in a facility, the individual hospice and the facility, as noted above, should review and identify those LTC staff who will benefit from the bereavement services. This should be individualized based on the resident involved and the staff involvement in their care. The agreement will identify how this service will be implemented by the certified hospice. Since the proposed language reflects the requirement already in hospice CoPs, we are not making any changes to the current language. Rather, we believe it should stay consistent with the current hospice regulation at § 418.112(c)(9).

At § 483.75(r)(3)(i) through (v), we proposed that the LTC facility that arranges for the provision of hospice care under a written agreement designate a member of the facility's interdisciplinary team to be responsible for working with hospice representatives to coordinate care provided by the LTC facility and hospice staff to the resident. This individual must be responsible for—(1) Collaborating with hospice representatives and coordinating LTC facility staff participation in the hospice care planning process for those residents receiving these services; (2) communicating with hospice representatives and other healthcare providers participating in the provision of care for the terminal illness, related conditions, and other conditions to ensure quality of care for the patient and family; (3) ensuring that the LTC facility communicates with the hospice medical director, the patient's attending physician, and other physicians participating in the provision of care to the patient as needed to coordinate the hospice care of the hospice patient with the medical care provided by other physicians; (4) obtaining pertinent information from the hospice including the most recent hospice plan of care specific to each patient; hospice election form; physician certification and recertification of the terminal illness specific to each patient; names and contact information for hospice personnel involved in hospice care of each patient; instructions on how to access the hospice's 24-hour on-call system; hospice medication information specific to each patient; and hospice physician and attending physician (if any) orders specific to each patient); and (5) ensuring that the LTC facility staff provides orientation in the policies and procedures of the facility, including patient rights, appropriate forms, and record keeping requirements, to hospice staff furnishing care to LTC residents.

Comment: The majority of the commenters supported the requirement designating a member of the LTC facility's interdisciplinary team to be responsible for working with hospice representatives to facilitate the coordination of care. A few commenters however, were unsure if the designation of the facility's interdisciplinary team member required a specific person by name or designation of a specified staff position and/or discipline. One commenter suggested the final rule specify the LTC representative be someone with a clinical background, possibly a registered nurse (RN), as well as credentialed in the nursing facility.

Response: We agree with commenters that the LTC representative should be an employee of the facility with a clinical background. However, we do not want to limit LTC facilities' clinical personnel options solely to a professional registered nurse. The responsibilities of the interdisciplinary team member could be fulfilled by other clinicians participating in the care of the resident. We believe that by limiting the interdisciplinary team member to only a registered nurse, staffing issues may arise in addition to the possibility of increasing burden on the facility. In light of the complex clinical needs of a resident who is in the terminal stages of life, we believe it would be beneficial for the interdisciplinary team member to have the ability to assess the resident or have access to someone that has the ability to assess the resident. We are not requiring the person assessing the resident to be on the LTC facility staff: for example, it could be the hospice RN that is required to be available 24 hours. Therefore, we have revised the regulation at § 483.75(t)(3) to clarify that the LTC representative must have a clinical background, function within their State scope of practice act, and have the ability to assess the resident or have access to someone that has the skills and capabilities to assess the resident.

Comment: One commenter requested additional information regarding how a hospice program can best incorporate the LTC interdisciplinary member into the IDG. This commenter also wanted to know if this requirement would mandate that the interdisciplinary member directly participate in the hospice IDG meetings.

Response: In accordance with § 418.56(d), the hospice interdisciplinary group is required to update the hospice plan of care no less frequently than every 15 calendar days. The hospice interdisciplinary group must include specified core members; however, it is not limited to those core members. Rather, it is our expectation that all licensed professionals who participate in a patient's care will give input to the interdisciplinary group (§ 418.62(b)). Furthermore, the hospice is required to have a system of communication that ensures the ongoing sharing of information with non-hospice providers that are caring for a patient (§ 418.56(e)(5)). Finally, the hospice is specifically required to designate an individual from each interdisciplinary group that is responsible for a patient that resides in an LTC facility to act as a communicator and coordinator with the LTC representatives. In addition, the LTC facility is specifically required to designate an individual to coordinate with the hospice representatives. The regulation doesn't stipulate that the facility staff coordinator directly participate in the hospice care planning meeting, but it does not preclude them from attending. The LTC facility and hospice must work out the arrangements on how needed information for care planning and the delivery of care and services will be coordinated and provided based upon the needs of the resident.

Comment: One commenter has expressed concern with the requirement of the LTC facility interdisciplinary team member obtaining hospice medication information specific to each patient. An LTC pharmacy may experience difficulty with billing hospice medications to the correct payer without the appropriate notification by either the hospice provider or the LTC facility. This includes information as to whether the medication is “related to” the terminal illness, and the patient's insurance information. Because payment for medications not related to the terminal illness is the responsibility of the hospice patient or secondary payer, it is critical for the LTC pharmacy to have correct information. Generally, when an LTC facility resident elects hospice care, the LTC facility will typically have more information on the patient's secondary insurance coverage. Because the hospice provider may not know the pharmacy contact information for each resident, it is only logical that notification by the LTC facility to the pharmacy seems most appropriate. Having specific regulatory language that would make the LTC facility aware of this requirement is needed to avoid the potential for inappropriate billing. The commenter recommends that the LTC facility be responsible for obtaining medication information from the hospice, and that the notification be communicated among the hospice provider, the LTC facility, and the pharmacy within 1 business day of any admission, discharge or any change in the patient's medications or payer status.

Response: We agree with the commenter that it is the responsibility of the LTC facility to obtain medication information from the hospice provider, and we believe that this concern has already been addressed in the regulations (see § 483.75(t)(3)(iv)(F)). Further, § 483.75(t)(3)(iv) clarifies what information the designated member of the LTC facility's interdisciplinary team is responsible for obtaining from the hospice provider, including, medication information as set out at § 483.75(t)(3)(iv)(F)). Also, we expect that the LTC facility's designated member of the interdisciplinary team would appropriately communicate medication information and would identify the payer source for a resident before a change in their medical condition.

After carefully considering how resident information is communicated between the hospice and the LTC providers, we are making a change in the regulations text at § 483.75(t)(3)(iii) regarding who is responsible for communicating with the hospice about, among other things, the resident's medication orders. We are replacing the phrase, “other physicians” with “other practitioners” to encompass all other non-physician personnel such as an advanced practice registered nurse (APRN), licensed therapist, or pharmacist, in accordance with State law and scope of practice participating in the provision of care to the patient. We believe that this will address the commenter's concerns.

Comment: The majority of commenters agreed with the requirement that the LTC facility provide a written overview for orientation on the policies and procedures of the facility to hospice staff furnishing care to LTC residents. One commenter suggested that the information be standardized and readily available in electronic format throughout all facilities in order for hospice staff to have access to quick and concise training. Another commenter suggested the overview address high priority regulatory and care related issues including facility layout with a tour of the facility, abuse and/or neglect prohibition and reporting policies and procedures, fire safety, infection control, falls prevention, and internal communications processes. Another commenter suggested that the facility-based orientation overview should be reviewed and signed by hospice staff before provision of care and services to residents electing the hospice benefit. A commenter also suggested that a list of the services the facility would anticipate from the hospice would also help in focusing the orientation.

Response: We appreciate the suggestion offered by the commenter regarding a standardized electronic format to facilitate training of hospice staff. This regulation does not preclude LTC facilities from using a standardized electronic format for their hospice orientation. Therefore, we believe that the proposed language at § 483.75(t)(3)(v) provides enough flexibility to LTC facilities that provide orientation to hospice providers on their policies and procedures. Although, we have not required all of the specific elements of an orientation, we expect that both the LTC facility and the hospice provider will ensure appropriate orientation, including an outline of services that the hospice will provide, before the provision of care.

Comment: One commenter stated that cross orientation would increase the quality of patient care, therefore, it was suggested that language from the hospice regulation at § 418.112 be added to the proposed rule to ensure that LTC staff furnishing care to hospice patients will also be oriented to the hospice procedures and policies.

Response: The regulations for the written agreements between the LTC facility and a hospice provide for orientation from the perspective of each entity. The SNF/NF orientation is meant to address the overall facility environment including policies, rights, record keeping and forms requirements. The hospice regulations at § 418.112(f) require hospices to assure that LTC facility staff are educated about the hospice philosophy, hospice policies and procedures, principles of death and dying, individual responses to death, hospice patient rights, and paperwork requirements. The orientation requirements, while separate regulations for both the LTC facility and Medicare Certified Hospice, should be a collaborative effort between the hospice and the LTC facility, to assure that the hospice employees provide services and care effectively in the LTC facility and that the hospice ensures that the LTC facility staff understands the basic philosophy and principles of hospice care. We believe that the requirement at § 483.75(t)(4)(v) is sufficient; therefore, we are finalizing this requirement as proposed.

At § 483.75(r)(4), we proposed that each LTC facility providing hospice care under a written agreement ensure that each resident's written plan of care includes both the hospice plan of care and a description of the services furnished by the LTC facility to attain or maintain the resident's highest practicable physical, mental, and psychosocial well-being, as required at § 483.20(k).

Comment: Some commenters suggested that the regulation be changed to mirror the State Operations Manual (SOM) which states, “Highest practicable physical, mental, and psychosocial well-being is defined as the highest possible level of functioning and well-being, limited by the individual's recognized pathology and normal aging process.”

Response: We do not agree that this regulation should include the language that mirrors the definition in the SOM. The interpretive guidelines in the SOM are subject to more frequent informal changes based on the regulatory text of a final rule. Therefore, we will not change the language in the regulation.

Comment: One commenter suggested deleting the requirement for LTC facilities to have the most recent hospice care plan in its possession. LTC facilities would not know when the hospice revised its care plan and would rely on hospice staff to provide the updated care plan. The LTC facility should not be held responsible for not having it in place. It should be the obligation and compliance requirement for hospice. Therefore, if hospice staff failed to provide the most current plan of care, the LTC facility would not be held responsible.

Response: At § 418.112(e)(3)(i) of the hospice regulations, hospices are required to provide the LTC facility with the most recent hospice plan of care for each patient. To ensure that all care providers are performing their duties in accordance with the most recent plan, it is appropriate to require the LTC facility to include the most recent plan of care in its files. If an LTC facility has reason to believe that the plan of care in its possession is out of date, it is incumbent upon the LTC facility to seek out the most recent information. The intent of this regulation is to ensure coordination of care between the hospice and LTC facility. We would expect, through this coordination that the LTC facility would always have the most current hospice plan of care.

Comment: While the majority of the commenters supported the written agreement, some commenters had concerns about the lack of clear regulatory direction regarding the responsibilities of the LTC facility and the hospice provider and requested clarification regarding the requirement for two plans of care. There was concern that medical errors that could result from a requirement for two plans of care for patients electing to use the hospice benefit along with the subsequent increase in possible transitions and transfer. Commenters believed that dividing medical care duties and services between two facilities will open the door for medical malpractice and further the chances for neglect of health care and safety and continue to exacerbate the lack of coordination between hospice and LTC providers.

Response: Having a written agreement that clearly delineates roles, responsibilities, expectations, and communication strategies should enhance, rather than impede, the coordination of care. This rule, when paired with the hospice regulatory requirements for written agreements, required services, and designated hospice representatives, will provide the overall structure for LTC-hospice relationships and written agreements. The hospice and LTC facility must collaborate to develop a coordinated plan of care for each patient that guides both providers. When a hospice patient is a resident of a facility, that patient's hospice plan of care must be established and maintained in consultation with representatives of the facility and the patient and/or family (to the extent possible). The hospice portion of the plan of care governs the actions of the hospice and describes the services that are needed to care for the patient. In addition, the coordinated plan of care must identify which provider (hospice or facility) is responsible for performing a specific service. The coordinated plan of care may be divided into two portions, one of which is maintained by the facility and the other by the hospice. The facility is required to update its plan of care in accordance with any Federal, State or local laws and regulations governing the particular facility, just as hospices need to update their plans of care according to § 418.56(d) of the CoPs. The hospice plan of care must specifically identify or delineate the provider responsible for each function, service, and intervention included in the plan of care. The providers must have a procedure that clearly outlines the chain of communication between the hospice and facility in the event a crisis or emergency develops, a change of condition occurs, and/or changes to the hospice portion of the plan of care are indicated.

We are adopting the provisions of this final rule as proposed, with the following changes:

• We originally proposed the standard regarding LTC facility/Hospice cooperation at § 483.75(r); however, during the process of finalizing this rule, CMS published a separate interim final rule, Requirements for Long-Term Care (LTC) Facilities; Notice of Facility Closure (76 FR 9503). The interim final rule added standards § 483.75(r) and (s). Since the standards at § 483.75(r) and (s) are now in use, we are finalizing this standard at § 483.75(t).

• In consideration of public comments, we are making three substantive changes in this final rule. We have made a revision at 483.75(t)(3) to clarify that the LTC representative must have a clinical background, function within their State scope of practice act, and have the ability to assess the resident or have access to someone that has the skills and capabilities to assess the resident. We have also made a revision to the requirement at § 483.75(t)(3)(iii) removing the phrase “other physicians” and replacing it with “other practitioners.” Lastly, we have made a revision to the requirement at § 483.75(t)(2)(ii)(E)(3) by removing the phrase “that is not related to the terminal condition.”

• We are finalizing the proposed technical correction which would fix an incorrect citation at § 483.10(n). In § 483.10(n), we are revising the reference “§ 483.20(d)(2)(ii)” to read “§ 483.20(k)(2)(ii).”

• We are also finalizing the proposed technical correction which would fix an incorrect citation at proposed § 483.75(r)(4). In § 483.75(t)(4), we are revising the reference “483.20(k)” to read “483.25.”

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

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

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

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

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

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

Proposed § 483.75(r)(2)(ii) stated that if hospice care were to be provided in an LTC facility through an agreement with a Medicare-certified hospice, the LTC facility would have to have a written agreement with the Medicare-certified hospice before care was furnished to any resident.

An LTC facility will be required to have only one written agreement with each hospice that provides services in the facility. This final rule will not require an LTC facility to have an individual agreement with a hospice for each resident receiving hospice services. Therefore, the burden associated with this requirement is the time and effort necessary for an LTC facility to develop and finalize one written agreement. Initially, the development of an agreement will require staff time; however, it will also require additional staff time to coordinate the care between the hospice and the LTC facility.

We estimate the number of hours to develop and finalize a written agreement to be approximately 5 hours the first year. The estimated burden associated with the first year is 80,695 hours or $5,512,275 for the 16,139 LTC facilities that would be affected by this rule. The current requirements at § 483.75(h) “Use of Outside Resources,” requires a written agreement when contracting for outside services. Therefore, we expect that a facility will modify an existing agreement to make it specific to hospice services. Review and revision of an already existing agreement will be expected to take less time thereafter. We estimate that it will take 2 hours to review and revise the agreement annually. The estimated annual burden associated with each successive year after the first is 32,278 hours or $2,204,910. We have based our projections of the hourly cost on the rate for a staff lawyer at $68.31 an hour, which includes fringe benefits (estimated to be 25 percent of the salary). (Source: Bureau of Labor Statistics, Occupational Employment Statistics Survey.)

Proposed § 483.75(r)(2)(ii)(E)(1) through (4) stated that the LTC would have to notify the hospice immediately about—

• A significant change in the resident's physical, mental, social, or emotional status;

• Clinical complications that suggest a need to alter the plan of care;

• A need to transfer the resident from the facility for any condition that is not related to the terminal condition; or

• The resident's death.

The burden associated with these requirements is the time and effort it will take the LTC facility to provide notification to the hospice. We estimate it will take approximately 5 minutes per notification. We anticipate that this will affect 16,139 LTC facilities. If each LTC facility makes one notification each month, the burden associated with this requirement is 16,139 annual burden hours and the cost will be $504,344 annually, based on an hourly rate of $31.25 for a blended salary of a registered nurse and licensed practical nurse that includes fringe benefits, since either practitioner could notify the hospice of stated changes. (Source: Bureau of Labor Statistics, Occupational Employment Statistics Survey).

Proposed § 483.75(r)(2)(ii)(J) stated that under the agreement, the LTC facility would be required to report all alleged violations involving mistreatment, neglect, or verbal, mental, sexual, and physical abuse, including injuries of unknown source, and misappropriation of patient property by hospice personnel to the hospice administrator immediately when the LTC facility becomes aware of the alleged violation. The burden associated with this requirement is the time and effort it will take the LTC facility to report this information to the hospice administrator. We estimate it will take approximately 10 minutes per incident. We anticipate that this will affect 16,139 LTC facilities. If each LTC facility made one report per month, the burden associated with this requirement will be 32,278 annual burden hours and the cost would be $1,032,895 annually based on an hourly rate of $32 for a registered nurse that includes fringe benefits. (Source: Bureau of Labor Statistics, Occupational Employment Statistics Survey.)

The comments we received on this proposal and our responses are set forth below.

Comment: A few commenters expressed concern about this rule creating additional administrative burden. One commenter was concerned that if the contracting process became too burdensome it could reduce beneficiary access to the critical services being requested.

Response: The burden associated with this requirement is the time and effort necessary to develop, draft, sign, and maintain the written agreement. The hospice regulations at § 418.112 require hospices that provide services to LTC residents to have written agreements with LTC facilities. Furthermore, the regulations at § 418.112 require those written agreements to include specific provisions that are equivalent to the specific provisions that were proposed for LTC facilities. This requirement has been in place for hospices since December, 2008. Therefore, LTC facilities that currently have relationships with hospice providers should already have these written agreements in place. In addition, we believe the use of this type of written agreement is a usual and customary business practice, and therefore will not create additional burden on the facility.

Comment: Other commenters stated that the rule would save money by preventing double billing of services provided to the patients.

Response: We appreciate the support from commenters who recognized that this rule may save money by preventing double billing of services to the patients.

If you have comments on the reporting, recordkeeping or third-party disclosure requirements contained in this final rule, please submit your comments to the Office of Information and Regulatory Affairs, Office of Management and Budget,

Attention: CMS Desk Officer, [CMS-3140-F]

Fax: (202) 395-6974; or

Email: OIRA_submission@omb.eop.gov.

This final rule will revise the requirements that an institution will have to meet in order to qualify to participate as a SNF in the Medicare program, or as an NF in the Medicaid program. These requirements will ensure that LTC facilities that choose to arrange for the provision of hospice care through an agreement with one or more Medicare-certified hospice providers will have in place a written agreement with the hospice that specified the roles and responsibilities of each entity.

Additionally, this rule will ensure that the duties and responsibilities of a hospice are clearly articulated if the hospice provides care in an LTC facility. Therefore, in order to ensure that quality hospice care is provided to LTC residents, we believe it is essential to add these requirements to the LTC regulations.

We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2).

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). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This rule does not qualify as a major rule as the estimated economic impact is $7,049,515 the first year and $3,742,150, thereafter.

The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, we estimate that the great majority of hospitals and most other health care providers and suppliers are small entities, either by being nonprofit organizations or by meeting the SBA definition of a small business (having revenues of less than $7.0 million to $34.5 million in any 1 year). For purposes of the RFA, the majority of hospitals, LTC facilities and hospices are considered to be small entities. Individuals and States are not included in the definition of a small entity. A rule has a significant economic impact on the small entities if it significantly affects their total costs or revenues. Under statute, we are required to assess the compliance burden the regulation will impose on small entities. Generally, we analyze the burden in terms of the impact it will have on entities' costs if these are identifiable or revenues. As a matter of sound analytic methodology, to the extent that data are available, we attempt to stratify entities by major operating characteristics such as size and geographic location. If the average annual impact on small entities is 3 to 5 percent or more, it is to be considered significant. We estimate that these requirements will cost $437 ($7,049,515/16,139 facilities) per facility initially and $232 ($3,742,150/16,139 facilities) thereafter. This clearly is much below 1 percent; therefore, we do not anticipate it to have a significant impact. We do not have any data related to the number of LTC facilities contracting hospice care through an outside hospice provider; however, we are aware through annual surveys that not all LTC facilities arrange for the provision of hospice care.

In addition, section 1102(b) of the Social Security Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For the purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. This rule will impact only LTC facilities. Therefore, the Secretary has determined that this proposed rule will not have any impact on the operations of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2011, that threshold is approximately $136 million. This rule will not have a significant impact on the governments mentioned or on private sector costs. The estimated economic effect of this rule is $7,049,515 the first year and $3,742,150 thereafter. These estimates are derived from our analysis of burden associated with these requirements in section III, “Collection of Information Requirements.”

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This rule will not have any effect on State or local governments.

The purpose of this rule is to ensure the coordination of care for LTC facility residents who elect hospice services. The coordination of care is anticipated to result in better outcomes related to quality of care and quality of life for residents. With appropriate coordination of care, we anticipate improved outcomes through more efficient coordination of care between the LTC facility staff and hospice staff, a decrease in duplication of services provided, and improved resident care.

We expect improved consistency in the provision of services to residents receiving hospice care in an LTC facility. We anticipate that primarily LTC facilities and Medicare-certified hospice providers will be affected, as this rule will be expected to improve coordination of care between LTC facilities and Medicare-certified hospice providers. In instances where a patient is transferred to the hospital for care unrelated to their terminal illness, the hospital should be notified that the patient has elected hospice care.

We considered the effects of not addressing specific requirements for the provision of hospice care in LTC facilities. However, we believe that to improve quality and ensure consistency in the provision of hospice services in LTC facilities, it is important to delineate clear responsibilities for Medicare-certified hospice providers and LTC facilities. We expect that these requirements will result in improvement in the quality of care provided to LTC residents receiving hospice services.

This rule sets out an LTC facility's responsibilities for developing a written agreement with a hospice if a resident elects to receive hospice care. This rule also clarifies the responsibility of the facility that chooses not to arrange for the provision of hospice services at the facility through an agreement with a Medicare-certified hospice. These facilities must assist the resident in transferring to a facility that will arrange for the provision of hospice services when a resident requests a transfer.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR part 483 as set forth below:

This document announces that, on May 29, 2013, OMB approved the non-substantive revisions to the information collection requirements contained in the Commission's Service Provider Identification Number and Contact Form, 77 FR 42728, July 20, 2012. The OMB Control Number is 3060-0824. The Commission publishes this notice as an announcement of the effective date of the rules. If you have any comments on the burden estimates listed below, or how the Commission can improve the collections and reduce any burdens caused thereby, please contact Judy Herman, Federal Communications Commission, Room 1-C823, 445 12th Street SW., Washington, DC 20554. Please include the OMB Control Number, 3060-0824, in your correspondence. The Commission will also accept your comments via email please send them to PRA@fcc.gov.

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 and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), the FCC is notifying the public that it received OMB approval on May 29, 2013, for the information collection requirements contained in the Commission's rules at 47 CFR 54.640(b) and 54.679.

Under 5 CFR part 1320, an agency may not conduct or sponsor a collection of information unless it displays a current, valid OMB Control Number.

No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act, that does not display a current, valid OMB Control Number. The OMB Control Number is 3060-0824.

The foregoing notice is required by the Paperwork Reduction Act of 1995, Public Law 104-13, October 1, 1995, and 44 U.S.C. 3507.

The total annual reporting burdens and costs for the respondents are as follows:

OMB Control Number: 3060-0824.

OMB Approval Date: May 29, 2013.

OMB Expiration Date: November 30, 2015.

Title: Service Provider Identification Number and Contact Form.

Form Number: FCC Form 498.

Type of Review: Revision of a currently approved collection.

Respondents: Business or other for-profit and not-for-profit institutions.

Number of Respondents: 5,000 respondents; 5,000 responses.

Estimated Time per Response: 1.5 hours.

Frequency of Response: On occasion reporting requirements and third party disclosure requirements.

Obligation to Respond: Required to obtain or retain benefits. Statutory authority for this collection of information is contained in 47 U.S.C. 151-154 and 254 the Communications Act of 1934, as amended.

Total Annual Burden: 7,500 hours.

Total Annual Cost: N/A.

Privacy Impact Assessment: N/A.

Nature and Extent of Confidentiality: The Commission notes that the Universal Service Administrative Company (USAC) who administers the universal service program must preserve the confidentiality of all data obtained from respondents and contributors to the universal service programs, must not use the data except for purposes of administering the universal service programs, and must not disclose data in company-specific form unless directed to do so by the Commission. With respect to the FCC Form 498, USAC shall publish each participant's name, Service Provider Identification Number (SPIN), and contact information via USAC's Web site. All other information, including financial institution account numbers or routing information, shall remain confidential.

Needs and Uses: The Commission has received OMB approval to the non-substantive revisions of this information collection.

One of the functions of USAC is to provide a means for the billing, collection and disbursement of funds for the universal service support mechanisms.

On October 1998, the OMB first approved FCC Form 498, the “Service Provider Information Form” to enable USAC to collect service provider name and address, telephone number, Federal Employer Identification Number (EIN), contact names, contact telephone numbers, and remittance information. FCC Form 498 enables participants to request a SPIN and provides the official record for participation in the universal service support mechanisms. The remittance information provided by participants on FCC Form 498 enables USAC to make payments to participants in the universal service support mechanisms.

The following non-substantive revisions were made to the FCC Form 498: Page 1, replaced “FRN Number” with “FCC Registration Number (CORES ID)”, the same revisions were made to page 5 of the Instructions; Page 8, line 122, the Rural Health Care Program offset indicator was separated from the Schools and Libraries offset indicator, page 10 of the Instructions was revised to remove the mandatory offset requirement and page 14 of the Instructions was revised to add the separate offset indicator for the Rural Health Care Program; Page 8, line 23, added a certification for service providers (vendors) participating in the Healthcare Connect Fund, the same certification was added to page 14 of the Instructions; and Page 18 of the Instructions was revised to include a definition for “officer.”

The information collected on the FCC Form 498 is used by USAC to disburse federal universal service support consistent with the specifications of eligible participants in the universal service programs. FCC Form 498 submissions also provide USAC with updated contact information so that USAC can contact universal service fund participants when necessary. Without such information, USAC would not be able to distribute support to the proper entities and this would prevent the Commission from fulfilling its statutory responsibilities under the Act to preserve and advance universal service.