On August 24, 2005, the Commission published a Notice of Proposed Rulemaking (“NPRM”) proposing revisions to its rule defining “electioneering communications” under the Federal Election Campaign Act of 1971, as amended. In the NPRM, the Commission stated it would hold a hearing on the proposed rules on October 19 and, if necessary, October 20, 2005. The Commission has determined that one day of public hearing will be sufficient. The hearing will be held on Thursday, October 20, 2005.

We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Include the docket number “Docket No. FAA-2005-22715; Directorate Identifier 2005-NM-108-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or may visit http://dms.dot.gov.

You may examine the AD docket on the Internet at http://dms.dot.gov, or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone (800) 647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them.

We have issued the ADs listed in the following table.

The existing ADs apply to airplanes having line numbers 1 through 1307 inclusive. The existing ADs were prompted by reports of fatigue cracking on the body station 2598 bulkhead.

We issued those ADs to detect and correct discrepancies of the bulkhead structure, which could result in the inability of the structure to carry horizontal stabilizer flight loads, and reduced controllability of the airplane.

Since we issued those ADs, we have received additional reports of cracking in all three of the areas addressed in the existing ADs. The cracking was found on Model 747-200B, 747-200F, and 747-400 series airplanes. Also, we received a report of cracking found in all three areas on one airplane.

ADs 2001-15-03 and 2003-19-08 considered the requirements “interim action” and indicated that the manufacturer was developing a modification to address the unsafe condition. Those ADs explained that we may consider further rulemaking if a modification is developed, approved, and available. The manufacturer now has developed such a modification, and we have determined that further rulemaking is indeed necessary; this proposed AD follows from that determination.

We have reviewed Boeing Service Bulletin 747-53-2473, dated March 24, 2005. The service bulletin describes procedures for modifying the bulkhead. The modification involves:

• Inspecting specified areas using surface high-frequency eddy current (HFEC) and open-hole HFEC methods to detect cracks;

• Repairing cracks;

• Removing the bulkhead upper and lower diagonal braces by using a special tool between their attachment fittings to lift and hold the horizontal stabilizer;

• Installing the following on the aft side of the bulkhead on both sides of the airplane: Two web doublers, new upper and lower hinge backup fittings, and either a new inner chord or the original inner chord that has been inspected for cracks and repaired if necessary; and

• Installing oversize fasteners at specified locations where insurance cuts have been made to remove material that could contain an undetected crack.

AD 2003-19-08 refers to Boeing Alert Service Bulletin 747-53A2467, dated July 26, 2001, as the appropriate source of service information for the required actions. Boeing has since issued Revision 1, dated April 28, 2005. Revision 1 clarifies certain instructions, but the procedures are essentially the same as those in the original service bulletin.

AD 2001-14-07 refers to Boeing Service Bulletin 747-53A2449, Revision 1, dated May 24, 2001, as the appropriate source of service information for the required actions. Boeing has since issued Revision 2, dated March 14, 2002. Revision 2 clarifies certain instructions, but the procedures are essentially the same as those in Revision 1.

AD 2001-15-03 refers to Boeing Alert Service Bulletin 747-53A2427, dated December 17, 1998, and Revision 1, dated October 28, 1999, as the appropriate source of service information for the required actions. Boeing has since issued Revision 2, dated October 5, 2000, and Revision 3, dated September 27, 2001. Revisions 2 and 3 clarify certain instructions, but the procedures are essentially the same as those in the applicable versions cited in AD 2001-15-03.

Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition.

We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of the same type design that may be registered in the U.S. at some time in the future. For this reason, we are proposing this AD, which would supersede ADs 2001-14-07, 2001-15-03, and 2003-19-08. This proposed AD would retain the requirements of the existing ADs and add the actions specified in the service bulletin described previously, except as discussed below.

The service bulletin specifies contacting the manufacturer for instructions on how to repair certain conditions, but this proposed AD would require repairing those conditions by either using a method that we approve or using data that meet the certification basis of the airplane and that have been approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization whom we have authorized to make those findings.

Boeing Commercial Airplanes has received a Delegation Option Authorization (DOA). We have revised the existing AD to delegate the authority to approve an alternative method of compliance for any repair specified in this proposed AD to an Authorized Representative for the Boeing Commercial Airplanes DOA rather than the Designated Engineering Representative (DER).

We have changed all references to a “detailed visual inspection” in the existing ADs to “detailed inspection” in this action. Note 1 in this proposed AD defines a detailed inspection.

In the existing ADs, credit for accomplishment of a prior revision of a service bulletin was provided in a note; in this proposed AD, that language has been added to paragraph (f).

There are about 1,147 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs for U.S. operators to comply with this proposed AD.

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

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

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

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

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation.

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

The Federal Energy Regulatory Commission published in the Federal Register of October 7, 2005 (70 FR 58636), a document concerning revisions to 18 CFR parts 2 and 33 to implement amended section 203 of the Federal Power Act. Footnote 4 inadvertently references February 3, 2006 instead of February 8, 2006. This document corrects that error.

In proposed rule FR Doc. 05-20311, beginning on page 58636 in the issue of October 7, 2005, make the following correction. On page 58636, in the second column, paragraph 1, footnote 4 is revised to read: “As noted below, EPAct 2005's amendments to FPA section 203 will not take effect until February 8, 2006. We will generally refer to EPAct 2005's amended section 203 of the FPA as ‘amended section 203.’ All other references to FPA section 203 are as it currently exists.”

Background

On September 30, 2005, we published an NPRM in the Federal Register (70 FR 57222) to amend our current rules for the Ticket to Work program to improve the overall effectiveness of the program in assisting beneficiaries to maximize their economic self-sufficiency through work opportunities. We provided a 90-day period for interested parties to comment. The 90-day comment period ends December 29, 2005. For information on how to give us written comments on the NPRM or read the comments we receive, see ADDRESSES section of the NPRM, or “How do I provide comments if I do not go to a town hall meeting?” section later in this notice. You may also give us comments orally or in writing at any of the town hall meetings, as explained in this notice. You may read the NPRM for the Ticket to Work program Online. The NPRM is available on the Internet site for the Government Printing Office at http://www.gpoaccess.gov/fr/index.html . The NPRM is also available on the Internet site for SSA ( i.e. , Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs .

As contemplated in the NPRM for the Ticket to Work program, we are conducting a series of town hall meetings open to the public in order to obtain additional input on our proposed changes to the current rules for the program. We are holding these town hall meetings to maximize public awareness of our proposed rules for the Ticket to Work program and to maximize the opportunity for beneficiaries and other individuals with disabilities, their advocates, service providers, employers and other interested parties to provide us input on our proposed changes to the program. We invite you and other interested persons to come to any of the town hall meetings to give us oral and/or written comments on the NPRM for the Ticket to Work program.

The full agenda for the meetings, as soon as available, will be posted on the Internet on the “Work Site” of SSA's Office of Employment Support Programs, at http://www.socialsecurity.gov/work . Seating at the town hall meetings may be limited. In general, the agenda and format for the meetings will be as follows:

There will be a brief introductory opening during which SSA officials and/or other personnel, including a facilitator, will introduce themselves and describe the purpose and format of the meeting, including the ground rules for providing oral and/or written comments at the meeting.

We will ask for public comments on our proposed rules after a presentation of an overview of SSA's Comprehensive Work Opportunity Initiative. This discussion will be followed by a brief overview of the Ticket NPRM followed by an opportunity to offer comment on the following areas: (1) State participation and beneficiary choice; (2) employment network payment systems; (3) ticket eligibility for beneficiaries whose conditions may improve; (4) eligibility for more than one ticket per period of eligibility; (5) the definition of “using a ticket” and timely progress; (6) the evidence requirements for employment network payment; and (7) availability of phase 1 milestone payments in conjunction with vocational rehabilitation reimbursement.

The third and final phase of the meeting will start with an overview of SSA's Demonstration Projects and will be followed by an opportunity to comment on any of the Demonstration Projects or SSA Work Incentives.

For each issue and as time allows, we will give each individual the opportunity to provide oral comments within a specified amount of time ( e.g. , approximately two minutes). Microphones will be stationed at convenient points in the meeting room. We will ask individuals wanting to provide comments to us to form a line behind each microphone and approach the microphone in turn. We will ask that each speaker, before delivering his or her remarks, identify themselves by full name, address, and telephone number. For those individuals representing organizations, we will request that they identify themselves by full name, state the name of the organization and the capacity in which they represent the organization, and give the organization's address and telephone number. Each individual will then state his/her comments regarding the area/issue open for comment. Each individual's remarks will be recorded and later transcribed and entered into the rulemaking record as written comments.

We anticipate allotting a period of time to receive oral comments on each area/issue, with a short break between each such period. At times announced during the meeting, and at the end of each meeting, we will accept written comments from individuals wishing to give us comments in writing.

The transcript of the oral comments on the NPRM given to us at the town hall meetings and any written comments we receive at the meetings, together with the written comments that we receive in the manner prescribed in the NPRM during the 90-day comment period, will become a part of the rulemaking record for making changes to the regulations for the Ticket to Work program. The 90-day comment period ends on December 29, 2005. We will consider all of these comments in developing the final rules for the Ticket to Work program. We will summarize the public comments we received on the NPRM and respond to the major comments in the preamble to our final regulations.

We will post the written comments we receive during the 90-day comment period, including the transcript of the oral comments presented at the town hall meetings, on our Internet site at http://policy.ssa.gov/pnpublic.nsf/LawsRegs . You may also make arrangements to inspect the comments as explained in the “How do I provide comments on the NPRM if I do not go to a town hall meeting?” section of this notice.

The tentative sites and approximate dates for additional town hall meetings are as follows:

When we have more information about these additional town hall meetings, we will publish that information in a notice(s) in the Federal Register at a time nearer to the event(s). Seating may be limited at these meetings.

You may give us your written comments by: using our Internet site facility ( i.e. , Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs or the Federal eRulemaking Portal at http://www.regulations.gov ; e-mail to regulations@ssa.gov ; telefax to (410) 966-2830; or letter to the Commissioner of Social Security, P.O. Box 17703, Baltimore, MD 21235-7703. You may also deliver them to the Office of Regulations, Social Security Administration, 107 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, between the hours of 8 a.m. and 4:30 p.m. on regular business days. To be sure your comments are considered, we must receive them by December 29, 2005.

We post the comments on our Internet site at http://policy.ssa.gov/pnpublic.nsf/LawsRegs . You may also inspect the comments on regular business days by making arrangements with the following contact person: Greg Zwitch, SSA Regulations Officer, Social Security Administration, 107 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, e-mail regulations@ssa.gov , or telephone (410) 965-1887 or TTY (410) 966-5609.

Health claims are statements used on food labels or in food labeling that describe a relationship between a food or component of food and reduction in the risk of a disease or health-related condition (21 U.S.C. 343(r)(1)(B); § 101.14(a)(1) and (a)(2) (21 CFR 101.14(a)(1) and (a)(2)). The 1993 regulations for health claims (§ 101.14) adopted the congressionally mandated standard of significant scientific agreement (SSA) in the Nutrition Labeling and Education Act of 1990 (Public Law 101-538). This standard limits authorized health claims in food labeling to those dietary substance/disease relationships where, based on the totality of publicly available scientific evidence, there is significant scientific agreement among qualified experts that the claim is supported by such evidence. However, the approach of deciding whether a claim was misleading or not based on FDA's evaluation of whether the scientific evidence met the significant scientific agreement standard was overturned in court on first amendment grounds (see Pearson v. Shalala , 164 F.3d 650 (D.C. Cir. 1999) (Pearson decision)).

The Pearson decision rejected FDA's approach in part because the agency did not meet its burden under the First Amendment of justifying a restriction on health claims that do not meet the SSA standard. The court criticized FDA's approach for not considering the possibility that disclaimers about the quality of science underlying claims that did not meet the SSA standard (“qualified health claims”) could remedy any potential harm. Following the Pearson decision and subsequent related cases, including Whitaker v. Thompson , 248 F. Supp. 2d 1 (D.D.C. 2002) (finding a “credible evidence” standard as the appropriate standard for FDA to apply in evaluating qualified health claims), FDA revised its process for reviewing qualified health claim petitions. FDA considers the use of qualified health claims when such claims are supported by credible scientific evidence and accurately communicate the level of scientific support for the claim. FDA instituted an interim system for communicating qualified health claims in food and dietary supplement labeling based on a four level system to classify health claim petitions in terms of the strength of science supporting the claim (“Guidance for Industry and FDA: Interim Evidence-Based Ranking System for Scientific Data” (68 FR 41387, July 11, 2003); “Guidance for Industry and FDA: Interim Procedures for Qualified Health Claims in the Labeling of Conventional Human Food and Human Dietary Supplements” (68 FR 41387)). At the same time it instituted this interim system, FDA developed a consumer studies research agenda designed to identify the most effective ways to best present scientifically based, truthful and nonmisleading information to consumers and to identify the kinds of information known to be misleading to consumers. See “Consumer Studies Research Agenda—Improving Consumer Understanding and Product Competition on the Health Consequences of Dietary Choices,” Attachment D to the Report of the FDA Task Force on Consumer Health Information for Better Nutrition (July 10, 2003), available at http://www.cfsan.fda.gov/~dms/nuttftoc.html#memo (last accessed September 30, 2005).

FDA (Ref. 1) and others (Refs. 2 and 3) have conducted research to assess consumers' responses to health claims. Some of this research has studied consumers' reactions to qualifying language that is similar to that found in FDA's interim system for communicating the level of scientific support for health claims. This research provides important information about consumers' judgments about the level of scientific support for health claims, and reports the effects of health claims on consumers' perceptions of the substance-disease relationship, product healthfulness, product quality and safety, and purchase intent.

FDA is holding this public meeting to discuss the findings from its own and other research that examines consumers' reactions to health claims, including those claims supported by SSA and those that are qualified, on conventional foods and dietary supplements. The meeting also will allow attendees an opportunity to provide comments to FDA about the implications of the available research for further consumer studies that may be needed or that are already underway by other parties to assess consumer understanding of health claims and the effect of health claims on consumer perceptions and behaviors. FDA is also interested in hearing from commenters their views regarding schemes or signals, other than those already studied, that may, consistent with the first amendment, effectively communicate to consumers the level of scientific support for health claims, without leading consumers to make erroneous inferences about the claimed substance-disease relationship and/or other product characteristics. FDA anticipates that this meeting will also include comments from attendees about alternative research methods to empirically assess consumer understanding of health claims and the effect of health claims on consumer perceptions and behaviors. FDA intends to consider all pertinent information from this public meeting in any rulemaking related to alternatives for regulating qualified health claims in the labeling of conventional human foods and dietary supplements (see 68 FR 66040, November 25, 2003).

Please submit your registration information (including name, title, firm name (if applicable), address, telephone, FAX (if available), by November 10, 2005. We encourage you to register online at http://www.cfsan.fda.gov/~comm/register.html or by FAX to Marion V. Allen at 301-436-2605. Space is limited and registration will be closed when maximum seating capacity is reached. Please also specify whether you need onsite parking when you register. We also will accept registrations onsite, if space is available.

If you need special accommodations due to a disability, please contact Marion V. Allen (see FOR FURTHER INFORMATION CONTACT ) no later than November 10, 2005.

If you wish to make a presentation, indicate your request when registering and submit the following information by November 10, 2005: (1) A brief written statement about the general nature of the views you wish to present and (2) the names of any copresenters who must also register to attend. The amount of time allowed for each oral presentation at the public meeting will be limited (e.g., 5 minutes each), and will depend in part upon the number of persons who request to speak. Individuals and organizations that do not preregister to make a presentation may be given an opportunity to speak if time permits.

Persons preregistered or wishing to register onsite should check in between 7:30 and 8:30 a.m. Because the meeting will be held in a Federal building, meeting participants must present photo identification and plan adequate time to pass through the security system.

In addition to attending or presenting oral comments at the meeting, interested persons may submit to the Division of Dockets Management (see ADDRESSES ) written or electronic comments related to the focus of this public meeting. All relevant data and information should be submitted with the written comments. Submit a single copy of electronic comments or two paper copies of any mailed comments, except that individuals may submit one paper copy. Comments are to be identified with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

A transcript will be made of the meeting's proceedings. You may request a copy in writing from FDA's Freedom of Information Office (HFI-35), Food and Drug Administration, 5600 Fishers Lane, rm. 12A-16, Rockville, MD 20857, approximately 30 working days after the public meeting at a cost of 10 cents per page. The transcript of public meeting and all comments submitted will be available for public examination at the Division of Dockets Management (see ADDRESSES ) between 9 a.m. and 4 p.m., Monday through Friday, as well as on the FDA Web site at http://www.fda.gov/ohrms/dockets/default.htm .

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

The standards of identity for cheeses and related cheese products are specified in part 133 (21 CFR 133). The general provisions within part 133, in part, define “milk” and “nonfat milk” that may be used in the manufacture of cheeses and related cheese products. The definitions for “milk” and “nonfat milk” in § 133.3(a) and (b), respectively, list different forms of milk and nonfat milk, including concentrated, reconstituted, and dried forms, that may be used in the making of cheeses and related cheese products. However, fluid or dried filtered forms of milk obtained through mechanical filtration of milk or nonfat milk are not included within these definitions. Therefore, while current regulations permit the use of concentrated, reconstituted, and dried forms of milk and nonfat milk as basic dairy ingredients, they do not provide for the use of fluid or dried filtered milk or fluid or dried filtered nonfat milk as basic dairy ingredients in standardized cheeses and related cheese products.

Mechanical filtration technologies available for milk processing include microfiltration, ultrafiltration, nanofiltration, and reverse osmosis (Refs. 1 and 2). In all of these filtration methods, milk is passed over a series of semipermeable membranes with varying pore sizes. The portion of milk that passes through the membranes is referred to as the “permeate,” and the portion that does not pass through the membranes is referred to as the “retentate.” While the application of hydraulic pressure is the driving force for these membrane separation processes, the nature of the membrane itself (as well as the orientation of the components) controls which components of milk are separated into the permeate and which components are retained in the retentate during these filtration processes (Refs. 1 and 2). In a reverse osmosis (RO) filtration, the membrane pore size is such that all components other than water in the milk are retained. Nanofiltration uses membranes with pores that are larger than RO membranes, but smaller than those used in ultrafiltration. In milk processing, nanofiltration can be used to remove water as well as some soluble salts, yet retain all other components of milk (Refs. 1 and 2). Ultrafiltration retains macromolecules and particles larger than about 0.001-0.02 micrometers, while microfiltration is designed to retain particles between about 0.10 micrometers to 5 micrometers (Ref. 1). While there is some overlap in membrane pore sizes and operating pressures used in ultrafiltration and microfiltration (Refs. 1 and 3), in dairy processing, ultrafiltration is typically used to retain all protein components of milk, including casein and whey proteins, while some of the lactose, minerals, and water soluble vitamins present in milk are lost along with water. Microfiltration, on the other hand, is primarily used for fat separation, bacterial removal, and casein concentration, with a resulting loss of whey proteins, lactose, minerals, and water soluble vitamins along with water (Refs. 1, 2, and 3).

FDA received two petitions requesting amendments to existing regulations to permit the use of filtered milk in the manufacture of standardized cheeses and related cheese products.

The ADPI filed a citizen petition (CP) on December 2, 1999 (Docket No. 1999P-5198 (formerly Docket No. 99P-5198); hereafter referred to as the ADPI petition) requesting that the FDA amend the definition of “milk,” as provided in § 133.3(a), to include fluid UF milk, thereby permitting the use of fluid UF milk in the manufacture of standardized cheeses and related cheese products specified in part 133. ADPI requested that § 133.3(a) be amended to add that “milk may be subjected to an ultrafiltration process that results in a fluid UF milk for use in the manufacture of cheese.” In its petition, ADPI stated that the requested amendment would improve efficiencies in cheese manufacturing and result in benefits to consumers without alteration of cheese composition, characteristics, or flavor. FDA reviewed the ADPI petition and determined that it did not present reasonable grounds in accordance with 21 CFR 10.30 to support the requested amendment and, therefore, FDA closed this petition. However, because the issues raised in the ADPI petition are clearly covered under a second citizen petition (Docket No. 2000P-0586 (formerly Docket No. 00P-0586)/CP2, discussed in section I.A.2 of this document), FDA converted the ADPI petition into a comment to this second petition. ADPI was informed of FDA's action in a letter dated February 26, 2003.

On June 13, 2000, FDA received a joint petition (Docket No. 2000P-0586 (formerly Docket No. 00P-0586)/CP2; hereafter referred to as the NCI petition) from the NCI, the GMA, and the NFPA requesting an amendment of § 133.3 to include “filtered milk” in the definition of “milk” and “filtered skim milk” in the definition of “nonfat milk” for use in standardized cheeses and related cheese products. The NCI petition also requested that a new subsection be added within § 133.3 to define “filtered milk” as:

In support of their requested amendments, the NCI, GMA, and NFPA (hereafter referred to as the petitioners) argued that the amendments requested in the NCI petition are consistent with established FDA policy. Some cheese standards, in addition to specifying a specific procedure for preparing the food, currently provide for the use of “any other procedure which produces a finished cheese having the same physical and chemical properties” (see e.g., standard of identity for cheddar cheese in § 133.113). The petitioners maintained that these “alternate make procedure” provisions historically have provided the legal basis for the use of milk filtration and the resulting filtered milk in cheese making, regardless of whether the filtration occurs in the same plant as other cheese-making procedures or in a centralized filtration facility. The petitioners believe that FDA has previously acknowledged that the use of filtered milk to manufacture cheddar cheese is covered by the alternate make procedure provision of the standard of identity for cheddar cheese. Furthermore, the petitioners maintained that the requested amendments are fully consistent with the basis and rationale for amendments that FDA previously made to expand the scope of the forms of milk recognized as “milk” for cheese making. The petitioners stated that FDA authorized the use of certain forms of milk because these forms of milk may be used in place of fluid milk to produce a finished cheese that is equivalent physically and chemically to the traditional cheese made using fluid milk.

In addition, the petitioners stated that mechanical filtration has been used in cheese manufacturing in the United States for the past 20 years, and contended that the extensive use of filtration technologies, under the existing “alternate make procedure” provisions within some standards of identity for cheeses, has produced significant benefits by improving product consistency and yields and manufacturing efficiency; lowering milk refrigeration, hauling and whey disposal costs; expanding milk sourcing options; and enabling cheese makers to respond more effectively to regional disruptions in the fluid milk supply. The petitioners also stated that because mechanical filtration removes only those constituents that are removed by loss of whey in traditional cheese making, it functions simply to rearrange the steps in the cheese making process to permit the constituents to be removed earlier. The petitioners further contended that the long history and widespread use of filtration technology under the alternate make procedure provisions have clearly established the equivalence of cheese made from filtered milk and cheese made from other forms of milk explicitly permitted under § 133.3.

The petitioners also argued that cheese made with filtered milk is nutritionally equivalent to traditional cheese because mechanical filtration of milk using membranes with pore sizes between 0.0001 and 0.20 microns removes the water phase constituents (water, soluble protein, lactose, minerals, and some water soluble vitamins) that otherwise would be removed in the traditional cheese-making process as whey. In fact, the petitioners argued, with respect to filtered milk in cheese, the retentate may actually contain slightly greater concentrations of valuable constituents (e.g., whey proteins) than the cheese curd that remains after loss of whey in traditional cheese making. The petitioners provided analytical data related to cheddar cheese to support their assertion that cheese made with filtered milk is not “nutritionally inferior,” as that term is defined in 21 CFR 101.3(e)(4), to cheese made using traditional procedures.

Finally, the petitioners argued that their proposed amendments are consistent with the Codex Alimentarius Commission (Codex) standard for cheese. The Codex standard for cheese (Standard A-6-1978, revised in January 1999) provides for the use of “milk and/or products obtained from milk.” The petitioners stated that the Codex standard encompasses mechanical filtration technology, provided the finished cheese meets applicable requirements for physical and chemical properties, which would include nutritional and organoleptic properties.

The fiscal year (FY) 2000 FDA appropriations bill from the U.S. Senate requested the Comptroller General to conduct a study to determine the quantity and end use of UF milk imported into the United States and to submit a report describing the results of the study to Congress. In March 2001, GAO reported (hereafter referred to as “the GAO report” (Ref. 4)), in part, that: There are no specific data on UF milk imports because UF milk is classified under the broad category of “milk protein concentrates” (MPC) by the U.S. Customs Service. GAO reported that imports in the broad category of MPC rose dramatically between 1990 and 1999 from about 800 to 45,000 metric tons, the primary reasons being the difference between U.S. and international prices of milk protein, especially nonfat dry milk (NFDM), and the market growth of nutritional supplements and other novel foods using MPC. GAO also reported that dry MPC imports are used in several foods other than cheeses, such as frozen desserts, bakery products, and sports and other nutritional supplement products. Some in the industry note that economic disincentives have prevented domestic production of dry MPC. GAO noted that there are limited data on domestic production and use of fluid UF milk in cheese making but found that 22 dairy plants produce fluid UF milk used to make cheese within the plant, while 4 dairy farms in New Mexico and Texas produce fluid UF milk for transport to cheese plants in the Midwest. GAO also found that FDA and State contract inspectors reported no violations related to the use of imported UF milk or MPC in standardized cheese in FY 1999, whereas in FY 2000, two plants in Vermont were issued warning letters for using imported MPC in standardized cheese, and the plants subsequently discontinued this use.

FDA received a total of 58 letters and e-mails, each containing one or more comments, to the ADPI (subsequently converted to a comment to the NCI petition) and the NCI petitions. A large portion of the letters and e-mails received were from individual dairy farmers, organizations representing dairy farmers, and consumers. Nearly half of the comments opposed both the ADPI and NCI petitions, while the other half opposed the NCI petition alone without commenting on the ADPI petition. A few comments expressed support for the ADPI petition, but none of the comments supported the NCI petition. The primary concern expressed by the comments opposing either of the petitions appeared to be the potential economic impact of the use of imported milk ingredients, particularly dried forms of filtered milk or MPC, on U.S. dairy farmers. Some comments also expressed concern about the use of imported milk ingredients on the quality and safety of cheese.

The organizations representing dairy farmers expressed strong opposition to both petitions and stated that the use of filtered milk would undoubtedly lower the quality of cheese products and greatly increase the flood of imports of subsidized MPC and filtered milk with the potential to jeopardize the safety of cheese products. They stated that the filtration process removes calcium and reduces the lactose content of milk and results in cheese that does not have the fullness of flavor of traditional cheese. They further maintained that changing the definition of milk to allow the use of liquid filtered milk would ultimately result in the use of dry filtered MPC and, therefore, they reiterated that even if only liquid filtered milk were allowed, while disallowing dry MPC, they would still be concerned about product quality degradation. In addition, they stated that changing the definition of milk could result in increased imports of filtered milk from Canada, displacing U.S. milk and causing a surplus. However, these comments did not provide any factual data or information that would lead FDA to believe that the use of fluid UF milk would impact the safety or quality of the product.

Another comment, from an organization representing milk producers, unconditionally endorsed the ADPI petition, but strongly opposed the NCI petition, stating that the commenter does not support any change to § 133.3(a) that alters which products are currently defined as “milk.” This comment stated that the language in the NCI petition is sufficiently vague that it may be subject to interpretation such that it subsequently would allow dried forms of UF milk. The comment also stated that permitting only liquid forms of UF milk has general widespread support among different stakeholders, and argued that it is essential to establish a definition of “liquid” UF milk to mitigate potential misinterpretations regarding the use of dried MPC and provide clarity for enforcement. In this regard, the comment suggested that a limitation of 45 percent total solids be included in the definition of “liquid ultrafiltered milk,” because a requirement of a maximum of 45 percent total solids would allow for the use of UF technology while preserving the liquid state of the ultrafiltered product and preventing subsequent treatment for concentration beyond ultrafiltration.

The definitions of “milk” and “nonfat milk” in § 133.3 do not provide for the use of filtered milk or filtered nonfat milk as basic dairy ingredients in standardized cheeses and related cheese products. In 1983, with respect to the use of the forms of milk that are permitted as basic ingredients in cheesemaking, FDA amended § 133.3 to define the class designations “milk,” “nonfat milk,” and “cream” and provide for alternate forms of milk, nonfat milk, and cream, i.e., concentrated, dried, and reconstituted forms to be used in standardized cheeses and related cheese products (48 FR 2736, January 21, 1983). In the proposed rule, FDA advised of its opinion that these alternate forms can be used to produce the same cheese as produced from fluid cow's milk (43 FR 42127 at 42128, September 19, 1978), which was the only form of milk permitted as the basic ingredient for cheese manufacture at that time. Filtered forms, however, are not included within “milk” or “nonfat milk” permitted in standardized cheeses and related cheese products.

In the NCI petition, the petitioners argued that the alternate make procedure that is provided for in some cheese standards historically has provided the legal basis for the use of milk filtration and the resulting filtered milk as an ingredient in cheese making. FDA does not agree with the petitioners. The alternate make procedure provision provides for the use of “any other procedure which produces a finished cheese having the same physical and chemical properties” as the procedure specified in the standard. For example, the procedure for making blue cheese described in § 133.106(a)(2) requires Penicillium roquefortii spores to be added to the curd. In a final rulemaking in 1983, in response to a comment that this requirement should be changed to permit the addition of spores to dairy ingredients rather than only to the curd, FDA noted that a change is not necessary because the procedure described in § 133.106(a)(2) may be modified as provided for in § 133.106(a)(1), which states that any other procedure may be used which produces a finished cheese having the same physical and chemical properties (48 FR 2736 at 2739). Rather than restricting the manufacturing procedure to the one specifically described in the standard, this provision allows manufacturers to use alternate manufacturing procedures, but not alternate ingredients, provided the alternate manufacturing procedure does not adversely affect the physical and chemical properties of the cheese. However, the alternate make procedure provision does not permit the use of dairy or other ingredients that are not specifically provided for in the cheese standard. Therefore, the alternate make provision of current cheese standards allows manufacturers to appropriately process the basic ingredient milk during the cheese-making process. For example, the ingredient milk may undergo an additional step of ultrafiltration prior to being introduced into the cheese vat in a single within-batch and within-plant production line for cheese making. In such a process, the ingredient that is introduced into the cheese-making process is milk. However, fluid UF milk purchased or brought in from another plant, even within the same company, that is then introduced into cheese making is considered an alternate ingredient because the ultrafiltration process is used solely for the production of an ingredient that is subsequently used in cheese making. Therefore, in this case, the ingredient is fluid UF milk, not milk.

In the NCI petition, the petitioners also stated that FDA has previously acknowledged that the use of filtered milk to manufacture cheddar cheese is covered by the alternate make procedure provision of the cheddar cheese standard, including when filtration occurs in a separate centralized facility. FDA clarifies that it has previously not objected to the use of fluid UF milk in cheddar cheese under specific circumstances. In 1996, FDA granted temporary permission to Bongards Creamery in Minnesota to manufacture cheddar cheese using fluid UF milk that is produced on a farm in New Mexico. That permission was granted on a limited basis in response to a request from the T.C. Jacoby & Company, Inc., to run a testing program at Bongards Creamery during a pilot period to demonstrate that the finished cheddar cheese made with fluid UF milk as an ingredient has the same physical and chemical characteristics as traditional cheddar cheese (Ref. 5). In its response to T.C. Jacoby & Company, Inc., FDA stated that based on its understanding that “cheddar cheese produced with the retentate that results when milk is subjected to processing in a ultrafiltration system is nutritionally equivalent to and is physically and chemically identical” to cheddar cheese prepared by the standardized procedure, it would not object to the use of fluid UF milk in the manufacture of cheddar cheese at Bongards Creamery on the limited basis described by T.C. Jacoby & Company, Inc. (Ref. 6).

Subsequently, FDA stated its interpretation of the cheese standards that, as written, they do not allow for the use of UF milk as an ingredient (Ref. 7). FDA reaffirms that the use of filtered milk, dried or fluid, including fluid UF milk, as an ingredient is not covered under the alternate make procedures provided for in certain standardized cheeses. However, while FDA has considered the use of UF milk in standardized cheeses, it has stated that it would not object to the experimental use of fluid UF milk as an ingredient in cheddar and mozzarella cheeses (Ref. 7) and that enforcement regarding the use of UF milk as an ingredient in Swiss cheese is not a priority (Ref. 8).

Substances commonly referred to as MPC are also not permitted as ingredients in standardized cheeses. While there is no current FDA regulation that defines “MPC” and this term does not appear to have a standard definition within the industry, the term “MPC” is generally used to refer to dried forms of filtered milk and dried blends and coprecipitates of milk proteins (Ref. 9). The existing standards of identity in part 133 do not list MPC as a permitted optional ingredient in the manufacture of standardized cheeses or related cheese products. Ingredients that are not specifically provided for by the standard cannot be used in the manufacture of a food named with the standardized term. FDA reiterated this statement in 1983 when FDA amended the standards for nine natural cheeses to bring them into closer conformance with the recommended Codex standards for those cheeses (48 FR 2736). FDA advised that dairy ingredients that may be used in manufacture of standardized cheeses are specifically listed in the individual standards, and that milk-derived ingredients other than those specifically provided for may not be used in these cheeses (48 FR 2736 at 2737). In addition, specific to the use of caseinates in standardized cheeses, FDA previously addressed comments on the use of caseinates in previous rulemakings (48 FR 2736 at 2737 and 58 FR 2431 at 2439, January 6, 1993), and advised that caseinates are not among the dairy ingredients provided for use in the manufacture of standardized cheeses in part 133 and, therefore, cannot be used. FDA reaffirms that ingredients other than those specifically provided for by the individual standards cannot be used in the making of standardized cheeses and related cheese products.

Therefore, under the current regulations, use of filtered milk, including fluid UF milk, as an ingredient in a cheese whose applicable standard(s) does not provide for its use would constitute a deviation from the standard, and such cheese cannot be named by the standardized term. However, under the provisions of 21 CFR 130.17, food manufacturers may request from FDA a temporary marketing permit (TMP) to market a food that is named by the standardized term but that deviates from its standard of identity.

On August 1, 2002, FDA received an application from Wells' Dairy, Inc. (Wells' Dairy), for a TMP for the use of UF milk in the manufacture of cottage cheese. In the Federal Register of December 9, 2004 (69 FR 71418), FDA announced the issuance of a TMP to Wells' Dairy to market test cottage cheese that deviates from the standard of identity for cottage cheese in that the product is formulated using fluid UF skim milk. For the purpose of this TMP, fluid UF skim milk was described as “the product obtained by subjecting skim milk to a physical separation process called ultrafiltration using a membrane with a pore size of 10,000 Daltons (Da) molecular weight cut-off (MWCO), resulting in the partial loss of lactose, minerals, water-soluble vitamins, and water present in skim milk.” The TMP also specified that the casein-to-whey protein ratio of skim milk is not altered during the ultrafiltration process and that the moisture content of fluid UF skim milk is about 80 percent. The TMP permitted the addition of such fluid UF skim milk to skim milk at a level needed to increase the total solids of the cheese milk (or final milk used to make cheese) by 5 to 25 percent, and required fluid UF skim milk to be declared in the ingredient statement of the finished cottage cheese as “ultrafiltered skim milk.” The purpose of the permit was to allow Wells' Dairy to measure consumer acceptance of the product, identify mass production problems, and assess commercial feasibility. The permit provided for the temporary market testing of 15 million pounds (lb) (6.8 million kilograms) of the test product for a period of 15 months.

Section 401 of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 341)) directs the Secretary of Health and Human Services (the Secretary), to issue regulations fixing and establishing reasonable definitions and standards of identity, quality, or fill of container whenever such action will promote honesty and fair dealing in the interest of consumers. Section 701(e) of the act (21 U.S.C. 371(e)) directs the Secretary to publish a proposal for the amendment or repeal of any definition and standard of identity under section 401 of the act for any dairy product (e.g., cheese) that is based on a petition of any interested persons showing reasonable grounds.

FDA considered several options in response to the two petitions, including the following: (1) Denying the two petitions, (2) proposing to permit the use of all fluid forms of filtered milk, (3) proposing to permit the use of all fluid and dried forms of filtered milk, and (4) proposing to permit the use of fluid UF milk. FDA concluded that the first option would not be appropriate given that the NCI petition includes within its scope allowing the use of UF milk in standardized cheeses, which FDA tentatively concludes, for reasons discussed under option 4, should be permitted.

The second option, to provide for the use of all fluid forms of filtered milk in standardized cheeses, was also determined to be inappropriate. Standards of identity regulations establish the name of the food, which identifies and describes the food's basic nature (43 FR 42118 at 42120, September 19, 1978). As FDA discussed in 1950 during the establishment of the cheese standards of identity, the starting point for all varieties of cheese is milk. In preparing milk for use in cheese making, adjustments may be made by adding or removing milk fat in the form of cream, fresh skim milk, NFDM solids, or concentrated skim milk so that the ratio of milk fat to the nonfat milk solids is at a desired level (15 FR 5656 at 5657, August 24, 1950). FDA reiterates its longstanding interpretation that a basic nature of cheese is that it is a food made using milk as the starting ingredient. Proposing to allow the use of all fluid forms of filtered milk in standardized cheeses was rejected because some forms of filtration concentrates are specific individual components of milk resulting in a retentate that is no longer milk. For example, microfiltration can be used to separate whey proteins along with lactose, minerals, and water-soluble vitamins from milk resulting in the concentration of casein fractions. FDA tentatively believes that such products that are merely concentrates of certain individual milk components are not milk. The use of individual components of milk, such as specific milk proteins, as the basic or starting ingredient in cheese is not consistent with the basic nature of cheese in that cheese is a food prepared using milk, not specific individual components of milk. Moreover, as FDA previously noted, when providing flexibility for use of advances in food technology, food standards should ensure that the basic nature of the food remains essentially the same (60 FR 67492 at 67499, December 29, 1995). FDA tentatively concludes that allowing for the use of technologies that could potentially result in the use of a specific component of milk as the starting ingredient of cheese would seem to violate the intent of the cheese standards of identity to preserve the basic nature of cheese.

In the NCI petition, the petitioners also stated that because mechanical filtration removes only those constituents that are removed by loss of whey in traditional cheese making, it functions simply to rearrange the steps in the cheese-making process to permit the constituents to be removed earlier. FDA believes that food standards should provide for flexibility in manufacturing procedures and ingredients, provided that the basic nature and essential characteristics of the food are preserved. In determining which filtered products are appropriate for use as ingredients in cheeses, FDA considered how the use of a type of filtered milk affects the basic nature and essential characteristics of cheese. While filtration selectively and variably removes different constituents of milk that are lost, to varying degrees, during the whey removal process in the traditional cheese-making process, we do not agree that this fact can form a sufficient basis to support the use of all forms of fluid filtered milk as ingredients. Some forms of filtration result in retentates that are specific individual components of milk and are no longer milk. In addition, research suggests that milk that is concentrated to higher levels of protein is not suited for use in all types of cheeses, with adverse effects on quality being reported particularly in the case of hard and semi-hard cheeses (Refs. 1, 10, and 11). Moreover, FDA believes that in determining the appropriateness of different forms of filtered milk as ingredients in cheese a primary criterion, based on a fundamental principle of food standards, is whether the use of the filtered milk ensures the integrity of the standardized cheese—its basic nature and essential characteristics. As explained in the previous paragraph, FDA tentatively concludes that the use of a product of microfiltration as the starting ingredient of cheese is not consistent with the basic nature of cheese. Therefore, we do not agree that it is appropriate to provide for the use of all types of fluid filtered milk nor do we agree that the argument about the “rearrangement” of the steps of cheese making (as described by the petitioners) sufficiently supports the appropriateness of the use of all forms of fluid filtered milk an ingredient.

A third option that was also considered inappropriate was to provide for all filtered milk, including both fluid and dried forms. Under this option, substances such as MPC, dry microfiltered (MF) milk, and caseins would be permissible in standardized cheeses or related cheese products. FDA's concerns regarding the use of all fluid filtered milk, which are stated in the two previous paragraphs, also apply to the use of dried filtered milks. Allowing for the use of technologies that could potentially result in the use of specific components of milk, such as caseins, rather than milk, as the starting ingredient of cheese would be inconsistent with the basic nature of cheese.

Based on all the information available, including the information presented by the two petitions and the comments received thus far, FDA is proposing to amend the definitions of “milk” and “nonfat milk” in § 133.3 to do the following: (1) Provide for ultrafiltration of milk and nonfat milk and (2) define UF milk and nonfat milk as raw or pasteurized milk or nonfat milk that is passed over one or more semipermeable membranes to partially remove water, lactose, minerals, and water-soluble vitamins without altering the casein-to-whey protein ratio of the milk and resulting in a liquid product. FDA is also proposing that the name of such treated milk is “ultrafiltered milk” or “ultrafiltered nonfat milk,” as appropriate. Consequently, when this type of milk is used, it would be declared in the ingredient statement of the finished food as “ultrafiltered milk” or “ultrafiltered nonfat milk.”

First, providing for the use of fluid UF milk is consistent with the basic nature of cheese in that the starting ingredient is milk. During the process of ultrafiltration, some of the lactose, soluble salts, and water-soluble vitamins of milk pass through the membranes and are removed, while protein, fat, fat-soluble vitamins, and some of the insoluble salts are retained. Therefore, unlike microfiltration, ultrafiltration does not result in the separation of specific fractions of milk proteins.

Second, FDA tentatively concludes that fluid UF milk can be used in standardized cheeses while maintaining the essential characteristics of these cheeses specified in the individual standards of identity in part 133. Scientific literature suggests that fluid UF milk, especially at low concentration factors, can be used in different cheeses (including soft, semi-hard, hard, and direct-acidified cheeses and process cheese) without adversely affecting the physical, chemical, or organoleptic properties of the cheese (Refs. 1, 2, and 11 through 20; Appendix F of the NCI petition). This appears to be especially true with soft cheeses such as cottage cheese (Refs. 1, 14, and 15) and some direct-acidified cheeses (Ref. 12). Specifically with respect to cottage cheese, as noted in section I.E of this document, FDA reviewed relevant scientific information related to the use of fluid UF milk as an ingredient and determined that fluid UF milk may be used in cottage cheese without adversely affecting the essential physical or chemical characteristics, including nutritional composition and organoleptic properties of cottage cheese. FDA issued a TMP to Wells' Dairy to market test cottage cheese that deviates from the standard of identity for cottage cheese in that the product is formulated using fluid UF skim milk (69 FR 71418).

FDA notes, however, that the scientific literature also includes some reports of adverse effects from the use of fluid UF milk on the texture and development of flavor and aroma of certain cheeses, particularly in semi-hard and hard cheeses and with the use of fluid UF milk at higher concentration factors (Refs. 1, 11, 17, and 21 through 24). FDA points out that the use of fluid UF milk must not adversely affect the physical or chemical characteristics of the cheese. The cheese standards of identity ensure the integrity of the cheese by setting limits on its fat, milk solids-not-fat, and moisture content. In addition, FDA considers nutritional equivalency and organoleptic properties of the cheese among other factors to determine whether the essential characteristics of the cheese are maintained. Providing for the use of fluid UF milk does not preclude a standardized cheese from meeting the existing requirements within the applicable individual standard(s) of identity in part 133. Rather, the use of fluid UF milk would be optional and any cheese made using fluid UF milk would have to meet all the requirements, including the physical and chemical characteristics, specified in the applicable individual standard(s) of identity.

Third, FDA anticipates that providing for the use of fluid UF milk would enable cheese manufacturers to benefit from advances in milk filtration technology and provide them with greater flexibility in cheese making, while preserving the basic nature and essential characteristics of standardized cheese. Further, using ultrafiltration technology may result in better retention of milk proteins and greater cheese yields as well as more uniform product quality (Ref. 1). In addition, the petitioners claimed that using fluid filtered milk (including fluid UF milk) helps manage seasonal imbalances in milk supplies and demand for cheese, and reduces the costs associated with bulk milk distribution, resulting in cost savings that ultimately could be passed on to consumers. Furthermore, declaring fluid UF milk in the ingredient statement of the cheese as “ultrafiltered milk” or “ultrafiltered skim milk,” as appropriate, would enable consumers to identify cheeses made with milk that has undergone ultrafiltration.

Finally, providing for the use of fluid UF milk would bring the standards of identity for cheeses in closer conformity with the international standards adopted by Codex and facilitate increased harmonization. In response to the ADPI and NCI petitions, FDA considered the relevant Codex standards for cheeses and related cheese products. Specifically, FDA reviewed the Codex standards for cheese (Codex Stan A-6), cheeses in brine (group standard) (Codex Stan 208), cottage cheese including creamed cottage cheese (Codex Stan C-16), cream cheese (Codex Stan C-31), extra hard grating cheese (Codex Stan C-35), unripened cheese including fresh cheese (group standard) (Codex Stan 221), named variety process(ed) cheese and spreadable process(ed) cheese (Codex Stan A-8(a)), process(ed) cheese and spreadable process(ed) cheese (Codex Stan A-8(b)), process(ed) cheese preparations (Codex Stan A-8(c)), and whey cheeses (Codex Stan A-7) (Refs. 25-34). FDA notes that several Codex standards such as the standard for cheese, group standard for cheeses in brine, and group standard for unripened cheese including fresh cheese all permit the use of “milk and/or products obtained from milk,” which encompasses fluid UF milk, as the raw material in the manufacture of theses cheeses, provided the finished cheese meets the relevant physical and chemical properties. Additionally, the Codex standard for whey cheeses provides for the addition of “raw materials of milk origin,” including fluid UF milk. Providing for the optional use of fluid UF milk as a basic dairy ingredient in cheeses would be consistent with, although not as expansive as, the provisions of some Codex standards.

In a recent proposed rule (70 FR 29214, May 20, 2005) (the food standards proposal), FDA and FSIS proposed a set of general principles that define how modern food standards should be structured. The agencies also proposed that, if finalized, the agencies will require that a CP for establishing, revising, or eliminating a food standard be submitted in accordance with these general principles. Conversely, the agencies proposed that they may find deficient a petition to establish, revise, or eliminate a food standard that does not follow these general principles. FDA believes that the action proposed here to provide for the use of fluid UF milk as an ingredient in standardized cheeses and related cheese products is consistent with the general principles proposed in the food standards proposal.

For the reasons explained previously in this section, FDA tentatively concludes that providing for the use of fluid UF milk only, rather than for the use of all fluid filtered milk (as requested by the NCI petition), would promote honesty and fair dealing in the interest of consumers by providing greater flexibility in cheesemaking while preserving the basic nature and essential characteristics of the food. Therefore, FDA proposes to amend the definitions of “milk” and “nonfat milk” within § 133.3 to do the following: (1) Provide for ultrafiltration of milk and nonfat milk and (2) define UF milk and nonfat milk as raw or pasteurized milk or nonfat milk that is passed over one or more semipermeable membranes to partially remove water, lactose, minerals, and water-soluble vitamins without altering the casein-to-whey protein ratio of the milk and resulting in a liquid product. FDA also proposes that the name of such treated milk is “ultrafiltered milk” or “ultrafiltered nonfat milk,” as appropriate. Consequently, when this type of milk is used, it would be declared in the ingredient statement of the finished food as “ultrafiltered milk” or “ultrafiltered nonfat milk.”

FDA seeks comment on the appropriateness of the proposed amendments, including the provision to permit the use of fluid UF milk and fluid UF nonfat milk. The proposed amendments would allow for optional ultrafiltration of the starting ingredient, milk or nonfat milk, used in cheese manufacturing. Under these proposed amendments, whether a manufacturer uses fluid UF milk is optional and entirely up to the manufacturer.

FDA also seeks comment on the appropriateness of the proposed definition of ultrafiltration. With respect to the requirement for an unaltered casein-to-whey protein ratio during ultrafiltration, FDA acknowledges that some loss of small molecular weight whey proteins may occur during ultrafiltration of milk with the extent of loss partially dependent on the nature of the membrane and the orientation of the molecules in milk (which may be influenced by the treatment of milk prior to or during ultrafiltration). While casein and most whey proteins are retained in the retentate, proteose-peptones with low molecular weights may be lost in the permeate. Proteose-peptones have a molecular weight between 4,100 and 20,000 Da (Ref. 35). Because there is expected to be free cross-flow of these proteins across the membranes, the loss of the very low molecular weight proteose-peptones may be small and, therefore, as noted in published reviews, the casein-to-whey protein ratio of milk would not be significantly altered during ultrafiltration (Refs. 36 and 37). Studies also have demonstrated complete retention of whey proteins and a relatively constant casein-to-whey protein ratio in milk that has been ultrafiltered to increasing volume concentration (Refs. 13, 38, and 39). The information presented by Wells' Dairy, Inc., as part of its TMP submission also demonstrates that there is minimal, insignificant loss of true protein in the ultrafiltration permeate resulting in an ultrafiltered retentate with its casein-to-whey protein ratio intact (Docket No. 2004P-0519; 69 FR 71418).

FDA notes that a comment received in response to the two petitions suggested that any definition of ultrafiltration also include a requirement that the fluid UF milk must contain a maximum of 45 percent total solids (or a minimum moisture content of 55 percent). The comment stated that this requirement is necessary to define “liquid” UF milk and preclude any treatment following ultrafiltration to further concentrate UF milk. However, the comment did not provide any supporting information or data on the appropriateness of this minimum level of moisture. In the proposed definition of UF milk, FDA is not proposing a requirement related to minimum moisture content of UF milk; however, the proposed definition states that UF milk is a liquid product. FDA seeks comment on whether there is a need for an added measure to ensure the liquid nature of this ingredient and/or to preclude any subsequent treatment following ultrafiltration to further concentrate the fluid UF milk. If so, does a minimum moisture content requirement sufficiently address this concern and what is an appropriate minimum level of moisture?

FDA also seeks comment on the need for, and appropriateness of, the following: (1) Not permitting other forms of mechanical filtration, such as microfiltration; and (2) the requirement that the casein-to-whey protein ratio remain unaltered during ultrafiltration and the feasibility of such a requirement for compliance and enforcement purposes. If the requirement that the casein-to-whey protein ratio remain unaltered is not appropriate, FDA seeks information on what constitutes an acceptable variation of this ratio during ultrafiltration of milk so that FDA may determine appropriate criteria for purposes of enforcement.

In response to the petitions, FDA received some comments that opposed the use of any filtered milk, citing product safety and quality concerns; however, these comments did not provide any scientifically sound and valid data to support their objections specifically with regard to fluid UF milk. At this time, FDA does not have any information that raises food safety concerns with the use of fluid UF milk in standardized cheeses. FDA specifically requests that any comments that address the technical aspects of these proposed provisions include sound scientific and factual data or information that support the positions presented in the comments. For example, are there analytical data or other information that would support a determination that standardized cheeses made using fluid UF milk, as defined in this proposed rule, are potentially unsafe or are nutritionally inferior? Are there scientific data or information that demonstrate that the use of fluid UF milk, as defined in this proposed rule, adversely affects the physical, chemical, or sensory characteristics of a particular standardized cheese or cheese product or that would support the determination that the use of fluid UF milk is not appropriate in a particular standardized cheese or cheese product?

FDA has examined the economic implications of this proposed amendment for part 133 as required by Executive Order 12866. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). Executive Order 12866 classifies a rule as significant if it meets any one of a number of specified conditions, including: Having an annual effect on the economy of $100 million, adversely affecting a sector of the economy in a material way, adversely affecting competition, or adversely affecting jobs. A regulation is also considered a significant regulatory action if it raises novel legal or policy issues. FDA has determined that this proposed rule is a significant regulatory action as defined by Executive Order 12866.

Under current standards of identity for cheese and cheese products, the definitions of “milk” and “nonfat milk” do not encompass “filtered milk”. As a result, while these definitions list milk, nonfat milk, and the different forms (including concentrated, reconstituted, and dried) that can be used in making standardized cheeses, they do not explicitly permit the use of filtered milk as an ingredient in standardized cheeses. The use of filtered milk in cheese making provides greater flexibility and potential cost savings to cheese producers while still preserving the basic nature and essential characteristics of the food. FDA tentatively concludes that revision of the standard is needed to promote honesty and competition in the interest of consumers and to allow dairy producers to utilize a safe and effective technology.

The sources for this analysis were compiled from food research and chemistry journals, milk and cheese industry publications, U.S. Department of Agriculture (USDA) data and reports, other government agency reports, and expert opinions. Sources cited in this text refer to the specific passage or data reported, but all sources found at the end of the document were used to formulate the basis of the analysis.

The standardization of casein and fat content in milk is a common practice in cheese production that improves the consistency of the final products, reduces the volatility of total milk ingredient costs, and increases the amount of cheese produced per vat (Ref. 9). Not all cheese producers standardize their milk, but the amount of protein, specifically in the form of casein, present in milk for cheese production is the single largest factor affecting cheese yield. Condensed skim milk and NFDM are widely used to increase the amount of casein in cheese milk (Refs. 9 and 40). In 2001, the dairy industry purchased 621 million lb of NFDM, 67.5 percent of all domestic sales of NFDM. The use of NFDM in hard cheeses made up 43.3 percent of the total amount purchased by the dairy industry, and cottage and cream cheeses accounted for an additional 6.2 percent (Ref. 41).

By adding condensed milk or NFDM the cheese producer is adding lactose and minerals that must later be removed from the curd at a greater rate than the casein that provides the benefits (Ref. 40). Ideally, cheese producers would standardize their cheese milk with a higher concentration of protein without adding components that later have to be removed. The key components of milk products used in cheese making are listed in table 1 of this document.

Table 1 of this document, reflects the fact that UF milk can be concentrated to a greater or lesser extent to meet the needs of different manufacturing processes. For some cheeses, the UF milk can be highly concentrated then mixed with cream to produce a liquid “precheese” with the same gross composition as the final cheese. It has been shown that this precheese can be used in continuous process cheese making without the use of vats (Refs. 10 and 42). Some soft cheeses, processed cheese, and direct acidified cheese, particularly those made from goat's and sheep's milk, have been reported to be successfully produced using highly concentrated UF milk (Refs. 12, 13, and 43). However, the high concentration of the retentate may affect some properties of the milk and require specially designed equipment (Ref. 2).

More widely accepted for the common styles of cheese consumed in the United States appears to be the use of lower concentrations of UF milk to standardize the protein concentration in cheese milk to produce higher final cheese yields (Refs. 4, 10, and 44). Low concentration UF milk replaces a percentage of milk, usually between 10 and 20 percent, to provide a higher level of casein in the cheese milk without the addition of lactose and minerals (Ref. 40). Most of the benefits of using UF milk are from standardizing the protein concentrations while still allowing conventional cheese-making equipment to be used, or easily adapted for use (Ref. 10). Other uses include UF milk replacement to eliminate the natural seasonal variation in milk quality, improving the consistency of cheese (Ref. 9).

For the purpose of the economics analysis, and without making any declarations about what FDA believes is technically sufficient, we use a low concentration of UF milk with approximately 10 percent replacement as the appropriate reference for 80 percent of all cheese made in the United States. This is based on research that suggests that low concentration replacement has been successfully used in Cheddar and Mozzarella cheeses (Refs. 1 and 9), whereas continuous process cheese-making from high concentration UF milk was not (Ref. 9). These two cheeses alone made up two-thirds of domestic cheese production in 2002 with Swiss and other American cheeses, making up an additional 13 percent (Ref. 45). If this proposed rule is finalized, all standardized cheese made in the United States, regardless of the variety and including those that implement UF technology, must continue to meet the physical and chemical properties specified in the standard.

Amending the standard of identity of cheese has the potential to affect two related sectors of the dairy industry: Dairy processors and cheese producers. Milk is produced on dairy farms daily, with the volume and composition varying both seasonally and daily. The milk is picked up from dairy farms and transported by milk haulers to cooperatives or proprietary operations for distribution or further processing. Large dairy farms may encompass production, processing, and even hard-product manufacturing facilities all at one site, whereas other dairy farms may belong to a cooperative or sell their milk to a proprietary operation that processes or further distributes the milk at its own discretion. Except in the cases of large operations, dairy farms do not usually process their own milk. Therefore, while there are almost 92,000 dairy operations (an operation is a place with one or more milk cows; a farm may include more than one operation) in the United States (Ref. 46), the unit of measurement for purchasing UF technology is the dairy processor who collects milk from one or more dairy operations. In addition to making the capital investment in UF technology, dairy processors would benefit from the decreased costs for transporting and storing UF milk during shipment to cheese producers.

Cheese producers, while not the direct purchasers of UF technology, would still be affected by the changes in the definition of milk in standardized cheese if they choose to replace some of their ingredient milk with UF milk. Many of the benefits of using UF milk in cheese accrue to the cheese producers directly, including, e.g., higher cheese yields and increased production efficiency as well as a greater ability to eliminate the natural variation in their milk supplies, and reduced storage costs.

Dairy processors and cheese producers are not mutually exclusive categories. A dairy processor is a manufacturer of dairy products made using milk as the main dairy ingredient. Therefore, cheese producers are all dairy processors, but not all dairy processors produce cheese. In 2002 there were 403 cheese plants and 1,153 dairy processors in the United States (Ref. 45). Some dairy processors either manufacture cheese directly or manufacture dairy products that are sold to cheese producers. However, some dairy processors produce no cheese products or ingredients whatsoever, and instead, produce a variety of other dairy products including fluid milk, butter, ice cream, and whey products. It is also worth noting that dairy processors include cooperatives. In 1997 there were 226 dairy cooperatives that ranged in primary function from bargaining-only to hard-product manufacturing and fluid processing (Ref. 47).

We measure benefits as the net decrease in the cost of producing cheese. These benefits accrue from all types of protein-standardization; however, the extent of the benefits will vary depending on the milk product used. These benefits lead to cost savings that could be passed along to consumers if the market is opened to a larger number of dairy producers within the industry and competition among cheese producers is enhanced. When only those milk processors that are large enough to incorporate UF technology in legitimate alternate-make procedures (i.e., within plant and within batch) are allowed to use the cost-saving technology in standardized cheeses, they will be able to sell their goods at the market price, which is based on competition among firms with higher production costs. If, however, the market is broadened so that all firms, large and small, are able to use the cost-saving technology, competition among these firms should bid down the market price of cheese, passing the savings on to consumers.

We measure the costs of using filtered milk to make standardized cheese as losses to consumers who prefer cheese made under the existing milk definitions, domestic and international market adjustments, and government purchases required under USDA's Commodity Credit Corp., program. Increases in government purchases of dairy products will not incur unless the market prices of specific products fall below the government floor prices.

We analyze several options for amending the standards of identity for cheeses and cheese products. Option 1 would amend the definition of milk in the standards of identity for cheeses to allow fluid UF milk to be used. Option 2 would allow fluid UF milk and dry UF milk. Option 3 would amend the definition of milk in the standards of identity for cheese to allow all filtration methods that resulted in a fluid milk product to be used in cheese production. Option 4 would allow all filtration methods that resulted in fluid or dry milk products to be used. Option 5 would allow all milk or products obtained from milk to be used in cheese production, in concert with the Codex general standard for cheese.

We estimate the benefits and costs of the regulatory option compared with the benefits and costs of a baseline. The baseline reflects the state of the industry before any new regulation is put in place. Therefore, in this analysis the baseline is leaving the standard of identity for cheese unmodified, i.e., milk, nonfat milk, and the concentrated, reconstituted, and dried forms of milk and nonfat milk are the only basic ingredients allowed in the production of standardized cheese. Due to the “extensive use of nonfat dry milk (NFDM) as an ingredient for cheese manufacture in the United States” (Ref. 9), the baseline assumes NFDM is used as the source of supplemental solids in cheese manufacture. For purposes of this analysis, we assume that the benefits and costs of the baseline are zero.

This option would allow fluid UF milk to be used in the making of standardized cheese. For most U.S. cheese production, this option would result in replacing a percentage of the milk used in the production of cheese with fluid UF milk. This option differs from the baseline by substituting fluid UF milk for NFDM as the protein-dense replacement milk ingredient.

Benefits of Option 1 : Fluid UF milk retains more moisture from milk than NFDM does, so as a percentage of total composition, UF milk has less protein than NFDM. However, it also contains less lactose than either NFDM or milk. In fact, the more highly concentrated the milk is, (the concentrations listed in table 1 of this document, vary from 1.5 to 4 times the solids concentration of milk), the more protein is retained and the less lactose is unnecessarily added. Replacement of milk with fluid UF milk during the manufacturing process produces yield increases per vat, thus spreading out fixed costs (labor, equipment, physical facility) over more total weight of cheese (Ref. 9). According to the Technical Director of North American Milk Products, a cheese plant that replaces 10 percent of its daily milk inputs with fluid UF skim milk would see an increase in cheese yield of 12 percent. This increase in yield lowers costs by up to two cents per pound of cheese (Ref. 48). In 2002, 8.6 billion pounds of cheese were produced (Ref. 45). Therefore, the yield increase due to partial replacement of milk with fluid UF milk in all U.S. cheese production could save about $172 million per year ($0.02 per pound x 8.6 billion pounds).

This estimate may understate the potential cost savings; Fassbender (Ref. 49) states that a 10 percent replacement produces a yield increase of 25 percent, and an article from Dairy Management, Inc., states that a 10-15 percent replacement produces a yield increase as high as 18 percent (Ref. 50). In addition, the amount of rennet and starter cultures which are added to cheese milk can be reduced due to the higher solids content in the cheese milk. In one fluid UF milk research study at the Wisconsin Center for Dairy Research, a plant was able to reduce the rennet usage by 4 ounces per vat, for a total annual savings of over $28,000 (Ref. 49). If we assume this plant is representative of all cheese manufacturing plants, then multiplying $28,000 by the 403 cheese plants in 2002 (Ref. 45) gives a rough figure of $11 million savings in coagulant usage annually. FDA notes that these estimates are uncertain and seeks comment on the cost savings from rennet and starter cultures.

Estimating the net social benefits from implementing UF technology requires subtracting out the private costs to firms of making the necessary capital investments. Milk is increasingly being ultrafiltered during the processing stage, usually at manufacturing plants or dairy cooperatives, so we assume that no capital investment in equipment by the cheese maker is needed to take advantage of UF technology for low level fluid UF milk concentration replacement (Ref. 48). Cheese producers can simply replace a portion of milk with fluid UF milk purchased from a dairy processor without purchasing new equipment.

An early cost-benefit analysis of fluid UF milk production by Slack, et al. (Ref. 51), found that the benefits of UF milk production outweighed the costs for dairy farms with over 100 cows. However, this threshold has likely changed as the latest Pasteurized Milk Ordinance (April 2003 edition) loosened the restriction that allowed only single pass UF systems to now allowing for less expensive recirculating UF systems. Informal conversations with industry representatives revealed that the smallest single pass UF systems being marketed can process 300,000 lb of milk per day, the equivalent of production from almost 5,000 cows (300,000 lb is roughly 34,800 gallons, which at 7 to 8 gallons per cow per day, is 4,350 to 4,971 cows). Recirculating systems, on the other hand, are available for flow rates of 800 gallons per day, or production from approximately 100 cows (Ref. 52).

The costs of implementing fluid UF technology differ for four categories of dairy processors.

• If a processor already produces fluid UF milk, there is no additional cost to allowing the extended definition of milk in standardized cheese.

• If a processor collects milk from fewer than 100 cows, UF technology may not be economically feasible. If cheese producers switch their input purchases away from milk to fluid UF milk, there might be a redistribution of income away from these very small dairy processors. FDA believes that few, if any, milk processors will fall into this category. Even though there are many small dairy farms (72,070 in 2002) milk is not necessarily ultrafiltered on-farm. Instead, small dairy farms have the option of combining milk with other dairy farms in member-owned cooperatives or selling milk to proprietary operations that combine milk from several farms for processing. The USDA defines a “small” dairy cooperative as handling less than 50 million lb of milk each year (Ref. 53), which is roughly the equivalent of milk from 2,000 cows per day and well above the 100 cow minimum.

• If a processor collects milk from more than 100 cows but less than 4,000 and is not currently producing fluid UF milk, then the cost of purchasing recirculating UF equipment ranges from $175,000 to $350,000 (Ref. 52).

• If a processor collects milk from 4,000 or more cows and is not currently producing fluid UF milk, then the cost of purchasing UF equipment ranges from $350,000 for a recirculating system to $1,372,500 for a single-pass system (Ref. 52).

Of the 1,153 dairy processors (which includes dairy cooperatives that process milk for members), an unknown portion would purchase UF technology in response to this proposed rule if finalized. In 2002, cheese production used 64,504 million lb of milk, which is approximately 61 percent of the 105,961 million lb used in all manufactured dairy products (Ref. 45). Therefore, we estimate that 61percent of the dairy manufacturing plants process milk for cheese, for a total of 703 dairy plants. Given that at least 22 dairy manufacturing plants and 4 large dairy farms already produce fluid UF milk (Ref. 4), a total of 677 dairy processors may choose to purchase UF technology as a result of changing the definition of milk in § 133.3. Assuming that new purchases of UF equipment would more likely be recirculating systems, the total one time capital expenditure would range from $118 to $237 million. Given that the UF equipment depreciates over 7 to 14 years (Ref. 1), we estimated the annualized cost over a 10 year period. With a 3 percent interest rate, the annualized cost ranges from $14 to $28 million. With a 7 percent interest rate, the annualized cost ranges from $17 to $34 million. The annualized cost ranges indicate the capital expenditure ranges based on the equipment capacity needs described previously in this document.

Milk is produced daily, with the volume and composition varying both seasonally and daily. Demand for dairy products also varies both seasonally and daily, but demand variations are not correlated with supply variations (e.g., milk production peaks in the spring, but demand for milk and butter peaks in the fall months) (Ref. 53). Cheese producers, however, need to provide a consistent quality cheese, regardless of the day or season in which the inputs were produced. Replacing a given portion of milk with UF milk can eliminate the daily variation that occurs in milk composition by standardizing the ratio of casein to fat. However, fluid UF milk does not offer any price stability from seasonal fluctuations that occur in the supply and demand for both milk and cheese, since it cannot be stored past the short term in a liquid form. Nonfat dry milk has a shelf-life of 12 to 18 months (Ref. 50) and may offer more price stability from seasonal fluctuations.

The transportation and storage costs associated with fluid UF milk are lower than milk due to the removal of approximately two-thirds of the water, lactose, and ash during the filtration process (Ref. 48). The 2001 GAO Report cites a shipment of fluid UF milk by Select Milk Producers, Inc., in which the cost of transporting fluid UF milk was 73 percent lower than the cost of transporting milk. In this same year, milk hauling charges in the Upper Midwest Marketing Area (which includes California and Wisconsin, the top two milk producing states) averaged 17.1 cents per hundredweight (cwt) of milk (Ref. 54). A 73 percent price reduction in this average hauling cost lowers the cost of hauling fluid UF milk to an average of 4.62 cents per cwt. As stated in the section I of this document, we assume that for approximately 80 percent of the cheese produced in the United States, fluid UF milk is used as a substitute in cheese production, not for milk, but for the baseline standardizing ingredient, NFDM. To calculate the transportation savings for these cheeses, we take the 64,504 million pounds of milk used in cheese production in 2002 (Ref. 45) and multiply by 80 percent to capture the amount shipped for American style natural cheeses. We then calculate 10 percent of this total to be replaced by fluid UF milk and convert it to cwt. This is the amount of milk that is subject to a 73 percent reduction in shipping costs, giving a total annual cost savings of about $7 million as follows:

There would be an additional transportation and storage cost savings for the varieties of cheese that are well-suited to high concentrations of UF milk where replacement values are closer to 100 percent of the original milk. To get a potential range for what this cost savings would be, we calculated the transportation savings assuming that the remaining 20 percent of cheese production would use only UF milk for an upper bound and assuming only 2 percent of cheese production would replace 100 percent of milk in cheese production as a lower bound. The annual transportation savings here range from $2 to $17 million (See below).

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EPA is proposing to approve revisions to the Indiana SIP in three areas: (1) To amend the definition of “particulate matter,” and “ambient air quality standards,” add new rules consistent with these amended definitions, and amend rules pertaining to SO 2 and NO 2 ambient standards; (2) to update the references to the Code of Federal Regulations (CFR) from the 2000 edition to the 2002 edition; and (3) to add credible evidence provisions into state rules consistent with federal requirements.

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This is a summary of the Further Notice of Proposed Rulemaking (FNPRM) portion of the Commission's Report and Order and Further Notice of Proposed Rulemaking, FCC 05-144, in WT Docket Nos. 03-264, adopted July 22, 2005, and released August 9, 2005. The Commission is also concurrently publishing a summary of the Report and Order in the Federal Register . The full text of the document is available for public inspection and copying during regular business hours at the FCC Reference Information Center, 445 12th St., SW., Room CY-A257, Washington, DC 20554. The complete text may be purchased from the Commission's duplicating contractor: Best Copy & Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC, 20554, telephone 800-378-3160, facsimile 202-488-5563, or via e-mail at fcc@bcpiweb.com. The full text may also be downloaded at: http://www.fcc.gov. Alternative formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365 or at Brian.Millin@fcc.gov.

1. In the Report and Order portion of the Report and Order and Further Notice of Proposed Rulemaking, we revise the broadband PCS transmitting power rule by eliminating the transmitter output power limit portion of that rule. We note, however, that various proposals before us concerning the radiated power portion of the rule (EIRP limits), particularly those introduced into the record by CTIA's recent ex parte filing, give rise to practical and technical issues that we believe should be further evaluated and addressed before we act on these proposals. Although it appears that some of these radiated power proposals have considerable merit, especially as applied across various bands or services in a harmonized fashion, we find that a more complete record would assist us in properly analyzing the technical details and specifics needed to craft a clear and workable radiated power rule that is not unduly burdensome. We also see no need to delay implementation of the other streamlining actions taken in the Report and Order while we consider this issue. Therefore, we are splitting off the radiated power issues from the Report and Order and consider them in the FNPRM. This will allow us to seek a more comprehensive record, and will provide an opportunity to comment for any parties that might wish to address any of the proposals in the CTIA filing and the issues discussed below.

2. Accordingly, in the FNPRM, we ask a number of questions on the details of the CTIA proposals, explained further below, for changes to the broadband PCS radiated power limits. In addition, we consider whether these proposals should be applicable to those part 22 and part 27 services that operate under a flexible regulatory framework similar to part 24 broadband PCS. We also seek comment on possible changes to other technical rules that may be appropriate if we adopt changes to the radiated power rules.

3. CTIA's ex parte filing proposes that the Commission revise its PCS radiated power rules to limit average EIRP for broadband PCS stations having an antenna height of up to 300 meters above average terrain to the larger of: (1) 1640 Watts per carrier (3280 Watts in rural areas) which is the current rule, and (2) 3280 Watts per MHz of emission bandwidth (6560 Watts per MHz of emission bandwidth in rural areas). For stations using an antenna height greater than 300 meters above average terrain, CTIA proposes that the “per MHz” limit be set to 1640 rather than 3280 Watts. We note that the CTIA plan for revision of the radiated power rule comprises three related but independent proposals that we believe can and should be addressed and evaluated individually. First, CTIA proposes to add a power spectral density feature to the current rule. This would allow more radiated power, the specific amount being proportional to emission bandwidth, for stations transmitting emissions with a bandwidth wider than 500 kHz, relative to stations transmitting emissions with a bandwidth less than 500 kHz. Under CTIA's proposal, the narrow emission bandwidth stations would remain subject to the current set radiated power limits, preventing the unintended result of narrowband systems actually having to decrease power. Second, CTIA generally proposes increasing the maximum radiated power for emissions with a bandwidth wider than 500 kHz, notwithstanding the implementation of a spectral density model. Third, CTIA proposes that the radiated power rule be specified in terms of average power rather than peak power. CTIA states that the issue of peak vs. average power is “logically separate” from the power spectral density issue, but believes that it is appropriate to address it because it arises in the “very same sentence in the rules.” Finally, CTIA proposes that the Commission ensure regulatory parity for technically like services by mirroring the requested broadband PCS changes in our part 27 Advanced Wireless Service (AWS) rules.

4. We welcome comment on all aspects of the CTIA proposal. We recognize the effort CTIA has made to reconcile the differing positions filed earlier in the record and to craft a consensus among the parties. CTIA states that its proposal will facilitate deployment of wideband technologies and eliminate disadvantages for certain narrowband technologies, resulting in lower costs for consumers. Because many of the commenting parties support the proposal, we believe that it makes a good starting point for consideration of these issues. Nevertheless, as discussed in detail below, we have some concerns with CTIA's proposal, especially in circumstances where subsequent entrants operating within our rules and their licensed parameters seek to introduce technologies and services that are incompatible with existing systems. For instance, we question whether the proposal would serve the purpose of balancing the interference potential of various known and future technologies, as well as the relative coverage or performance of wideband versus narrowband systems. We also believe that the CTIA proposal, as outlined, may be unnecessarily complex in some respects, leading to practical difficulties in compliance. We question whether the proposed radiated power limits are comparable to power levels actually used by licensees in their current systems.

5. We seek forward-looking comment to inform us on possible unintended consequences that might flow from the technical aspects of the CTIA proposal, such as the “peak vs. average power” issue. Our radiated power rules are intended to limit the interference potential of wireless systems while still providing technical flexibility to licensees. As a result, substantial changes to our radiated power rules may require consideration of how these changes may affect other related technical interference-limiting rules. Based on these considerations, we raise a number of questions in the following paragraphs about the three aspects of the CTIA proposal. We also suggest some simpler alternatives that might accomplish the same objectives as the CTIA proposal, and we seek comment on those as well.

6. We also seek comment on whether we should extend the relief CTIA's requests to other services. As noted, CTIA specifically requests that the proposed changes be mirrored in the part 27 rules governing AWS systems. If we adopt any or all of the proposed changes, should we implement them in other services, for example, part 27 (700 MHz and/or Wireless Communications Services (WCS)), or part 22 (Cellular)? We recognize that there may be concerns with applying the proposed changes to other services that may be less flexible than broadband PCS, or where there may be possible interference concerns to adjacent spectrum users ( i.e., Public Safety) or existing incumbent systems ( i.e., Broadcasters), and therefore we seek comment on whether CTIA's proposed changes should be extended beyond part 24 broadband PCS. In this regard, we note that Crown Castle International Corp. (Crown Castle) recently filed an ex parte in this proceeding. Crown Castle is the sole licensee of a nationwide authorization in the 1670-1675 MHz band with plans to deploy, through its subsidiary Crown Castle Mobile Media, a wide-band terrestrial wireless network to “transmit multiple channels of high-quality, digital video and audio programming to mobile phones and other hand-held devices.” Crown Castle supports the CTIA proposal in principle, but also seeks application of the proposal, if implemented, on a proportional basis. We seek comment on application of CTIA's proposal in general to the 1670-1675 MHz band. Moreover, Crown Castle points out that CTIA seeks application of its proposal to part 24 PCS and part 27 AWS, i.e., bands that were previously afforded relief in the Rural Report and Order. In supporting CTIA's proposal, Crown Castle requests that the Commission increase power levels in rural areas for certain bands not afforded relief in the Rural Report and Order, published at 70 FR 21652, April 27, 2005, specifically the 1670-1675 MHz band, as the “reasoning provided by the Commission for increasing the base station power limits applicable to rural PCS and AWS operations also applies to 1670-75 MHz operations” ( i.e., allowing expanded rural coverage while using fewer base stations). We seek comment on this issue as well.

7. Power spectral density limits. In the Notice of Proposed Rule Making, the Commission requested that commenters consider a power spectral density ( i.e., power per unit of bandwidth) limit in the context of achieving a more “technology neutral” transmitter power output rule. The Commission was concerned that a “per carrier” (or “per emission”) wording, instead of the existing “per transmitter” language, would shift the burden of compliance with the transmitter output power rule from equipment manufacturers to individual licensees, who might find it impracticable to individually monitor each “carrier” (or emission). Because we decided to eliminate the transmitter output power rule, the compliance burden associated with it will no longer exist. Nevertheless, our question opened the door to consideration of power spectral density limits generally.

8. The Commission seeks to promulgate rules that are “technology neutral” because we believe that ideally it is in the public interest for competing telecommunications technologies to succeed or fail in the marketplace on the basis of their merits and other market factors, and not primarily because of government regulation. It should also be understood that “technology neutral” means that our rule should neither penalize nor give advantage to any particular technology unnecessarily. Sometimes, however, an FCC rule adopted under earlier unknown or different technological circumstances will inadvertently affect new and evolving technologies unequally and, in fact, this may be unavoidable in some cases, if the purpose of the rule ( e.g., avoiding harmful interference) is to be accomplished.

9. According to Motorola, adoption of a rule providing a power spectral density limit for broadband PCS can be considered in terms of leveling the competitive playing field between narrow emission and wide emission technologies. Qualcomm and Motorola both argue that the current radiated power rule, by failing to taking emission bandwidth into consideration, authorizes narrow emission systems to transmit more aggregate radiated power than wide emission systems, within a given spectrum block. CTIA claims that the current EIRP limit is interpreted to place a limit on the power of a single carrier but to permit multiple carriers to be transmitted from a single base station. CTIA further claims that systems operating in smaller bandwidths are permitted to operate at higher power spectral density than those operating in larger bandwidths. CTIA argues that technologies, such as CDMA, W-CDMA, or OFDM, that combine many voice signals onto a single combined signal and that use advanced techniques to counter multi-path fading therefore are disadvantaged by the per-carrier power constraint in the current rules. CTIA contends that removing an artificial handicap on the use of some technologies—such as W-CDMA—would facilitate the adoption and deployment of these technologies by wireless service providers. Moreover, CTIA contends that researchers and inventors would no longer be constrained to give up power in order to use wider bandwidths.

10. Existing narrow emission PCS technologies ( i.e., TDMA, GSM) carry 3 to 8 voice conversations per emission, while existing wide emission technologies ( i.e., CDMA) carry as many as 20 to 40 voice conversations per emission. Because the current rule makes no distinction between wide and narrow emissions, it applies the same maximum radiated power limit to both. Consequently, a wide emission system is allowed to provide only about one fifth of the radiated power for each voice conversation that a narrow emission system is allowed to provide, assuming that each system is fully loaded and operating at the maximum power permitted by rule. Thus the average voice conversation on the wide emission system would have a lower signal to noise ratio, which, despite the partially compensating processing gain provided by signal spreading, would reduce the coverage range. Motorola expressed a view that the Commission's current policy is biased against wider bandwidth technologies as it allows technologies that utilize a narrower bandwidth to radiate a higher power per unit bandwidth, thus placing wider bandwidth systems at a competitive disadvantage because wider bandwidth technologies will need to deploy additional infrastructure to maintain the same coverage area as narrower bandwidth technologies.

11. Several of the comments reflect a concern that, if the Commission were to adopt a rule allowing more radiated power for wide emissions than for narrow emissions, the power allowed by such a rule for narrow emissions (such as GSM and TDMA) would be lower than is permitted by the current rule. These commenters argue that there should be no reduction in the radiated power limit currently applicable to existing PCS systems. We note that we did not propose in the NPRM to reduce the transmitting power limits for broadband PCS systems, nor do we do so here. Thus, even if we were to adopt the CTIA proposal, we assume that the current radiated power limits (1640 Watts EIRP non-rural, 3280 Watts EIRP rural) would be unchanged for all narrow emission types. The parties' comments have raised a good question however, and we seek comment on whether a power spectral density radiated power limit should be applied for narrow emissions as well as wide emissions. For example, should the radiated power limit for 30 kHz bandwidth emissions be lower than that for 200 kHz bandwidth emissions? Likewise, should the radiated power limit for 12.5 kHz bandwidth emissions be lower than that for 30 kHz bandwidth emissions?

12. One of our concerns is that a larger aggregate power presents a greater interference potential to other systems. In other words, the current rule may well allow systems employing narrow emission technologies to pose a greater interference potential than those employing wide emission technologies. We note that CTIA does not propose any upper limit or cap on radiated power under this approach, and consequently the power levels permitted under its proposal could easily reach some very large numbers ( i.e., 32,800 Watts in a rural area) for wider emission types such as Wideband Code Division Multiple Access (W-CDMA) using 5 MHz bandwidths. Moreover, existing licensees and new entrants may not have adequate information about the types of technology being deployed in adjacent bands or areas, including system architecture, nor the locations of base stations that could cause interference. This additional interference risk with limited information could lead to difficult negotiating positions among adjacent systems using different technologies, which could hinder coordination procedures that have been at the heart of the success of interference avoidance in the broadband PCS service, and which will be applied to other flexible use bands ( e.g., part 27 AWS). In considering the issue of whether to adopt a radiated power limit rule that would allow more power for wider bandwidth emissions, we must consider the primary objective of the rule, which is to limit interference potential between licensees. How should the Commission balance the interference potential of various technologies and facilitate information sharing in order to facilitate inter-system coordination negotiations between licensees?

13. If we ultimately decide to adopt a rule that allows a higher radiated power limit for wide emissions than for narrow emissions, we must define which emissions types are wide and which are narrow, and the basis for that classification. We note that typical systems using emissions that have a bandwidth wider than 1 MHz re-use the same channels in every cell, whereas systems using emissions with a bandwidth less than 1 MHz use a cellular frequency re-use pattern where different channel sets are used in adjacent cells. Another way of describing this is that systems using emissions that have a bandwidth wider than 1 MHz use their entire spectrum contiguously in each cell, whereas systems using emissions with a bandwidth less than 1 MHz use at each cell a number of narrower channels separated by several channels not used in that cell. We note that Motorola proposes in its earlier filings to utilize a bandwidth of 1 MHz as the dividing line. The CTIA proposal, however, results in the division between narrow and wide emission bandwidths occurring at 500 kHz rather than 1 MHz. We believe however, that if a technology is developed using a 500 kHz-1MHz bandwidth, the technology is more likely to use different channels at different cells like other narrowband systems, rather than use a spread spectrum approach as is typically used in wideband systems. Accordingly, if we were to adopt a spectral density model similar to what CTIA proposes, we seek comment on whether to use 500 kHz, 1 MHz, or some other emission bandwidth as the dividing point between narrow and wide emissions, noting that we seek to logically divide wireless technologies into two groups that use differing system architectures.

14. Adoption of a radiated power rule that allows more power for wide emissions than for narrow emissions also raises a number of questions in regard to implementation. A “Watts per MHz” power spectral density limit, such as the CTIA proposal includes for wider bandwidth emissions, would define power limits based on a sliding scale with a potentially infinite number of linear scaled limit values. Initially, we question whether this is the best way to structure a radiated power limit rule for PCS and other flexible services. An alternative would be to use a “step” approach, with specific power limits for particular bandwidth ranges, which could perhaps be set forth in a table to make clear what limit is applicable in any given instance. For an analogy, if it were desired in the interest of highway safety to require heavier vehicles to travel slower than lighter vehicles, it may make more sense to simply have two posted speed limits, one for automobiles and another for heavier vehicles such as trucks, rather than to adopt a “mph per ton of vehicle” ratio that would likely result in a different individual speed limit being applicable to each model of car or truck in accordance with how much that particular model weighs. While the latter might be more accurate in terms of equalizing the momentum of vehicles, the gained accuracy is greatly outweighed by the resultant complexity and difficulty in determining compliance. CTIA apparently differs with this assessment, stating that a “stepped limit” would be less appropriate than a power spectral density applied to “every contiguous 1 MHz region in the relevant band,” but offers no reasons, however, for that particular position. We therefore seek comment on whether, if we decide to allow higher radiated power for wide emission types, this power should be expressed in terms of a specific limit or series of limits for various emission bandwidths. We note that this could be easily codified in table form, as illustrated below. The simplest proposal would involve having only four power radiated limits: rural and non-rural power limits for wide emissions (for example, emissions with bandwidth exceeding 1 MHz), and rural and non-rural power limits for narrow bandwidth emissions.

15. Another possible variation is the use of a series of radiated power limits corresponding to six common existing emission bandwidths as illustrated in Table 2: 6.25 kHz, 12.5 kHz, 16/20/25/30 kHz, 200 kHz, 1.25 MHz, 4.3/5 MHz. The value of each radiated power limit would be chosen as appropriate to the technologies commonly deployed in that emission bandwidth, and thus the power levels would not necessarily be linearly scaled by bandwidth or otherwise related to each other, as would be the case with a pure power spectral density limit. Would the benefit of having custom tailored power levels for each common bandwidth justify the added complexity of an increased number of limits? What would be appropriate power levels for these emission bandwidths? We seek comment on these methods for providing higher radiated power limits for systems employing emissions with wider bandwidths and any other alternatives, including CTIA's preferred sliding scale approach in terms of “Watts per MHz.”

16. Some of the commenters propose not only to allow more radiated power for wide emission systems relative to narrow emission systems, but also to increase the overall radiated power limit substantially over that permitted by the current rule. For example, Ericsson originally proposed to increase the maximum radiated power limit for non-rural broadband PCS from 1640 to 6560 Watts EIRP, and QUALCOMM proposed that the limit be increased similarly for wide emissions. We reiterate that, using an open-ended power spectral density limit such as that in the CTIA proposal, permissible radiated power could reach very high power levels for very wide emission systems ( e.g. , 16,400 Watts for a 5 MHz emission bandwidth in non-rural areas and 32,800 Watts for a 5 MHz emission bandwidth in rural areas).

17. We seek comment on whether these maximum power levels now being proposed by the parties for our rules may be far above power levels that licensees actually use in their systems. Do existing licensees use as much radiated power in their systems as is permitted by the current PCS radiated power rule? In this light, we ask what marginal benefit would be realized by further overall increases in our radiated power limits for broadband PCS or other flexible wireless services? We believe that our radiated power rule should be as flexible as possible, but it should also reflect realistic limits that are comparable to necessary power levels. We seek comment on how such levels should also accommodate implementation of future technologies and current situations that may prove unusual or exceptional, without imposing undue regulatory burdens or unnecessary risks of harmful interference. One reason to avoid unrealistically high limits in our rules would be, as CTIA has suggested, if we also were to specify radiated power limits in terms of average power instead of peak power (see discussion below). To build an adequate record on whether there is any routine or extraordinary need for very high power operation, we request that commenters supporting higher overall limits provide examples of actual situations in which licensees could beneficially use radiated power levels on the order of what is being proposed by the parties. Are there particular coverage or service quality problems that could be solved by such an increase? What effect would increased radiated power have on the potential for harmful interference to adjacent spectrum users?

18. If we were to increase radiated power levels as CTIA proposes, it may be necessary to enhance coordination efforts between licensees, which will assist these licensees in minimizing instances of interference. We note that current rules do not require broadband PCS licensees to notify the Commission of the location of existing transmitter sites. We therefore seek comment on possible methods to improve information sharing among licensees, including comment on the types of circumstances that would trigger information disclosure or sharing requirements. For example, we note that an industry association made up of representatives of many current licensees has established a detailed protocol for exchanging technical information. We seek comment on whether this existing sharing protocol will be sufficient if we were to raise radiated power levels as CTIA proposes. As an alternative, should we require such licensees to notify adjacent licensees about the technical specifications of such base station prior to commencing operation, or should we require licensees (or lessees, in the case of secondary markets) to register such stations in ULS?

19. Finally, we seek comment regarding whether radiated power limit increases will impact licensee's administrative burden in making filings required for proper evaluation of transmission sites in regard to environmental compliance. We note that wireless systems, including broadband PCS systems, are subject to environmental evaluation with respect to human exposure of RF radiation for non-building mounted antennas when the antenna height above ground level is less than 10 meters and the total power of all channels is greater than 2000 watts ERP and for building mounted antennas when the total power from all channels is greater than 2000 watts ERP. Otherwise, these systems are categorically excluded from such environmental evaluation. We note that we are not proposing any change to RF exposure standards, and that CTIA “sees no connection between its proposal and RF exposure limits.” However, we seek comment as to whether adoption of higher radiated power limits would increase the number of facilities requiring full environmental evaluation rather than being categorically excluded, and whether adoption of higher radiated power limits would outweigh any possible increased administrative burden. We also note that engineers considering the RF environment at a site location which includes a PCS cell may not in fact know the exact operating power of all the transmitters at that location, since that information is not collected by Commission and is not typically made available by licensees. Nonetheless, we find it reasonable that an engineer assume that the power is no greater than our rules permit. How would an increase in the radiated power limits affect the ability of consultants to analyze a site? Would high power use “lock out” other users from co-locating at a site, because to do so would exceed the RF exposure limits?

20. For most of the last 50 years, wireless telecommunications services such as land mobile and public mobile telephone services, including analog cellular, used frequency or phase modulation (FM or PM) to transmit analog voice and/or tone modulation. The emissions from these older technologies have a “constant envelope,” which is to say, there are no peaks or valleys in the envelope of the modulated waveform. As a result, the peak power of such emissions is equal to the average power. In our power limit rules for private and public land mobile services, we did not need to specify either “peak” or “average” because the two were equal.

21. In recent years, we have allowed greater technical flexibility in many of our wireless services so that licensees could utilize newer technologies without having to obtain prior FCC approval. As a result, licensees in these services have employed a variety of newer and more efficient digital technologies, many of which produce an emission where the modulation envelope is not of constant amplitude. With these emissions, the peak power is larger than the average power, and the ratio between the two is referred to as the peak-to-average ratio (PAR). Because the PAR can vary from 0 dB to as much as 13 dB, depending on the technology used and the modulation conditions, stations having equal average radiated powers could have substantially different peak radiated powers. Because receivers often begin to exhibit interference effects when the power of an undesired signal exceeds a certain value, even if only for a short duration, the peak radiated power of the emission can be an important factor in evaluating the interference potential of a transmitting station. Consequently, the Commission has in recent years adopted rules in our flexible services that limit peak radiated power rather than average radiated power.

22. The CTIA filing states that the Commission's use of peak radiated power is subject to interpretation and could lead to confusion and proposes that the Commission's radiated power limits for PCS and AWS be specified in terms of average power, either instead of, or as an alternative to, peak power. CTIA points out that when several signals are present in an amplifier, that they can combine to produce high peaks even though individually they would not have high peaks. Given this concern, we seek comment as to whether we should depart from the Commission's practice of specifying peak radiated power and specify average radiated power as CTIA proposes. We note that the peak power of a radiated emission is always equal to or higher than the average power. Under the CTIA proposal, peak power could reach levels much higher than the increased limits CTIA recommends for the rule. If we specify average radiated power, should we also include a limit on the PAR, in order to guard against interference, and what should that limit be? We request that commenters consider the pros and cons of peak and average radiated power limits in terms of controlling the interference potential of stations, conforming to current industry measurement procedures using available measuring instruments, minimizing the burden of compliance with the rules, and having applicability to the wide range of technologies in use today and in the future.

23. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments on the Further Notice of Proposed Rulemaking, WT Docket No. 03-264, on or before December 19, 2005, and submit reply comments on or before January 17, 2006. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, published at 63 FR 24121, May 1, 1998.

• Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: http://www.regulations.gov . Filers should follow the instructions provided on the Web site for submitting comments.

• For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption. In completing the transmittal screen, filers should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions, filers should send an e-mail to ecfs@fcc.gov , and include the following words in the body of the message, “get form.” A sample form and directions will be sent in response.

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

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

• The Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building.

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

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

People with Disabilities: Contact the FCC to request materials in accessible formats (braille, large print, electronic files, audio format, etc.) by e-mail at FCC504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0531 (voice), 202-418-7365 (TTY).

24. Regardless of whether parties choose to file electronically or by paper, they should also send one copy of any documents filed, either by paper or by e-mail, to each of the following: (1) Best Copy & Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, facsimile (202) 488-5563, or e-mail at http://www.fcc@bcpiweb.com; and (2) Wilbert E. Nixon, Jr., Mobility Division, Wireless Telecommunications Bureau, 445 12th Street, SW., Washington, DC 20554, or e-mail at Wilbert.Nixon@fcc.gov.

25. This is a permit-but-disclose notice and comment rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided they are disclosed pursuant to the Commission's rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206.

26. As required by the Regulatory Flexibility Act of 1980, as amended (RFA) ( See 5 U.S.C. 601-612 ), the Commission has prepared this present Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the FNPRM. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed on or before December 19, 2005. Reply comments must be filed on or before January 17, 2006. The Commission will send a copy of the Further Notice, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the FNPRM and IRFA (or summaries thereof) will be published in the Federal Register .

27. In the Report and Order, we revise the Broadband PCS transmitting power rule by eliminating the transmitter output power limit portion of that rule. We note, however, that various proposals before us concerning the radiated power portion of the rule (EIRP limits), particularly those introduced into the record by CTIA's recent ex parte filing, give rise to practical and technical concerns that we believe should be further evaluated and addressed before we act on these proposals. Although it appears that some of these radiated power proposals have considerable merit, especially as applied across various bands or services in a harmonized fashion, we find that a more complete record would assist us in properly analyzing the technical details and specifics needed to craft a clear and workable radiated power rule that is not unduly burdensome. Accordingly, in the FNPRM, we ask a number of questions on the details of the CTIA proposals for changes to the broadband PCS radiated power limits. In addition, we consider whether these proposals should be applicable to those part 22 and part 27 services that operate under a flexible regulatory framework similar to part 24 Broadband PCS. Finally, we also seek comment on possible changes to other technical rules that may be appropriate if we adopt changes to the radiated power rules, as explained further below.

28. The potential actions on which comment is sought in the FNPRM would be authorized under sections 4(i), 7, 11, 303(c), 303(f), 303(g), 303(r), and 332 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(c), 303(f), 303(g), 303(r), and 332.

29. The RFA requires that an initial regulatory flexibility analysis be prepared for notice-and-comment rulemaking proceedings, unless the Agency certifies that “the rule will not, if promulgated, have a significant impact on a substantial number of small entities.” The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” This IRFA describes and estimates the number of small entity licensees that may be affected if the proposals in the FNPRM are adopted.

30. Small Businesses. Nationwide, there are a total of 22.4 million small businesses, according to SBA data.

31. Small Organizations. Nationwide, there are approximately 1.6 million small organizations.

32. Small Governmental Jurisdictions. The term “small governmental jurisdiction” is defined as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” As of 1997, there were approximately 87,453 governmental jurisdictions in the United States. This number includes 39,044 county governments, municipalities, and townships, of which 37,546 (approximately 96.2%) have populations of fewer than 50,000, and of which 1,498 have populations of 50,000 or more. Thus, we estimate the number of small governmental jurisdictions overall to be 84,098 or fewer.

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

34. When identifying small entities that could be affected by our new rules, we provide information describing auctions results, including the number of small entities that are winning bidders. We note, however, that the number of winning bidders that qualify as small businesses at the close of an auction does not necessarily reflect the total number of small entities currently in a particular service. The Commission does not generally require that applicants provide business size information, except in the context of an assignment or transfer of control application where unjust enrichment issues are implicated. Consequently, to assist the Commission in analyzing the total number of potentially affected small entities, we request commenters to estimate the number of small entities that may be affected by any rule changes resulting from the FNPRM.

35. The potential rules on which comment is sought in the FNPRM, if adopted, would possibly affect small entity licensees of the services identified below.

36. Cellular Licensees. The SBA has developed a small business size standard for wireless firms within the broad economic census category “Cellular and Other Wireless Telecommunications.” Under this SBA category, a wireless business is small if it has 1,500 or fewer employees. For the census category Cellular and Other Wireless Telecommunications firms, Census Bureau data for 1997 show that there were 977 firms in this category, total, that operated for the entire year. Of this total, 965 firms had employment of 999 or fewer employees, and an additional 12 firms had employment of 1,000 employees or more. Thus, under this category and size standard, the great majority of firms can be considered small. According to the most recent Trends in Telephone Service data, 719 carriers reported that they were engaged in the provision of cellular service, personal communications service, or specialized mobile radio telephony services, which are placed together in the data. We have estimated that 294 of these are small, under the SBA small business size standard.

37. 220 MHz Radio Service—Phase I Licensees. The 220 MHz service has both Phase I and Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are approximately 1,515 such non-nationwide licensees and four nationwide licensees currently authorized to operate in the 220 MHz band. The Commission has not developed a definition of small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the number of such licensees that are small businesses, we apply the small business size standard under the SBA rules applicable to “Cellular and Other Wireless Telecommunications” companies. This category provides that a small business is a wireless company employing no more than 1,500 persons. According to the Census Bureau data for 1997, only twelve firms out of a total of 977 such firms that operated for the entire year in 1997, had 1,000 or more employees. If this general ratio continues in the context of Phase I 220 MHz licensees, the Commission estimates that nearly all such licensees are small businesses under the SBA's small business standard.

38. 220 MHz Radio Service—Phase II Licensees. The 220 MHz service has both Phase I and Phase II licenses. The Phase II 220 MHz service is subject to spectrum auctions. In the 220 MHz Third Report and Order, published at 62 FR 16004, April 3, 1997, we adopted a small business size standard for defining “small” and “very small” businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. This small business standard indicates that a “small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that do not exceed $3 million for the preceding three years. The SBA has approved these small size standards. Auctions of Phase II licenses commenced on September 15, 1998, and closed on October 22, 1998. In the first auction, 908 licenses were auctioned in three different-sized geographic areas: three nationwide licenses, 30 Regional Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses auctioned, 693 were sold. Thirty-nine small businesses won 373 licenses in the first 220 MHz auction. A second auction included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies claiming small business status won 158 licenses. A third auction included four licenses: 2 BEA licenses and 2 EAG licenses in the 220 MHz Service. No small or very small business won any of these licenses.

39. Lower 700 MHz Band Licenses. We adopted criteria for defining three groups of small businesses for purposes of determining their eligibility for special provisions such as bidding credits. We have defined a small business as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years. A very small business is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years. Additionally, the lower 700 MHz Service has a third category of small business status that may be claimed for Metropolitan/Rural Service Area (MSA/RSA) licenses. The third category is entrepreneur, which is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. The SBA has approved these small size standards. An auction of 740 licenses (one license in each of the 734 MSAs/RSAs and one license in each of the six Economic Area Groupings (EAGs)) commenced on August 27, 2002, and closed on September 18, 2002. Of the 740 licenses available for auction, 484 licenses were sold to 102 winning bidders. Seventy-two of the winning bidders claimed small business, very small business or entrepreneur status and won a total of 329 licenses. A second auction commenced on May 28, 2003, and closed on June 13, 2003, and included 256 licenses: 5 EAG licenses and 476 CMA licenses. Seventeen winning bidders claimed small or very small business status and won sixty licenses, and nine winning bidders claimed entrepreneur status and won 154 licenses.

40. Upper 700 MHz Band Licenses. The Commission released a Report and Order, published at 15 FCC Rcd 476 (2000), authorizing service in the upper 700 MHz band. This auction, previously scheduled for January 13, 2003, has been postponed.

41. Paging. In the Paging Second Report and Order, published at 62 FR 11616, March 12, 1997, we adopted a size standard for “small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. A small business is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. The SBA has approved this definition. An auction of Metropolitan Economic Area (MEA) licenses commenced on February 24, 2000, and closed on March 2, 2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven companies claiming small business status won 440 licenses. An auction of Metropolitan Economic Area (MEA) and Economic Area (EA) licenses commenced on October 30, 2001, and closed on December 5, 2001. Of the 15,514 licenses auctioned, 5,323 were sold. 132 companies claiming small business status purchased 3,724 licenses. A third auction, consisting of 8,874 licenses in each of 175 EAs and 1,328 licenses in all but three of the 51 MEAs commenced on May 13, 2003, and closed on May 28, 2003. Seventy-seven bidders claiming small or very small business status won 2,093 licenses. Currently, there are approximately 24,000 Private Paging site-specific licenses and 74,000 Common Carrier Paging licenses. According to the Trends in Telephone Service report, published in May 2002, 608 private and common carriers reported that they were engaged in the provision of either paging or “other mobile” services. Of these, we estimate that 589 are small, under the SBA-approved small business size standard. We estimate that the majority of private and common carrier paging providers would qualify as small entities under the SBA definition.

42. Broadband Personal Communications Service (PCS). The broadband PCS spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission has created a small business size standard for Blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years. For Block F, an additional small business size standard for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These small business size standards, in the context of broadband PCS auctions, have been approved by the SBA. No small businesses within the SBA-approved small business size standards bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified as small entities in the Block C auctions. A total of 93 “small” and “very small” business bidders won approximately 40 percent of the 1,479 licenses for Blocks D, E, and F. On March 23, 1999, the Commission reauctioned 155 C, D, E, and F Block licenses; there were 113 small business winning bidders.

43. Narrowband PCS. The Commission held an auction for Narrowband PCS licenses that commenced on July 25, 1994, and closed on July 29, 1994. A second commenced on October 26, 1994 and closed on November 8, 1994. For purposes of the first two Narrowband PCS auctions, “small businesses” were entities with average gross revenues for the prior three calendar years of $40 million or less. Through these auctions, the Commission awarded a total of forty-one licenses, 11 of which were obtained by four small businesses. To ensure meaningful participation by small business entities in future auctions, the Commission adopted a two-tiered small business size standard in the Narrowband PCS Second Report and Order , published at 65 FR 35843, June 6, 2000. A “small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million. A “very small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million. The SBA has approved these small business size standards. A third auction commenced on October 3, 2001 and closed on October 16, 2001. Here, five bidders won 317 (MTA and nationwide) licenses. Three of these claimed status as a small or very small entity and won 311 licenses.

44. Specialized Mobile Radio (SMR). The Commission awards “small entity” bidding credits in auctions for Specialized Mobile Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz bands to firms that had revenues of no more than $15 million in each of the three previous calendar years. The Commission awards “very small entity” bidding credits to firms that had revenues of no more than $3 million in each of the three previous calendar years. The SBA has approved these small business size standards for the 900 MHz Service. The Commission has held auctions for geographic area licenses in the 800 MHz and 900 MHz bands. The 900 MHz SMR auction began on December 5, 1995, and closed on April 15, 1996. Sixty bidders claiming that they qualified as small businesses under the $15 million size standard won 263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper 200 channels began on October 28, 1997, and was completed on December 8, 1997. Ten bidders claiming that they qualified as small businesses under the $15 million size standard won 38 geographic area licenses for the upper 200 channels in the 800 MHz SMR band. A second auction for the 800 MHz band was held on January 10, 2002 and closed on January 17, 2002 and included 23 BEA licenses. One bidder claiming small business status won five licenses.

45. The auction of the 1,050 800 MHz SMR geographic area licenses for the General Category channels began on August 16, 2000, and was completed on September 1, 2000. Eleven bidders won 108 geographic area licenses for the General Category channels in the 800 MHz SMR band qualified as small businesses under the $15 million size standard. In an auction completed on December 5, 2000, a total of 2,800 Economic Area licenses in the lower 80 channels of the 800 MHz SMR service were sold. Of the 22 winning bidders, 19 claimed “small business” status and won 129 licenses. Thus, combining all three auctions, 40 winning bidders for geographic licenses in the 800 MHz SMR band claimed status as small business.

46. In addition, there are numerous incumbent site-by-site SMR licensees and licensees with extended implementation authorizations in the 800 and 900 MHz bands. We do not know how many firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of no more than $15 million. One firm has over $15 million in revenues. We assume, for purposes of this analysis, that all of the remaining existing extended implementation authorizations are held by small entities, as that small business size standard is established by the SBA.

47. Private Land Mobile Radio (PLMR). PLMR systems serve an essential role in a range of industrial, business, land transportation, and public safety activities. These radios are used by companies of all sizes operating in all U.S. business categories, and are often used in support of the licensee's primary (non-telecommunications) business operations. For the purpose of determining whether a licensee of a PLMR system is a small business as defined by the SBA, we could use the definition for “Cellular and Other Wireless Telecommunications.” This definition provides that a small entity is any such entity employing no more than 1,500 persons. The Commission does not require PLMR licensees to disclose information about number of employees, so the Commission does not have information that could be used to determine how many PLMR licensees constitute small entities under this definition. We also note that PMLR licensees generally are not in the business of providing cellular or other wireless telecommunications services but instead use the licensed facilities in support of other business activities. According to the Bureau of the Census, only twelve firms out of a total of 977 cellular and other wireless telecommunications firms that operated for the entire year in 1997 had 1,000 or more employees. Therefore, even if all twelve of these firms were cellular telephone companies, nearly all carriers are small businesses under the SBA's definition.

48. Public Safety Radio Services. Public Safety radio services include police, fire, local government, forestry conservation, highway maintenance, and emergency medical services. There are a total of approximately 127,540 licensees in these services. Governmental entities as well as private businesses comprise the licensees for these services. All governmental entities with populations of less than 50,000 fall within the definition of a small entity.

49. Fixed Microwave Services. Fixed microwave services include common carrier, private-operational fixed, and broadcast auxiliary radio services. Currently, there are approximately 22,015 common carrier fixed licensees and 61,670 private operational-fixed licensees and broadcast auxiliary radio licensees in the microwave services. The Commission has not yet defined a small business with respect to microwave services. For purposes of this IRFA, we will use the SBA's definition applicable to “Cellular and Other Wireless Telecommunications” companies—that is, an entity with no more than 1,500 persons. The Commission does not have data specifying the number of these licensees that have more than 1,500 employees, and thus is unable at this time to estimate with greater precision the number of fixed microwave service licensees that would qualify as small business concerns under the SBA's small business size standard. Consequently, the Commission estimates that there are 22,015 or fewer small common carrier fixed licensees and 61,670 or fewer small private operational-fixed licensees and small broadcast auxiliary radio licensees in the microwave services that may be affected by the rules and policies adopted herein. The Commission notes, however, that the common carrier microwave fixed licensee category includes some large entities.

50. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. The SBA has approved these definitions. The FCC auctioned geographic area licenses in the WCS service. In the auction, which commenced on April 15, 1997 and closed on April 25, 1997, there were seven bidders that won 31 licenses that qualified as very small business entities, and one bidder that won one license that qualified as a small business entity. An auction for one license in the 1670- 1674 MHz band commenced on April 30, 2003 and closed the same day. One license was awarded. The winning bidder was not a small entity.

51. 39 GHz Service. The Commission defines “small entity” for 39 GHz licenses as an entity that has average gross revenues of less than $40 million in the three previous calendar years. “Very small business” is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. The SBA has approved these definitions. The auction of the 2,173 39 GHz licenses began on April 12, 2000, and closed on May 8, 2000. The 18 bidders who claimed small business status won 849 licenses.

52. Local Multipoint Distribution Service. An auction of the 986 Local Multipoint Distribution Service (LMDS) licenses began on February 18, 1998, and closed on March 25, 1998. The Commission defined “small entity” for LMDS licenses as an entity that has average gross revenues of less than $40 million in the three previous calendar years. An additional classification for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These regulations defining “small entity” in the context of LMDS auctions have been approved by the SBA. There were 93 winning bidders that qualified as small entities in the LMDS auctions. A total of 93 small and very small business bidders won approximately 277 A Block licenses and 387 B Block licenses. On March 27, 1999, the Commission re-auctioned 161 licenses; there were 32 small and very small business winning bidders that won 119 licenses.

53. 218-219 MHz Service. The first auction of 218-219 MHz (previously referred to as the Interactive and Video Data Service or IVDS) spectrum resulted in 178 entities winning licenses for 594 Metropolitan Statistical Areas (MSAs). Of the 594 licenses, 567 were won by 167 entities qualifying as a small business. For that auction, we defined a small business as an entity that, together with its affiliates, has no more than a $6 million net worth and, after federal income taxes (excluding any carry over losses), has no more than $2 million in annual profits each year for the previous two years. In the 218-219 MHz Report and Order and Memorandum Opinion and Order , published at 64 FR 59656, November 3, 1999, we defined a small business as an entity that, together with its affiliates and persons or entities that hold interests in such an entity and their affiliates, has average annual gross revenues not exceeding $15 million for the preceding three years. A very small business is defined as an entity that, together with its affiliates and persons or entities that hold interests in such an entity and its affiliates, has average annual gross revenues not exceeding $3 million for the preceding three years. The SBA has approved of these definitions. At this time, we cannot estimate the number of licenses that will be won by entities qualifying as small or very small businesses under our rules in future auctions of 218-219 MHz spectrum. Given the success of small businesses in the previous auction, and the prevalence of small businesses in the subscription television services and message communications industries, we assume for purposes of this IRFA that in future auctions, many, and perhaps all, of the licenses may be awarded to small businesses.

54. Location and Monitoring Service (LMS). Multilateration LMS systems use non-voice radio techniques to determine the location and status of mobile radio units. For purposes of auctioning LMS licenses, the Commission has defined “small business” as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $15 million. A “very small business” is defined as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $3 million. These definitions have been approved by the SBA. An auction for LMS licenses commenced on February 23, 1999, and closed on March 5, 1999. Of the 528 licenses auctioned, 289 licenses were sold to four small businesses. We cannot accurately predict the number of remaining licenses that could be awarded to small entities in future LMS auctions.

55. Rural Radiotelephone Service. We use the SBA definition applicable to cellular and other wireless telecommunication companies, i.e. , an entity employing no more than 1,500 persons. There are approximately 1,000 licensees in the Rural Radiotelephone Service, and the Commission estimates that there are 1,000 or fewer small entity licensees in the Rural Radiotelephone Service that may be affected by the rules and policies adopted herein.

56. Air-Ground Radiotelephone Service. We use the SBA definition applicable to cellular and other wireless telecommunication companies, i.e. , an entity employing no more than 1,500 persons. There are approximately 100 licensees in the Air-Ground Radiotelephone Service, and the Commission estimates that almost all of them qualify as small entities under the SBA definition.

57. Offshore Radiotelephone Service. This service operates on several ultra high frequency (UHF) TV broadcast channels that are not used for TV broadcasting in the coastal area of the states bordering the Gulf of Mexico. At present, there are approximately 55 licensees in this service. We use the SBA definition applicable to cellular and other wireless telecommunication companies, i.e. , an entity employing no more than 1,500 persons. The Commission is unable at this time to estimate the number of licensees that would qualify as small entities under the SBA definition. The Commission assumes, for purposes of this IRFA, that all of the 55 licensees are small entities, as that term is defined by the SBA.

58. Multiple Address Systems (MAS). Entities using MAS spectrum, in general, fall into two categories: (1) Those using the spectrum for profit-based uses, and (2) those using the spectrum for private internal uses. With respect to the first category, the Commission defines “small entity” for MAS licenses as an entity that has average gross revenues of less than $15 million in the three previous calendar years. “Very small business” is defined as an entity that, together with its affiliates, has average gross revenues of not more than $3 million for the preceding three calendar years. The SBA has approved of these definitions. The majority of these entities will most likely be licensed in bands where the Commission has implemented a geographic area licensing approach that would require the use of competitive bidding procedures to resolve mutually exclusive applications. The Commission's licensing database indicates that, as of January 20, 1999, there were a total of 8,670 MAS station authorizations. Of these, 260 authorizations were associated with common carrier service. In addition, an auction for 5,104 MAS licenses in 176 EAs began November 14, 2001, and closed on November 27, 2001. Seven winning bidders claimed status as small or very small businesses and won 611 licenses.

59. With respect to the second category, which consists of entities that use, or seek to use, MAS spectrum to accommodate their own internal communications needs, we note that MAS serves an essential role in a range of industrial, safety, business, and land transportation activities. MAS radios are used by companies of all sizes, operating in virtually all U.S. business categories, and by all types of public safety entities. For the majority of private internal users, the definitions developed by the SBA would be more appropriate. The applicable definition of small entity in this instance appears to be the “Cellular and Other Wireless Telecommunications” definition under the SBA rules. This definition provides that a small entity is any entity employing no more than 1,500 persons. The Commission's licensing database indicates that, as of January 20, 1999, of the 8,670 total MAS station authorizations, 8,410 authorizations were for private radio service, and of these, 1,433 were for private land mobile radio service.

60. Incumbent 24 GHz Licensees . The rules that we adopt could affect incumbent licensees who were relocated to the 24 GHz band from the 18 GHz band, and applicants who wish to provide services in the 24 GHz band. The Commission did not develop a definition of small entities applicable to existing licensees in the 24 GHz band. Therefore, the applicable definition of small entity is the definition under the SBA rules for “Cellular and Other Wireless Telecommunications.” This definition provides that a small entity is any entity employing no more than 1,500 persons. We believe that there are only two licensees in the 24 GHz band that were relocated from the 18 GHz band, Teligent and TRW, Inc. It is our understanding that Teligent and its related companies have less than 1,500 employees, though this may change in the future. TRW is not a small entity. Thus, only one incumbent licensee in the 24 GHz band is a small business entity.

61. Future 24 GHz Licensees. With respect to new applicants in the 24 GHz band, we have defined “small business” as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the three preceding years not exceeding $15 million. “Very small business” in the 24 GHz band is defined as an entity that, together with controlling interests and affiliates, has average gross revenues not exceeding $3 million for the preceding three years. The SBA has approved these definitions. The Commission will not know how many licensees will be small or very small businesses until the auction, if required, is held.

62. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order , published at 65 FR 17594, April 4, 2000, we adopted size standards for “small businesses” and “very small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. A small business in this service is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years. Additionally, a “very small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years. SBA approval of these definitions is not required. An auction of 52 Major Economic Area (MEA) licenses commenced on September 6, 2000, and closed on September 21, 2000. Of the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five of these bidders were small businesses that won a total of 26 licenses. A second auction of 700 MHz Guard Band licenses commenced on February 13, 2001, and closed on February 21, 2001. All eight of the licenses auctioned were sold to three bidders. One of these bidders was a small business that won a total of two licenses.

63. Multipoint Distribution Service, Multichannel Multipoint Distribution Service, and Instructional Television Fixed Service. Multichannel Multipoint Distribution Service (MMDS) systems, often referred to as “wireless cable,” transmit video programming to subscribers using the microwave frequencies of the Multipoint Distribution Service (MDS) and Instructional Television Fixed Service (ITFS). In connection with the 1996 MDS auction, the Commission defined “small business” as an entity that, together with its affiliates, has average gross annual revenues that are not more than $40 million for the preceding three calendar years. The SBA has approved of this standard. The MDS auction resulted in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 auction winners, 61 claimed status as a small business. At this time, we estimate that of the 61 small business MDS auction winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA authorizations, there are approximately 392 incumbent MDS licensees that have gross revenues that are not more than $40 million and are thus considered small entities.

64. In addition, the SBA has developed a small business size standard for Cable and Other Program Distribution, which includes all such companies generating $12.5 million or less in annual receipts. According to Census Bureau data for 1997, there were a total of 1,311 firms in this category, total, that had operated for the entire year. Of this total, 1,180 firms had annual receipts of under $10 million, and an additional 52 firms had receipts of $10 million or more but less than $25 million. Consequently, we estimate that the majority of providers in this service category are small businesses that may be affected by the rules and policies proposed in the FNPRM.

65. Finally, while SBA approval for a Commission-defined small business size standard applicable to ITFS is pending, educational institutions are included in this analysis as small entities. There are currently 2,032 ITFS licensees, and all but 100 of these licenses are held by educational institutions. Thus, we tentatively conclude that at least 1,932 ITFS licensees are small businesses.

66. Cable Television Relay Service. This service includes transmitters generally used to relay cable programming within cable television system distribution systems. The SBA has defined a small business size standard for Cable and other Program Distribution, consisting of all such companies having annual receipts of no more than $12.5 million. According to Census Bureau data for 1997, there were 1,311 firms in the industry category Cable and Other Program Distribution, total, that operated for the entire year. Of this total, 1,180 firms had annual receipts of $10 million or less, and an additional 52 firms had receipts of $10 million or more but less than $25 million. Thus, under this standard, we estimate that the majority of providers in this service category are small businesses that may be affected by the rules and policies proposed in the FNPRM .

67. Multichannel Video Distribution and Data Service. MVDDS is a terrestrial fixed microwave service operating in the 12.2-12.7 GHz band. No auction has yet been held in this service, although an action has been scheduled for January 14, 2004. Accordingly, there are no licensees in this service.

68. The policy proposals in the FNPRM could apply to a significant number of Commission licensees of wireless services. Specifically, the FNPRM seeks comment on possible changes to the broadband PCS radiated power limits including the introduction of power spectral density limits and specifying average radiated power in additional to peak radiated power in measuring emissions. We recognize that if we were to increase radiated power levels, it may be necessary to enhance coordination efforts between licensees, which will assist licensees in minimizing instances of interference. Also, we seek comment on possible methods to improve information sharing among licensees and the level of burden increase such information sharing might entail. We also note that we have discussed possible changes to the likelihood of needing environmental evaluations as a result of our proposed actions in Section E of this IRFA, infra .

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

70. In addition to our discussion of compliance burdens, supra , we have noted in this FNPRM that radiated power limit increases may impact licensee's administrative burden in making filings required for proper evaluation of transmission sites in regard to environmental compliance. We have sought comment on this issue. We note that wireless systems, including broadband PCS systems, are subject to environmental evaluation with respect to human exposure of RF radiation for non-building mounted antennas when the antenna height above ground level is less than 10 meters and the total power of all channels is greater than 2000 watts ERP and for building mounted antennas when the total power from all channels is greater than 2000 watts ERP. Otherwise, these systems are categorically excluded from such environmental evaluation. Although we are not proposing any change to RF exposure standards, we seek comment as to whether adoption of higher radiated power limits would increase the number of facilities requiring full environmental evaluation rather than being categorically excluded, and whether adoption of higher radiated power limits would outweigh any possible increased administrative burden.

71. None.

72. This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

73. Pursuant to applicable procedures set forth in §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested parties may file comments on or before December 19, 2005, and reply comments on or before January 17, 2006. Comments and reply comments should be filed in both WT Docket Nos. 03-103 and 05-42. All relevant and timely comments will be considered by the Commission before final action is taken in this proceeding.

74. Regardless of whether parties choose to file electronically or by paper, they should also send one copy of any documents filed, either by paper or by e-mail, to each of the following: (1) Best Copy & Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, facsimile (202) 488-5563, or e-mail at http://www.fcc@bcpiweb.com ; and (2) Wilbert E. Nixon, Jr., Mobility Division, Wireless Telecommunications Bureau, 445 12th Street, SW., Washington, DC 20554, or e-mail at Wilbert.Nixon@fcc.gov .

75. It is further ordered that the commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this FNPRM, including the Final Regulatory Flexibility Certification and the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 05-273, adopted September 23, 2005, and released September 27, 2005. The full text of this Commission document is available for inspection and copying during normal business hours in the FCC Reference Information Center (Room CY-A257), 445 12th Street, SW., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, (800) 378-3160, or via the company's Web site, http://www.bcpiweb.com. This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

The Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

Vendor registration in the CCR as a pre-requisite for being awarded a contract has been required in the Department of Defense since 1998, for Civilian Agencies since 2003. Since CCR's inception, validation of registrants' TINs with the IRS has been contemplated in order to improve data accuracy throughout the Federal procurement system. This capability, although actively pursued, was never implemented as the Internal Revenue Code (I.R.C.) restricts disclosure of TINs without the taxpayer's consent, which due to technology at the time, would have been costly and inefficient to pursue. However, in its Fall 2004 “Report to Senate Committee on Governmental Affairs Permanent Subcommittee on Investigations,” the Federal Contractor Tax Compliance Task Force (which included the Office of Management and Budget, the Department of Treasury, the Department of Defense, the General Services Administration, the Department of Justice, and the IRS) recommended that “ . . . a consent-based TIN validation under I.R.C. § 6103 should be instituted.” The capability for a near real-time/real-time, web-based solution integrating the CCR with an IRS validation is now able to be pursued due to advancements in technology. The FAR was recommended to be updated to specifically identify the validation of the TINs as a part of CCR registration.

Additionally, Subpart 4.11, Central Contractor Registration, contains language that was included when this subpart was implemented in the FAR in 2003. This outdated language required modifications of contracts by December 31, 2003, to include CCR registration requirements. As this date is past, the case removes the associated language.

The rule is proposing to amend the FAR by—

1. Modifying FAR 2.101 to indicate that the validation requirement for “registered in CCR” includes TIN matching.

2. Removing FAR 4.1103(a)(3)(i) thru 4.1103(a)(3)(ii) and a part of 4.1104 to remove the language requiring action by December 31, 2003.

3. Adding detail to the FAR clause at 52.204-7, Central Contractor Registration, to specifically identify validation of the TIN as a part of the definition “Registered in the CCR Database,” and to indicate that consent is part of that process.

4. Removing Alternate I to FAR clause 52.204-7, Central Contractor Registration.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

The Councils do not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , as no new requirements are being placed on the vendor community. An Initial Regulatory Flexibility Analysis has, therefore, not been performed. We invite comments from small businesses and other interested parties. The Councils will consider comments from small entities concerning the affected FAR Parts 2, 4, and 52 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 601, et seq. (FAR case 2005-007), in correspondence.

The Paperwork Reduction Act does not apply because the proposed changes to the FAR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 4, and 52 as set forth below:

1. The authority citation for 48 CFR parts 2, 4, and 52 continues to read as follows:

2. Amend section 2.101 by revising paragraph (2) of the definition “Registered in the CCR database” to read as follows: