This document amends the pooling and related provisions of the Arizona-Las Vegas Federal milk order. Specifically, this final rule permanently adopts a provision that will eliminate the ability to simultaneously pool the same milk on the Arizona-Las Vegas milk order and any State operated milk order that has marketwide pooling.

This administrative action is governed by the provisions of Sections 556 and 557 of Title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Order 12866.

The final rule has been reviewed under Executive Order 12988, Civil Justice Reform. The rule is not intended to have a retroactive effect. This rule will not preempt any state or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may request modification or exemption from such order by filing with the Secretary a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with the law. A handler is afforded the opportunity for a hearing on the petition. After a hearing, the Secretary would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has its principal place of business, has jurisdiction in equity to review the Secretary's ruling on the petition, provided a bill in equity is filed not later than 20 days after the date of the entry of the ruling.

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the Agricultural Marketing Service has considered the economic impact of this action on small entities and has certified that this final rule will not have a significant economic impact on a substantial number of small entities.

For the purpose of the Regulatory Flexibility Act, a dairy farm is considered a “small business” if it has an annual gross revenue of less than $750,000, and a dairy products manufacturer is a “small business” if it has fewer than 500 employees. For the purposes of determining which dairy farms are “small businesses,” the $750,000 per year criterion was used to establish a marketing guideline of 500,000 pounds per month. Although this guideline does not factor in additional monies that may be received by dairy producers, it should be an inclusive standard for most “small” dairy farmers. For purposes of determining a handler's size, if the plant is part of a larger company operating multiple plants that collectively exceed the 500-employee limit, the plant will be considered a large business even if the local plant has fewer than 500 employees.

In September 2003, the month in which the hearing began, the milk of 106 dairy producers was pooled on, and 22 handlers were regulated by, the Arizona-Las Vegas order. Approximately 18 producers, or 17 percent, were small businesses based on the above criteria. On the handler side, 7 handlers, or 32 percent were “small businesses.”

The adoption of the proposed standards serve to revise and establish criteria that ensure the pooling of producers, producer milk, and plants that have a reasonable association with, and are consistently serving, the fluid milk needs of the Arizona-Las Vegas milk marketing area. Criteria for pooling milk are established on the basis of performance standards that are considered adequate to meet the Class I fluid needs of the market and to determine those that are eligible to share in the revenue that arises from the classified pricing of milk. Criteria for pooling are established without regard to the size of any dairy industry organization or entity. The criteria established in the amended pooling standards provision are applied in an equal fashion to both large and small businesses. Therefore, the amendments will not have a significant economic impact on a substantial number of small entities.

A review of reporting requirements was completed under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). It was determined that these amendments will have no impact on reporting, recordkeeping, or other compliance requirements because they will remain identical to the current requirements. No new forms are proposed and no additional reporting requirements are necessary.

This action does not require additional information collection that requires clearance by the Office of Management and Budget (OMB) beyond currently approved information collection. The primary sources of data used to complete the approved forms are routinely used in most business transactions. The forms require only a minimal amount of information which can be supplied without data processing equipment or a trained statistical staff. Thus, the information collection and reporting burden is relatively small. Requiring the same reports for all handlers does not significantly disadvantage any handler that is smaller than the industry average.

Notice of Hearing: Issued July 31, 2003; published August 6, 2003 (68 FR 46505).

Correction to Notice of Hearing: August 20, 2003; published August 26, 2003 (68 FR 51202).

Notice of Reconvened Hearing: Issued October 27, 2003; published October 31, 2003 (68 FR 62027).

Notice of Reconvened Hearing: Issued December 18, 2003; published December 29, 2003 (68 FR 74874).

Tentative Final Decision: Issued December 23, 2004; published December 30, 2004 (69 FR 78355).

Interim Final Rule: Issued February 23, 2005; published March 1, 2005 (70 FR 9846).

Partial Recommended Decision: Issued April 7, 2005; published April 13, 2005 (70 FR 19636).

Partial Final Decision: Issued June 20, 2005; published June 27, 2005 (70 FR 36859).

The findings and determinations hereinafter set forth supplement those that were made when the Arizona-Las Vegas order was first issued and when it was amended. The previous findings and determinations are hereby ratified and confirmed, except where they may conflict with those set forth herein.

The following findings are hereby made with respect to the Arizona-Las Vegas order:

(a) Findings upon the basis of the hearing record . A public hearing was held upon certain proposed amendments to the tentative marketing agreement and to the order regulating the handling of milk in the Arizona-Las Vegas marketing area. The hearing was held pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), and the applicable rules of practice and procedure (7 CFR Part 900).

Upon the basis of the evidence introduced at such hearing and the record thereof, it is found that:

(1) The Arizona-Las Vegas order as hereby amended, and all of the terms and conditions thereof, will tend to effectuate the declared policy of the Act;

(2) The parity prices of milk, as determined pursuant to Section 2 of the Act, are not reasonable in view of the price of feeds, available supplies of feeds, and other economic conditions which affect market supply and demand for milk in the aforesaid marketing area. The minimum prices specified in the order as hereby amended are such prices as will reflect the aforesaid factors, insure a sufficient quantity of pure and wholesome milk, and be in the public interest; and

(3) The Arizona-Las Vegas order as hereby amended regulates the handling of milk in the same manner as, and is applicable only to persons in the respective classes of industrial or commercial activity specified in, a marketing agreement upon which a hearing has been held.

(b) Determinations. It is hereby determined that:

(1) The refusal or failure of handlers (excluding cooperative associations specified in Sec. 8c(9) or the Act) of more than 50 percent of the milk that is marketed within the specified marketing area to sign a proposed marketing agreement tends to prevent the effectuation of the declared policy of the Act;

(2) The issuance of this order amending the Arizona-Las Vegas order is the only practical means pursuant to the declared policy of the Act of advancing the interests of producers as defined by the order as hereby amended;

(3) The issuance of the order amending the Arizona-Las Vegas order is favored by at least two-thirds of the producers who were engaged in the production of milk for sale in the marketing area.

It is therefore ordered , that on and after the effective date hereof, the handling of milk in the Arizona-Las Vegas marketing area shall be in conformity to and in compliance with the terms and conditions of the order, as amended, and as hereby further amended, as follows:

The Secretary of Homeland Security is exercising his authority under 8 CFR 214.2(f)(9) to temporarily suspend the applicability of certain requirements governing on-campus and off-campus employment. F-1 students, who are granted employment authorization pursuant to this Notice, will be deemed to be engaged in a “full course of study” for the duration of their employment authorization, provided such students satisfy the minimum course load requirement set forth in this Notice. See 8 CFR 214.2(f)(6)(F).

This Notice applies exclusively to nonimmigrant aliens admitted to the United States in F-1 classification for duration of status under section 101(a)(15)(F)(i) of the Immigration and Nationality Act (Act), who: (1) On August 29, 2005, were lawfully present in the United States in F-1 status and enrolled in an institution, which is approved by DHS for enrollment of F-1 students and located in an area adversely affected by Hurricane Katrina; (2) are currently maintaining valid F-1 status; and (3) are experiencing severe economic hardship as a direct result of Hurricane Katrina. This Notice also applies to nonimmigrant aliens admitted to the United States in F-2 classification under section 101(a)(15)(F)(ii) of the Act, who are the dependents (spouse or minor children) of F-1 students covered by this Notice, provided that the F-1 student continues to maintain F-1 status.

F-1 students otherwise covered by this Notice, who transfer to other academic institutions, which are approved by DHS for enrollment of F-1 students, remain eligible for the relief provided by means of this Notice.

Hurricane Katrina caused loss of life, caused extensive damage to property, and has disrupted normal activities in the states of Alabama, Louisiana, and Mississippi. Certain academic institutions that are located in the affected areas are consequently unable to operate normally, or at all, during the current academic term. Approximately 5,500 F-1 students were enrolled in academic institutions located in the areas adversely affected by Hurricane Katrina. As a result of this catastrophic natural disaster, many of these F-1 students are suffering severe economic hardship resulting from, among other things, costs incurred to replace lost or damaged possessions, and/or to transfer to other academic institutions. Moreover, many of these F-1 students are experiencing difficulty in satisfying the normal regulatory requirements for maintaining valid F-1 status, which include the pursuit of a “full course of study” pursuant to 8 CFR 214.2(f)(6).

DHS is taking action to provide relief to these F-1 students so they may obtain short-term employment authorization, and consequently reduce their course load.

This Notice lists the specific campuses of academic institutions, which are approved by DHS for enrollment of F-1 students and located in the areas adversely affected by Hurricane Katrina. In the event that DHS, after the publication of this Notice, identifies other academic institutions, which are approved by DHS for enrollment of F-1 students and located in areas adversely affected by Hurricane Katrina, DHS will extend the relief authorized under this Notice to eligible F-1 students who were enrolled in those academic institutions on August 29, 2005.

For F-1 students covered by this Notice, the Secretary of Homeland Security is suspending temporarily the applicability of the requirement in 8 CFR 214.2(f)(9)(i) that limits an F-1 student to no more than 20 hours per week of on-campus employment when school is in session.

For F-1 students covered by this Notice, the Secretary of Homeland Security is suspending temporarily the applicability of the following regulatory requirements: (a) The requirement in 8 CFR 214.2(f)(9)(ii)(A), that limits an F-1 student to no more than 20 hours per week of off-campus employment when school is in session; (b) the requirement in 8 CFR 214.2(f)(9)(ii)(D)(1), that requires a student to be in F-1 status for one full academic year in order to be eligible for off-campus employment; and (c) the requirement in 8 CFR 214.2(f)(9)(ii)(D)(3), that requires an F-1 student to demonstrate that acceptance of employment will not interfere with the student's carrying a full course of study.

Yes. Pursuant to 8 CFR 214.2(f)(6)(i)(F), F-1 students, who are granted employment authorization pursuant to this Notice, will be deemed to be engaged in a “full course of study” for the duration of their employment authorization, provided such students satisfy the minimum course load requirement set forth in this Notice.

Pursuant to 8 CFR 214.2(f)(5)(v), undergraduate level F-1 students who are granted employment authorization pursuant to this Notice must remain registered for a minimum of 6 semester/quarter hours of instruction per academic term, and graduate level F-1 students who are granted employment authorization pursuant to this Notice must remain registered for a minimum of 3 semester/quarter hours of instruction per academic term. In addition, pursuant to 8 CFR 214.2(f)(6)(i)(G), F-1 students granted employment authorization pursuant to this Notice, both at the undergraduate level and the graduate level, may count the equivalent of one class or three credits per semester/quarter of on-line or distance education toward satisfying this minimum course load requirement.

An F-1 student covered by this Notice, who seeks to pursue on-campus employment pursuant to this Notice, must demonstrate to the Designated School Official (DSO) at the academic institution where the F-1 student currently is enrolled that such employment is necessary to avoid severe economic hardship resulting from Hurricane Katrina. See 8 CFR 214.2(f)(9)(i). The DSO should sign, date, and include the following notation in the student employment box on page 3 of Form I-20: “Approved for more than 20 hours per week of on-campus employment until February 1, 2006, pursuant to Hurricane Katrina Special Student Relief.” By making this notation, the DSO certifies that the F-1 student is covered by this Notice.

An F-1 student covered by this Notice, who seeks to pursue off-campus employment pursuant to this Notice, must file a complete Form I-765, Application for Employment Authorization, including required supporting documentation, with the USCIS Texas Service Center at:

U.S. Citizenship and Immigration Services, Texas Service Center, P.O. Box 853062, Mesquite, TX 75815-3062.

The front of the envelope, on the bottom right-hand side, should include the following notation: “HURRICANE KATRINA SPECIAL STUDENT RELIEF.” Failure to include this notation may result in significant processing delays.

An application package is complete if it contains: (1) A properly completed Form I-765, Application for Employment Authorization, with the required fee or, if the F-1 student believes he or she is eligible for a waiver of this fee, a written affidavit or unsworn declaration, which requests waiver of the fee under 8 CFR 103.7(c) and explains the reasons why the student is unable to pay the prescribed fee, and (2) Form I-20 with a recommendation for off-campus employment from the DSO at the academic institution where the F-1 student is currently enrolled. See 8 CFR 214.2(f)(9)(ii)(D). The DSO should sign, date, and include the following notation in the student employment box on page 3 of Form I-20: “Approved for more than 20 hours per week of off-campus employment until February 1, 2006, pursuant to Hurricane Katrina Special Student Relief.” By making this notation, the DSO certifies that the F-1 student is covered by this Notice.

If U.S. Citizenship and Immigration Services (USCIS) approves the F-1 student's Form I-765, Application for Employment Authorization, USCIS will send the student a Form I-766, Employment Authorization Document, to evidence his or her employment authorization. The Form I-766 will contain an expiration date that will not extend beyond February 1, 2006. If USCIS denies the F-1 student's Form I-765, Application for Employment Authorization, USCIS will notify the student of the decision, and the reason(s) for the denial.

No. DHS has not established a cut-off date for the filing of a Form I-765, Application for Employment Authorization, pursuant to this Notice. Any benefits granted by means of this Notice, however, will expire no later than February 1, 2006. While USCIS will exercise its best efforts to process such applications in as prompt a manner as possible, F-1 students applying for employment authorization pursuant to this Notice should bear in mind this expiration date when submitting their Forms I-765, Applications for Employment Authorization.

No. Pursuant to 8 CFR 214.2(f)(15)(i), an F-2 dependent (spouse or minor children) of an F-1 student, may not accept employment.

No. F-1 students, who are granted employment authorization pursuant to this Notice, will be deemed to be engaged in a “full course of study” for the duration of their employment authorization, provided such undergraduate level F-1 students remain registered for a minimum of 6 semester/quarter hours of instruction per academic term, and such graduate level F-1 students remain registered for a minimum of 3 semester/quarter hours of instruction per academic term. See 8 CFR 214.2(f)(5)(v). Such F-1 students, therefore, would not be required to apply for reinstatement under 8 CFR 214.2(f)(16) if they are otherwise maintaining F-1 status.

This Notice grants temporary relief to a specific group of F-1 students for the estimated length of the current academic term. As such, this Notice will remain in effect until February 1, 2006. During this period, DHS will continue to monitor the adverse impact of Hurricane Katrina in the affected areas to determine if modification or rescission of these special provisions is warranted. Should these special provisions be modified or rescinded prior to February 1, 2006, DHS will announce such changes in the Federal Register .

The information collection requirements contained in this rule have been cleared by the Office of Management and Budget (OMB) under the provisions of the Paperwork Reduction Act. Clearance numbers for these collections are contained in 8 CFR 299.5, Display Control Numbers, and are noted herein. Form I-765, Application for Employment Authorization, OMB Control Number 1615-0040.

Schering-Plough Animal Health Corp., 1095 Morris Ave., Union, NJ 07083, has informed FDA of a change of address to 556 Morris Ave., Summit, NJ 07901. Accordingly, the agency is amending the regulations in 21 CFR 510.600(c) to reflect the change.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Phoenix Scientific, Inc., 3915 South 48th Street Ter., St. Joseph, MO 64503, has informed FDA that it has changed its name to IVX Animal Health, Inc. Accordingly, the agency is amending the regulations in § 510.600 (21 CFR 510.600) to reflect the change.

In addition, FDA has noticed that Phoenix Pharmaceutical, Inc., is no longer a sponsor of an approved new animal drug application. At this time, § 510.600 is amended to remove entries for this sponsor. This action is being taken to improve the accuracy of the regulations.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Fort Dodge Animal Health, A Division of Wyeth Holdings Corp., P.O. Box 1339, Fort Dodge, IA 50501, filed a supplement to NADA 34-705 that provides for veterinary prescription use of EQUIPOISE (boldenone undecylenate) by injection in horses. The supplemental NADA provides for a revised indication and food safety warning on labeling. The supplemental NADA is approved as of October 7, 2005, and the regulations are amended in 21 CFR 522.204 to reflect the approval and a current format.

Approval of this supplemental NADA did not require review of additional safety or effectiveness data. Therefore, a freedom of information summary is not required.

FDA has determined under 21 CFR 25.33(a)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Schering-Plough Animal Health Corp., 1095 Morris Ave., Union, NJ 07083, filed a supplement to NADA 101-479 that provides for the veterinary prescription use of BANAMINE-S (flunixin meglumine) Injectable Solution by intramuscular injection for the control of pyrexia associated with swine respiratory disease. The supplemental NADA is approved as of November 1, 2005, and the regulations are amended in 21 CFR 522.970 and 556.286 to reflect the approval. The basis of approval is discussed in the freedom of information summary.

In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

Under section 512(c)(2)(F)(iii) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 360b(c)(2)(F)(iii)), this supplemental approval qualifies for 3 years of marketing exclusivity beginning November 1, 2005.

FDA has determined under § 25.33(d)(5) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

This action only applies to specific SO 2 sources located in Dearborn County, Indiana.

1. The Regional Office has established an electronic public rulemaking file available for inspection at RME under ID No. R05-OAR-2005-IN-0007, and a hard copy file which is available for inspection at the Regional Office. The official public file consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public rulemaking file does not include CBI or other information whose disclosure is restricted by statute. The official public rulemaking file is the collection of materials that is available for public viewing at the Air Programs Branch, Air and Radiation Division, EPA Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604. EPA requests that, if at all possible, you contact the person listed in the FOR FURTHER INFORMATION CONTACT section to schedule your inspection. The Regional Office's official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m. excluding Federal holidays.

2. Electronic Access. You may access this Federal Register document electronically through the regulations.gov Web site located at http://www.regulations.gov where you can find, review, and submit comments on Federal rules that have been published in the Federal Register , the Government's legal newspaper, and that are open for comment.

For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing at the EPA Regional Office, as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in the official public rulemaking file. The entire printed comment, including the copyrighted material, will be available at the Regional Office for public inspection.

You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate rulemaking identification number by including the text “Public comment on proposed rulemaking Region 5 Air Docket R05-OAR-2005-IN-0007” in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments.

For detailed instructions on submitting public comments and on what to consider as you prepare your comments see the ADDRESSES section and the section I General Information of the SUPPLEMENTARY INFORMATION section of the related proposed rule which is published in the Proposed Rules section of this Federal Register .

EPA is approving revisions to Indiana's SO 2 State Implementation Plan (SIP) for specified existing stationary sources located in Dearborn County, Indiana. The SIP revisions amend Title 326 of the Indiana Administrative Code (IAC), section 7-4-13, by removing obsolete rule language for the Indiana Michigan Power Tanners Creek Station. The SIP revision also updates information for other companies listed in 326 IAC 7-4-13, including adding source identification numbers. Indiana held public hearings on these revisions on May 5, 2004 and October 6, 2004.

Indiana's SO 2 emission limits for Dearborn County are contained in 326 IAC 7-4-13. The current SO 2 emission limitations in 326 IAC 7-4-13 are based on air quality modeling used by the State when EPA approved the SIP in 1987. The SIP revision amends 326 IAC 7-4-13, as described below.

The SIP revision removes obsolete rule language that included interim requirements restricting the SO 2 emission limits for the Indiana Michigan Power Tanners Creek Station, Unit 4. These interim requirements are no longer necessary, and have been deleted; the rule limits Unit 4 to an SO 2 emission limit of five and twenty-four hundredths (5.24) pounds per MMBTU since August 1, 1991. This revision reflects these changes. This SIP revision also adds source identification number, No. 00002, to the Indiana Michigan Power Tanners Creek Station.

Schenley Distillers, Inc. closed in 1998 and has been removed from the rule.

The revision changes the name from Joseph E. Seagram and Sons, Inc. to Pernod Ricard USA, Seagram Lawrenceburg Distillery. The company has removed one boiler listed in the current rule, and renamed the remaining boiler. This revision reflects this change. The revision also adds source identification number, No. 00005, to the Pernod Ricard USA, Seagram Lawrenceburg Distillery.

The furnaces formerly owned by Diamond Thatcher Glass are owned by Anchor Glass Container Corporation, and have been renamed as such. This revision reflects this change. The revision also adds source identification number, No. 00007, to the Anchor Glass Container Corporation.

EPA is approving revisions to 326 IAC 7-4-13, which contains the SO 2 emission limitations for existing stationary sources located in Dearborn County, Indiana. The SIP revision amends 326 IAC 7-4-13, by removing obsolete rule language for the Indiana Michigan Power Tanners Creek Station, and by making minor revisions for other companies listed in 326 IAC 7-4-13, including adding source identification numbers.

We are publishing this action without prior proposal because we view this as a noncontroversial amendment and anticipate no adverse comments. However, in the proposed rules section of this Federal Register publication, we are publishing a separate document that will serve as the proposal to approve the state plan if relevant adverse written comments are filed. This rule will be effective January 24, 2006 without further notice unless we receive relevant adverse written comments by December 27, 2005. If we receive such comments, we will withdraw this action before the effective date by publishing a subsequent document that will withdraw the final action. All public comments received will then be addressed in a subsequent final rule based on the proposed action. The EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. If we do not receive any comments, this action will be effective January 24, 2006.

Under Executive Order 12866 ( 58 FR 51735 , October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget.

Because it is not a “significant regulatory action” under Executive Order 12866 or a “significant energy action,” this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” ( 66 FR 28355 , May 22, 2001).

This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 ( 59 FR 22951 , November 9, 2000).

This action also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 ( 64 FR 43255 , August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act.

This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” ( 62 FR 19885 , April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the state to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply.

This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by January 24, 2006. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

In this document EPA is amending appendix IX to part 261 to reflect a change in the status of a particular exclusion. The petition process under 40 Code of Federal Regulations (40 CFR) 260.20 and 260.22 allows facilities to demonstrate that a specific waste from a particular generating facility should not be regulated as a hazardous waste. Based on waste-specific information provided by the petitioner, EPA granted an exclusion for treated K071, brine purification muds, to Vulcan Materials Company, Port Edwards, Wisconsin (51 FR 41486, November 17, 1986).

On July 12, 2005, the Agency was notified by Vulcan that ownership of the facility in Port Edwards, Wisconsin had been transferred to ERCO Worldwide (USA) Inc. (ERCO). On July 18, 2005, ERCO certified it will meet all terms and conditions set forth in the delisting and will not change the characteristics of the waste or the K071 treatment process at the Port Edwards facility without prior Agency approval. Today's notice documents this change by updating appendix IX to incorporate this change in name.

These changes to appendix IX of part 261 are effective November 25, 2005. The Hazardous and Solid Waste Amendments of 1984 amended section 3010 of the Resource Conservation and Recovery Act (RCRA) to allow rules to become effective in less than six months when the regulated community does not need the six-month period to come into compliance. As described above, the facility has certified that it is prepared to comply. Therefore, a six-month delay in the effective date is not necessary in this case. This provides the basis for making this amendment effective immediately upon publication under the Administrative Procedures Act pursuant to 5 United States Code (U.S.C.) 5531(d).

The information in this section is organized as follows:

A delisting petition is a request from a generator to exclude waste from the list of hazardous wastes under RCRA regulations. In a delisting petition, the petitioner must show that waste generated at a particular facility does not meet any of the criteria for which EPA listed the waste as set forth in Title 40 Code of Federal Regulations (40 CFR) 261.11 and the background document for the waste. In addition, a petitioner must demonstrate that the waste does not exhibit any of the hazardous waste characteristics (that is, ignitability, reactivity, corrosivity, and toxicity) and must present sufficient information for us to decide whether factors other than those for which the waste was listed warrant retaining it as a hazardous waste. (See 40 CFR 260.22, 42 United States Code (U.S.C.) 6921(f) and the background documents for a listed waste.)

Generators remain obligated under RCRA to confirm that their waste remains nonhazardous based on the hazardous waste characteristics even if EPA has “delisted” the wastes and to ensure that future generated wastes meet the conditions set.

Under 40 CFR 260.20, 260.22, and 42 U.S.C. 6921(f), facilities may petition the EPA to remove their wastes from hazardous waste control by excluding them from the lists of hazardous wastes contained in 40 CFR 261.31 and 261.32. Specifically, 40 CFR 260.20 allows any person to petition the Administrator to modify or revoke any provision of parts 260 through 266, 268, and 273 of 40 CFR. 40 CFR 260.22 provides a generator the opportunity to petition the Administrator to exclude a waste from the lists of hazardous wastes on a “generator specific” basis.

GM petitioned to exclude from the list of hazardous wastes contained in 40 CFR 261.31 wastewater treatment sludges resulting from zinc phosphating (a chemical conversion coating process) on truck bodies which have aluminum components.

A generator must provide sufficient information to allow the EPA to determine that the waste does not meet any of the criteria for which it was listed as a hazardous waste, and that there are no other factors, including additional constituents, that could cause the waste to be hazardous. To support its petition, GM submitted descriptions and schematic diagrams of its manufacturing processes, historical accounts of waste generation, and the results of chemical analysis of the petitioned waste.

EPA considered the original listing criteria and evaluated additional factors required by the Hazardous and Solid Wastes Amendments of 1984 (HSWA) These factors included: (1) Whether the waste is considered acutely toxic; (2) the toxicity of the constituents; (3) the concentration of the constituents in the waste; (4) the tendency of the hazardous constituents to migrate and to bioaccumulate; (5) its persistence in the environment once released from the waste; (6) plausible and specific types of management of the petitioned waste; (7) the quantity of waste produced; and (8) waste variability.

Consistent with previous delistings, EPA identified plausible exposure routes (ground water, surface water, air) for hazardous constituents present in the petitioned waste based on improper management of a Subtitle D landfill. To evaluate the waste, we used the Delisting Risk Assessment Software program (DRAS), a Windows based software tool, to estimate the potential release of hazardous constituents from the waste and to predict the risk associated with those releases.

The EPA received public comments on the proposed rule from the Alliance of Automobile Manufacturers and GM. Both were generally supportive of the delisting decision with some additional specific comments.

(1) Comment: EPA should revise the F019 listing via federal rule change to specify that wastewater treatment sludge from chemical conversion coating processes on aluminum where hexavalent chromium and cyanide are not used should not be F019.

EPA Response: The Agency is now considering revising the F019 listing. EPA is examining the data collected as a result of this project, as well as past projects, as a basis for a possible revision to the F019 listing.

(2) Comment: Total constituent concentrations should not be used by EPA to set delisting levels for this waste because total concentrations do not indicate the waste's potential to leach and have no scientific correlation with environmental impacts.

EPA Response: EPA evaluates the potential environmental impact of plausible mismanagement of the waste in a solid waste landfill. EPA evaluates the potential off-site migration of waste particles and volatile organic compounds via air and surface water pathways as a result of inadequate cover and runoff control. EPA believes that inadequate daily cover and rainwater runoff control are plausible mismanagement scenarios for a solid waste landfill. Furthermore, since the source of this potential off-site migration is newly deposited waste at the surface of the landfill, total concentrations are appropriate inputs for fate and transport modeling.

(3) Comment: It is unclear why a requirement for total chromium has been included as it has not been a constituent requiring analysis for previously granted petitions for this waste.

EPA Response: Total chromium has been included as a constituent requiring analysis for previously granted petitions for this waste (See 69 FR 60557, October 12, 2004). Nevertheless, EPA reevaluated total chromium as a result of the comment and examined the results of the DRAS model version used in support of the proposal. Conservatively assuming that one seventh of the chromium is present as hexavalent chromium, a known human carcinogen by inhalation, the limiting pathway determining the allowable level is inhalation of waste particles emitted from the landfill surface. Two changes were made to the calculation as a result of the reevaluation. An estimate for particle emissions resulting from vehicles driving over the exposed waste contained assumptions that were discovered to be unreasonably conservative for this waste. The number of vehicles driven over the waste was conservatively based on a historical exclusion with a much higher annual waste volume. EPA used a survey of industrial subtitle D facilities and the annual volume of waste requested by GM to derive more appropriate assumptions. It was also discovered that the DRAS program was reducing the uptake of particles inhaled by the receptor to account for an absorption efficiency, when, according to Agency toxicologists, this factor is no longer needed when using the most recent reference values presented in EPA's Integrated Risk Information System (IRIS). A new allowable level for total chromium of 5,300 milligrams per kilogram (mg/kg) was derived using the updated methods, an increase from the proposed value of 3,200 mg/kg. The calculation of changes is documented in the Docket Report Reevaluating the Proposed Delisting Level for Chromium.

(4) Comment: Quarterly verification sampling is not justified. The sampling frequency should be reduced to annually.

EPA Response: Verification data submitted in conjunction with past delistings of this type of waste have shown significant variation on a quarterly basis over longer periods of time. Annual sampling would not detect such variations. Once enough verification data are collected to support a statistical analysis, a change in the frequency of verification sampling and/or sampling parameters may be considered.

Today the EPA is finalizing an exclusion for up to 3,000 cubic yards of wastewater treatment sludge generated annually at the GM JTAP facility in Janesville, Wisconsin.

GM petitioned EPA to exclude, or delist, the wastewater treatment sludge because GM believed that the petitioned waste does not meet the criteria for which it was listed and that there are no additional constituents or factors which could cause the waste to be hazardous. Review of this petition included consideration of the original listing criteria, as well as the additional factors required by HSWA. See § 222 of HSWA, 42 United States Code (U.S.C.) 6921(f), and 40 CFR 260.22(d)(2)-(4).

On April 25, 2005 EPA proposed to exclude or delist the wastewater treatment sludge generated at GM's Janesville facility from the list of hazardous wastes in 40 CFR 261.31 and accepted public comment on the proposed rule (see 70 FR 21165). EPA considered all comments received, and for reasons stated in both the proposal and this document, we believe that the wastewater treatment sludge from GM's Janesville facility should be excluded from hazardous waste control.

However, because the response to comments resulted in a change in the methodology used to evaluate the petitioned waste and a change in an allowable level under verification sampling, EPA is delaying the effectiveness of the rule to allow for the potential submission of adverse comments, even though the changes are considered noncontroversial and adverse comment is not anticipated. EPA believes the changes are not controversial because the change to the particulate inhalation exposure assessment is really a correction given the way data is developed in IRIS and the assumptions made to the particle emission scenario are more appropriate for this waste.

This rule is effective on January 24, 2006 without further notice unless we receive adverse comment by December 27, 2005. If EPA receives adverse comments, we will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. If adverse comments are received, they will be addressed as part of a future rulemaking.

HSWA amended section 3010 of RCRA to allow rules to become effective in less than six months when the regulated community does not need the six-month period to come into compliance. This rule reduces rather than increases the existing requirements and, therefore, can be made effective on January 24, 2006 (unless we receive adverse comment) under the Administrative Procedure Act, pursuant to 5 U.S.C. 553(d).

JTAP must dispose of the waste in a Subtitle D landfill which is permitted, licensed, or registered by a state to manage industrial solid waste. JTAP must obtain and analyze on a quarterly basis a representative sample of the waste in accordance with the waste analysis plan. JTAP must verify that the concentrations of the constituents of concern do not exceed the allowable levels set forth in this exclusion.

The list of constituents for verification is a subset of those initially tested for and is based on the occurrence of constituents at GM-JTAP and at the majority of auto-assembly facilities that already have exclusions granted for F019 (since GM-JTAP certified its process was consistent with the others). This exclusion applies only to a maximum annual volume of 3,000 cubic yards and is effective only if all conditions contained in this rule are satisfied.

Today's exclusion is being issued under the Federal RCRA delisting program. Therefore, only states subject to Federal RCRA delisting provisions would be affected. This exclusion is not effective in states which have received authorization to make their own delisting decisions. Also, the exclusion may not be effective in states having a dual system that includes Federal RCRA requirements and their own requirements. EPA allows states to impose their own regulatory requirements that are more stringent than EPA's, under section 3009 of RCRA. These more stringent requirements may include a provision that prohibits a federally issued exclusion from taking effect in the state. Because a dual system (that is, both Federal (RCRA) and state (non-RCRA) programs) may regulate a petitioner's waste, we urge petitioners to contact the state regulatory authority to establish the status of their wastes under the state law. If a participating facility transports the petitioned waste to or manages the waste in any state with delisting authorization, it must obtain a delisting from that state before it can manage the waste as nonhazardous in the state.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this rule is not of general applicability and therefore is not a regulatory action subject to review by the Office of Management and Budget. Because this rule is of particular applicability relating to a particular facility, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), or to sections 202, 204, and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4). Because this rule will affect only a particular facility, it will not significantly or uniquely affect small governments, as specified in section 203 of UMRA, or communities of tribal governments, as specified in Executive Order 13175 (65 FR 67249, November 6, 2000). For the same reason, this rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

This rule does not involve technical standards; thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 May 22, 2001) because it is not a significant regulatory action under Executive Order 12866.

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report which includes a copy of the rule to each House of the Congress and to the Comptroller General of the United States. Section 804 exempts from section 801 the following types of rules (1) rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties 5 U.S.C. 804(3). EPA is not required to submit a rule report regarding today's action under section 801 because this is a rule of particular applicability.

On November 30, 1999, we published an interim final rule with comment period titled “Religious Nonmedical Health Care Institutions and Advance Directives” (64 FR 67028) to adopt the 1997 edition of the Life Safety Code (LSC) for religious non-medical health care institutions (RNHCIs). We adopted the 1997 edition of the LSC because we believed that it provided the highest available level of protection for patients, staff, and the public at that time. The regulation also permitted a RNHCI to meet a fire and safety code imposed by State law if we found that the State-imposed code adequately protected patients. This interim final rule also added paragraphs (a)(2) and (a)(3) to the Life Safety from Fire Condition of Participation at 42 CFR 403.744. These paragraphs were added in order to ensure that RNHCIs had adequate fire plans in case of a fire emergency and to ensure that RNHCIs documented the fire safety inspections and approvals related to their State or local fire control agencies.

On January 10, 2003, we issued a final rule titled “Fire Safety Requirements for Certain Health Care Facilities” (68 FR 1374) amending the fire safety standards for RNHCIs that adopted, with certain exceptions, the 2000 edition of the LSC published by the National Fire Protection Association (NFPA). One of the exceptions to the 2000 edition of the LSC concerned the use of roller latches in health care facilities, including RNHCIs. In the 2003 final rule, we prohibited health care facilities, including RNHCIs, from having roller latches. The final rule provided a 3-year phase-in period to allow facilities time to replace their roller latches.

On August 11, 2004, we published the Hospital Inpatient Prospective Payment System (IPPS) final rule (69 FR 48916). In this final rule, we clarified the phase-in date of the roller latch provision, and accidentally deleted paragraphs (a)(2) and (a)(3), which stated:

• (a)(2) The religious non-medical health care institution (RNHCI) must have written fire control plans that contain provisions for prompt reporting of fires; extinguishing fires; protection of patients, staff, and the public; evacuation; and cooperation with fire fighting authorities.

• (a)(3) The RNHCI must maintain written evidence of regular inspection and approval by State or local fire control agencies.

This correcting amendment re-incorporates paragraphs (a)(2) and (3), which were inadvertently deleted from the regulations by the 2004 IPPS rule.

This document does contain information collection requirements as summarized below. However, we believe the burden associated with these requirements is exempt from the requirements of the Paperwork Reduction Act of 1995 (PRA) as defined in 5 CFR 1320.3(b)(2) because the time, effort, and financial resources necessary to comply with the requirement would be incurred by persons in the normal course of their activities.

Section 403.744(a)(2) states that the RNHCI must have written fire control plans that contain provisions for prompt reporting of fires; extinguishing fires; protection of patients, staff and the public; evacuation; and cooperation with fire fighting authorities.

Section 403.744(a)(3) states that the RNHCI must maintain written evidence of regular inspection and approval by State or local fire control agencies.

We ordinarily publish a notice of proposed rulemaking in the Federal Register and invite public comment on the proposed rule. We also ordinarily provide a 30-day delay in the effective date of the provisions of a rule. The notice of proposed rulemaking includes a reference to the legal authority under which the rule is proposed, and the terms and substances of the proposed rule or a description of the subjects and issues involved. We can waive both the notice of proposed rulemaking and the 30-day delay in effective date, however, if the Secretary finds good cause that a notice-and-comment procedure and a 30-day delay in the effective date are impracticable, or contrary to the public interest and incorporates a statement of the finding and the reasons in the rule issued.

We believe that proceeding with notice and comment procedures and delaying the effective date are impracticable, and contrary to the public interest.

The notice and comment procedures and delay in the effective date are impracticable because delaying implementation of these provisions would hinder our ability to provide continuous safety standards for RNHCI patients. These requirements were established in order to protect the patients, facility staff, and the public, and they continue to be necessary in order to ensure that RNHCIs provide safe care.

Proceeding with notice and comment rulemaking and delaying the effective date would delay the restoration of these two paragraphs. During this delay, fire safety could be compromised because providers would not be required to maintain their written fire control plans or document their inspection and approval by State or local fire control agencies, two requirements that are key to ensuring patient safety. In addition, our ability to ensure compliance with § 403.738 would be impeded if facilities did not maintain documentation of their compliance with State or local inspections and approval processes, as required by applicable State or local laws, regulations, and codes.

Publishing a proposed rule and delaying the effective date are contrary to the public interest because of the imminent danger to life posed by failing to enforce the requirements of § 403.744(a)(2) and (a)(3). One of the major responsibilities of a RNHCI is to provide an environment for their patients, staff, and the public that includes safety measures as outlined in its fire safety plan. These requirements re-enforce the importance of continually providing and maintaining a safe environment for RNHCI patients.

Therefore, we find good cause to waive the notice of proposed rulemaking and delayed effective date and to issue this correcting amendment.

Section 3 of the Administrative Simplification Compliance Act (ASCA), Pub. L. 107-105, was enacted by the Congress to improve the administration of the Medicare Program by facilitating program efficiencies gained through the electronic submission of Medicare claims. Section 3 of ASCA amends subsection (a) of section 1862 of the Social Security Act (the Act) (42 U.S.C. 1395y(a)) and adds a new subsection (h) to section 1862 (42 U.S.C. 1395y). The amendment to subsection (a) requires the Medicare Program, subject to subsection (h), to deny payment under Part A or Part B for any expenses for items or services “for which a claim is submitted other than in an electronic form specified by the Secretary.” Subsection (h) provides that the Secretary shall waive such denial in two types of cases and may also waive such denial “in such unusual cases as the Secretary finds appropriate.”

Section 3 of ASCA operates in the context of the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191. Those provisions require the Secretary to adopt, among other standards, standards for financial and administrative transactions for the health care industry, including health claims transactions (see section 1173(a) of the Act). In the August 17, 2000 Federal Register (65 FR 50311), the Secretary of Health and Human Services (the Secretary) published a final rule (generally known as the Transactions Rule) that adopted standards for eight electronic transactions. The transactions standards adopted by that final rule, as subsequently modified by final rule published on February 20, 2003 (68 FR 8381), are codified at 45 CFR part 162, subparts A and I through R.

The HIPAA standards apply to health plans, health care clearinghouses, and certain health care providers; collectively, these entities are known as “covered entities.” An additional category of covered entities—prescription drug card sponsors—was added by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Pub. L. 108-173. Covered entities are required to comply not only with the standards established by the Transactions Rule, but also with those established via other HIPAA Administrative Simplification rules—such as the Privacy Rule, the Employer Identifier Rule, the Security Rule, and the National Provider Identifier Rule—by the respective applicable compliance dates specified in those rules.

Compliance with the standards for the electronic transactions established by the Transactions Rule was required for all covered entities other than small health plans by October 16, 2002; compliance by small health plans was required by October 16, 2003. However, section 2 of ASCA extended the October 16, 2002 compliance deadline to October 16, 2003 for covered entities that were not small health plans and that submitted a compliance plan by October 15, 2002. In accordance with 45 CFR 162.900(c), covered entities that were not small health plans and that did not timely submit a compliance plan under ASCA were required to comply by October 16, 2002. Thus, all covered entities, regardless of type, were required to be in compliance no later than October 16, 2003.

Since a significant number of covered entities had expressed strong concern over the health care industry's state of readiness to conduct fully compliant HIPAA transactions and we wanted to promote compliance while ensuring that cash flow and health care operations would not be unnecessarily disrupted, the Department of Health and Human Services (HHS) issued guidance on the approach CMS would take to enforce the HIPAA electronic transactions and code sets provisions. In accordance with the July 24, 2003 guidance, the Secretary explained that we would focus on voluntary compliance, use a complaint-driven approach, and would not impose penalties on covered entities that deployed temporary contingency plans, if they made reasonable and diligent efforts to become compliant and, in the case of health plans, facilitated the compliance of their trading partners.

By statute, the Medicare Program is a health plan under HIPAA (see section 1171(5)(D) of the Act). It is, therefore, a covered entity. In 45 CFR 160.102(a)(3), we specify that, in accordance with section 1172(a)(3) of the Act, health care providers are covered entities if they transmit health information in electronic form in connection with a transaction for which the Secretary has adopted a standard (covered transaction). In 45 CFR 162.923(a), we specify that if a covered entity electronically conducts a covered transaction with another covered entity, it must conduct it as a standard transaction.

Approximately 86.1 percent of claims submitted to the Medicare Program are submitted electronically, which means that approximately 139 million claims are submitted on paper per year (fiscal year (FY) 2002). Section 3 of ASCA required Medicare providers to submit Medicare claims electronically by October 16, 2003, unless one of the specified grounds for waiver applies. As the October 16, 2003 deadline approached, we made the decision to implement our own contingency plan after reviewing statistics showing that an unacceptably low number of Medicare providers would likely be capable of submitting compliant claims by the compliance date. Concerned that many of its trading partners were still completing their transition to HIPAA-compliant transactions, Medicare implemented a contingency plan permitting the submission and processing of claims in electronic formats that were then in use and giving providers additional time to complete the testing processes. Neither CMS's contingency plan for Medicare nor HHS's enforcement guidance modified the October 16, 2003 compliance date for HIPAA transactions.

Section 3 of ASCA, thus, in general has the effect of requiring Medicare providers that are not already covered entities to conduct a covered transaction (the health claim transaction) electronically and, thereby, become covered entities. In submitting claims electronically, the providers are required to comply with the applicable HIPAA standard for the health claim transaction. Thus, section 3 of ASCA promotes the submission of standard transactions and will further the goal of improved health care delivery by reducing the administrative burden and paperwork associated with Medicare claims submissions.

Although 86.1 percent of Medicare claims are submitted electronically, the volume of Medicare claims submitted in paper form is substantial. Moving from paper to electronic submission has the potential for significant savings and efficiencies for Medicare physicians, practitioners, facilities, suppliers, and other health care providers, as well as for the Medicare program itself. Although these Medicare physicians, practitioners, facilities, suppliers, and other health care providers would incur a cost to comply with the mandatory electronic billing requirement, we believe their savings will offset the costs they incur. Further, the use of the HIPAA electronic claim standards could result in additional savings if these entities begin electronically billing other payers. However, the statute recognizes that certain circumstances may effectively prevent some providers from transacting claims with Medicare electronically or as standard transactions. ASCA, thus, identifies exceptions to the mandatory submission of electronic Medicare claims. This final rule reiterates and interprets these exceptions.

We considered whether the amendment to section 1862(a) of the Act in section 3 of ASCA could be interpreted to apply to payments made by Medicare + Choice (M+C) organizations to providers for services provided to Medicare beneficiaries. (Note: The MMA, enacted December 8, 2003, changed and renamed M+C to Medicare Advantage. For discussion purposes and to remain consistent with the interim final rule, the term “M+C” will continue to be used in this preamble.) The question was raised by the provision in section 4 of ASCA that expressly adds Medicare Part C, found in Part C of Title XVIII, to the definition of Medicare “health plans” found in section 1171(5)(D) of the Act.

The plain language of section 1862(a) of the Act, however, provides that “payment may not be made under Part A or Part B” for a number of activities. The Congress could have amended this provision, just as it amended section 1171(5) of the Act, if it had wanted to prohibit M+C organizations from paying for claims for services given to M+C enrollees by the M+C organization's participating providers if those claims were not submitted electronically. The fact that it did not so amend this provision indicates that it did not intend to apply the ASCA payment prohibition to the M+C organizations. The Congress's intent to apply the broader definition of “health plan” in section 4 of ASCA solely to the Administrative Simplifications provisions of HIPAA and not to the electronic submission requirement for Medicare claims is further suggested by the title of section 4 of ASCA: “Clarification with Respect to Applicability of Administrative Simplification Requirement to M+C Organizations.”

The M+C organizations, as health plans for the purposes of HIPAA Administrative Simplification, were required to come into compliance with the regulatory requirements related to transactions no later than October 16, 2003. We understand that all M+C organizations properly filed ASCA compliance plans before October 16, 2002. Therefore, they obtained extensions and had a compliance date of October 16, 2003.

An M+C organization that pays a non-compliant electronic claim after October 16, 2003, would accordingly be out of compliance with the HIPAA transactions regulations, but would not violate the provisions of section 1862(a)(22) of the Act or the requirements of this regulation. This final rule applies only to providers, practitioners, and suppliers who submit claims under Part A or Part B of Medicare. It does not apply to the submission of claims by providers to M+C organizations. Moreover, the waiver provisions for small providers, practitioners, and suppliers established by section 3 of ASCA and this regulation do not extend to claims submitted by these providers to any health plans other than Medicare.

Section 902 of the MMA amended section 1871(a) of the Act and requires the Secretary, in consultation with the Director of OMB, to establish and publish timelines for the publication of Medicare final regulations based on the publication of Medicare proposed or interim final regulations. Section 902 of the MMA also states that the timelines for these regulations may vary but shall not exceed 3 years from the previous publication of the proposed or interim final rule, except under exceptional circumstances.

The MMA also introduced Part D of the Medicare Program. Future rulemaking may be needed to explore the applicability of section 3 of ASCA to Part D. We will initiate such rulemaking, if needed, upon further evaluation as we get closer to the Part D implementation date.

We note that this rule finalizes the provisions of the August 15, 2003 interim final rule. The final rule is, thus, being published within the 3-year time period identified in section 902 of the MMA.

Section 3 of ASCA established the requirements and exceptions under the Medicare Program for the mandatory submission of claims in electronic form. In the August 15, 2003 Federal Register (68 FR 48805), we published an interim final rule that implemented these statutory requirements.

The interim final rule added a new paragraph (d) to § 424.32. Section 424.32(d)(1) specified the following definitions for the purposes of paragraph (d): Claim; electronic claim; direct data entry; electronic media; initial Medicare claim; physician, practitioner, facility, or supplier; provider of services; and small provider of services or small supplier. We defined “claim” to mean the transaction defined at 45 CFR 162.1101(a) (that is, “health care claim”). We specified the definition of “electronic claim” to mean a claim that is submitted via electronic media. In addition, we specified that the definitions of “direct data entry” and “electronic media” are defined as those terms are defined in 45 CFR 162.103 and 160.103, respectively.

In § 424.32(d)(1)(v) of the interim final rule, we defined an “initial Medicare claim” as a claim submitted to Medicare for payment under Part A or Part B of the Medicare Program for the first time for processing, including claims sent to Medicare for the first time for secondary payment purposes. This definition also specified that an initial Medicare claim excludes any adjustment or appeal of a previously submitted claim. This final rule adds the phrase “for initial processing” to the definition of “initial Medicare claim” to clarify that the requirement for electronic submission applies to claims that have been previously rejected before being accepted into the Medicare processing system.

In § 424.32(d)(1)(vi), we defined a “physician, practitioner, facility, or supplier” as a Medicare provider other than a provider of services. The final rule adds the words “or supplier” to make the definition precise, so that the term is defined as “a Medicare provider or supplier other than a provider of services.” In § 424.32(d)(1)(vii), we defined a “provider of services” as a provider of services as defined in section 1861(u) of the Act. In § 424.32(d)(1)(viii), we defined a “small provider of services or small supplier” as a provider of services with fewer than 25 full-time equivalent employees; or a physician, practitioner, facility, or supplier (other than provider of services) with fewer than 10 full-time equivalent employees.

Electronic submission of Medicare claims is required for initial Medicare claims, including initial claims with paper attachments, submitted for processing by the Medicare fiscal intermediary (FI) or carrier that serves the physician, practitioner, facility, supplier, or other health care provider. No other transactions, including changes, adjustments, or appeals to the initial claim, are required to be submitted electronically in accordance with ASCA.

In § 424.32(d)(2), we specified that, except for claims to which § 424.32(d)(3) or (d)(4) applies, an initial Medicare claim under Part A or Part B or both may be paid only if submitted as an electronic claim for processing by the Medicare FI or carrier that serves the physician, practitioner, facility, supplier, or other health care provider. This requirement does not apply to any other transactions, including adjustment or appeal of the initial Medicare claim.

The regulations at 45 CFR 162.923 state that, “except as otherwise provided in this part, if a covered entity conducts with another covered entity (or within the same covered entity), using electronic media, a transaction for which the Secretary has adopted a standard under this part, the covered entity must conduct the transaction as a standard transaction.” HIPAA does not require that a health plan be able to accept claims via every type of electronic media, only that claims received via such media comply with the standard format and content requirements of HIPAA ( www.wpc-edi.com/HIPAA ). The reference in section 3 of ASCA to the filing of claims “in electronic form” does not dictate the use of a particular electronic form. Thus, the Medicare program will continue to accept only those forms identified in Chapter 24 of the Medicare Internet Only Claims Processing Manual (IOM Pub. L. 100-04) that we issue. At present, Medicare does not accept claims via the Internet, an extranet or, in many cases, via removable/transportable storage media. This final rule does not change this Medicare policy. The interim final rule stated that an advance notice of any future plans for expansion or contraction in the electronic media accepted for submission of Medicare claims would be published in Medicare program instructions and via routine contractor notification and instructional media.

In the interim final rule, we specified that we will consider claims submitted via a direct data entry screen maintained for Medicare, and as permitted by 45 CFR 162.923, to be electronic claims for purposes of this requirement. Also, we stated that claims transmitted to a Medicare contractor using the free or low cost claims software issued by Medicare fee-for-service plans will be considered electronic claims for purposes of this requirement.

The ASCA provided for exceptions to the requirement for mandatory electronic submission of Medicare claims. In accordance with ASCA, the interim final rule established that the Secretary of HHS could waive the application of the electronic claim requirement in specific cases. To implement the statutory mandate, we provided more explicit requirements that are specified in § 424.32(d). Specifically, § 424.32(d)(3) states that there are two exceptions to electronic submission of initial Medicare claims.

The first exception, specified in § 424.32(d)(3)(i), applies when there is no method available for the submission of an electronic claim. For example, we could not reasonably expect Medicare beneficiaries to submit electronic claims. Even though the statute requires, with very few exceptions, that providers of health care bill Medicare on behalf of a beneficiary (sections 1814(a) and 1848(g)(4) of the Act), some beneficiaries will still submit claims to Medicare. However, those relatively few beneficiaries who submit claims are not likely to possess the capability to submit a HIPAA compliant claim. Further, there are situations in which the standard adopted by the Secretary at 45 CFR 162.1102 does not support all of the information necessary for payment of the claim. We identified three other situations that fall into this category:

• Roster billing of vaccinations covered by the Medicare Program. In order to promote an increase in the flu vaccinations for Medicare beneficiaries, since 1993 Medicare has allowed mass immunizers to bill the program using a single claim form with an attached list of beneficiaries to whom a flu vaccine was administered. Many mass immunizers bill electronically, but in a non-standard format. This roster billing simplifies provider billing but is not available in electronic form under the Transactions Rule.

• Claims for payment under Medicare demonstration projects. Medicare demonstration projects often allow for unusual situations not normally handled by the transactions standards; and

• Claims where more than one health plan is responsible for payment before Medicare. The interim final rule indicated that efforts were underway to resolve the confusion in the reporting of per service payments by more than one primary payer and allowed these claims to continue to be submitted to Medicare on paper for the time being. Although a number of alternatives were considered, a clear process for electronic billing of Medicare in this case is not yet finalized. Once a solution is reached, we will then notify the public of the effective date of the change.

Providers to whom an exception does not apply will then be required to submit Medicare claims electronically. In the interim final rule, we established that specific program guidance would be issued to Medicare providers concerning submission of these claims on paper effective October 16, 2003. We stated that we would also issue specific guidance or regulations, as necessary, informing covered entities if this or another exception no longer applies.

The second exception, described in § 424.32(d)(3)(ii), provided that electronic submission would be waived when the entity submitting the claim is a small provider of services or small supplier. The statute is quite specific as to the size requirements, and the interim final rule simply incorporated the statutory requirements. This final rule makes a slight technical revision, in order to use a defined term consistently.

In the interim final rule, we established that the Secretary may waive the electronic submission requirement in certain unusual situations as the Secretary finds appropriate. In § 424.32(d)(4), we specified that such an exception would exist in the following three situations:

• The submission of dental claims. This exception is being included because, under HIPAA, dentists who are covered entities are required to submit electronic transactions to other payers in a format different from that generally used in the Medicare Program. Since Medicare does not generally cover dental services, this exception is added to minimize the burden on dentists who may, at times, need to bill the Program.

• A service interruption in the mode of submitting the electronic claim that is outside of the control of the entity submitting the claim, for the period of the interruption. This exception would apply only if the physician, practitioner, facility, supplier, or other health care provider temporarily loses electricity, or telephone or other communication service. If electricity, telephone, or other communication services exist, but one or the other is unavailable for a period of time (for example, because of inclement weather or due to telephone company technical breakdowns), paper claims will be accepted during the period of disrupted power or communication service.

• On demonstration, satisfactory to the Secretary, of other extraordinary circumstances precluding submission of electronic claims.

The interim final rule specified that entities would not generally need to make a special request to determine whether an exception applies that would make them eligible for a mandatory waiver under § 424.32(d)(3) or a discretionary waiver under § 424.32(d)(4). A special request would have to be submitted to a Medicare FI or carrier when an entity did not meet the mandated exceptions at § 424.32(d)(3), or the specified discretionary waiver criteria at § 424.32(d)(4)(i) and (d)(4)(ii), but believed there were other extraordinary circumstances that precluded its submission of electronic claims. We also proposed to issue program guidance to Medicare FIs and carriers to enable them to handle, on a case-by-case basis, requests for relief in extraordinary circumstances. This program guidance was issued on December 19, 2003 (Transmittal 44, CR 2966, Instructions for the Mandatory Electronic Submission of Medicare Claims), and may be found at www.cms.hhs.gov/manuals/ . Publication of this final rule will result in some changes to Transmittal 44, CR 2966, which will be reissued following publication of this final rule.

This final rule adds two more unusual situations under § 424.32(d)(4) for which an exception would exist. Specifically, the requirement to submit electronic claims may be waived when the entity submitting the claim (1) submits, on average, less than 10 claims per month, or (2) furnishes services only outside of the U.S. territory. See our response to comments in section III of this preamble for further discussion regarding these additional exceptions.

ASCA's amendment to section 1862(a) of the Act prescribes that “no payment may be made under Part A or Part B of the Medicare Program for any expenses incurred for items or services” for which a claim is submitted in a non-electronic form. Consequently, absent an applicable exception, paper claims submitted to Medicare will not be paid.

We specified that the Secretary may review entities that bill Medicare non-electronically. We stated that entities determined to be in violation of the statute or the interim final rule would be subject to claim denials, overpayment recoveries, and applicable interest on overpayments.

In accordance with section 3(b) of ASCA, we specified, in § 424.32(d)(5) of the regulations, that the effective date for these amendments would be for claims submitted on or after October 16, 2003.

We received 17 timely public comments on the August 15, 2003 interim final rule. Based upon some of the comments we received from members of the health care provider community who bill Medicare, there remain questions about Medicare's electronic claim submission requirement and how this rule applies in certain situations. Additional information was provided through Medicare manual instructions to FIs and carriers (Transmittal 44, CR 2966, December 19, 2003, which may be found at www.cms.hhs.gov/manuals/ ). Several providers are uncertain about how to determine if they meet the definition of “small provider of services or small supplier,” especially when deciding who should be included in the “full time equivalent” (FTE) employee calculation. Furthermore, some providers have questions concerning whether they are required to submit a request to HHS for a small provider waiver, which would allow them to continue submitting their claims to Medicare on paper.

Comment: One commenter stated that the August 15, 2003 interim final rule did not provide sufficient time for providers to comply with the October 16, 2003 statutory effective date and that we should change the implementation date.

Response: We understand the commenter's concern. However, we are not able to change the effective date of implementation and compliance, because the October 16, 2003 effective date is mandated by the statute.

To qualify for a waiver as a small provider of services or small supplier, and thus, be permitted to continue billing Medicare on paper, the entity submitting a claim must be either: (1) A provider of services with fewer than 25 FTEs that submits its claims to a Medicare FI; or (2) a physician, practitioner, facility, or supplier with fewer than 10 FTEs who bills a Medicare carrier or Durable Medical Equipment Regional Carrier (DMERC).

Comment: Several commenters believe many in the provider community remain unaware that providers do not need to request a waiver for a small provider exception from Medicare electronic claims submission. In addition, other commenters requested a small provider waiver.

Response: Providers who in good faith believe they qualify as “small providers of services or small suppliers” automatically qualify for the small provider waiver unless, upon subsequent review, the Department determines that the waiver requirements in fact are not met. In that case, if the Department finds that none of the exceptions applies, the provider must submit all claims to Medicare electronically. Providers must assess their own situation and determine for themselves whether they meet the small provider criteria.

Small providers of services and small suppliers may elect to submit some of their claims to Medicare electronically, and some claims on paper. Submission of some claims electronically does not revoke or cancel their status as a small provider of services or small supplier, nor obligate them to submit all of their claims electronically. (More information about this will be published through the Medicare contractors. The first in a series of publications was Transmittal 44, CR 2966 dated December 19, 2003.)

Comment: Several commenters requested additional guidance on the term “FTE,” including direction on who is considered an FTE and how the number of FTEs should be calculated for a small provider of services or small supplier. One commenter suggested that only clinical staff should be included in the FTE count. Other commenters believe owners of practices should not count toward the FTE total.

Response: ASCA and its implementing regulation do not modify pre-existing laws or employer policies defining full-time employment. Employers have established policies and practices, subject to State and Federal laws, which define “full-time equivalent” and provide methods for calculating the number of hours their employees must work on average on a weekly, biweekly, monthly, or yearly basis to constitute a “full-time equivalent” employee. Some employers classify employees who work an average of 32 hours per week as one FTE, whereas other employers consider only employees who work 35 to 40 hours per week on average as one FTE. An employee who works an average of 40 or more hours a week would virtually always be considered full-time and one FTE, but employees who work fewer hours weekly could also be considered full-time and one FTE according to the policies of, and laws applicable to, a different employer.

Everyone on staff for whom a health care provider withholds taxes and files reports with the Internal Revenue Service (IRS) using an Employer Identification Number (EIN) is considered an employee including, if applicable, the physician(s) who owns a practice and provides hands-on services, and those support staff who do not furnish health care services but do retain records of, perform billing for, order supplies related to, provide personnel services for, and otherwise perform support services to enable the provider to function. Unpaid volunteers would not be considered employees for purposes of calculating FTEs. Individuals who perform services under independent contract for a provider, such as individuals employed by a billing agency or medical placement service, for whom a provider does not withhold taxes, are not considered members of a provider's staff for FTE calculation purposes when determining whether a provider of services or supplier can be considered as “small” for electronic billing waiver purposes.

Medical staff members may sometimes work part-time, or may work full-time but their time is split among multiple providers. Part-time employee hours must also be counted when determining the number of FTEs employed by a provider. For example, if a provider has a policy that anyone who works at least 35 hours per week on average qualifies as full-time (that is, as one FTE), and has five full-time employees and seven part-time employees, each of whom works 25 hours a week, that provider would have ten FTEs (5+[7 × 25 = 175 divided by 35 = 5]).

In some cases, the employer identification number (EIN) of a parent company may be used to file employee tax reports for multiple providers under multiple Medicare provider numbers. In that instance, it is acceptable to consider only those staff, or staff hours worked for a particular provider as identified by Medicare provider number to calculate the number of FTEs employed by that provider. For example, ABC Health Care Company owns hospital, home health agency (HHA), ambulatory surgical center (ASC), and durable medical equipment (DME) subsidiaries. Some of those providers bill intermediaries and some carriers. All have separate provider numbers, but the tax records for all employees are reported under the same EIN to the IRS. There is a company policy that staff must work an average of 40 hours a week to be considered full-time.

Some of the same staff split hours between the hospital and the ASC, or between the DME and HHA subsidiaries. To determine total FTEs by provider number, it is acceptable to base the calculation on the number of hours each staff member contributes to the support of each separate provider by provider number. First, each provider would need to determine the number of staff members who work on a full-time basis under a single provider number only; not more than 40 hours a week should be counted for these employees. Then each provider would need to determine the number of part-time hours a week worked on average by all staff who furnished services for the provider on a less than full-time basis, and divide that total by 40 hours to determine their full-time equivalent total. If certain staff members regularly work an average of 60 hours per week, but their time is divided 50 hours to the hospital and 10 hours to the ASC, for FTE calculation purposes, consider the person as one FTE for the hospital and .25 FTE for the ASC.

In some cases, a single provider number and EIN may be assigned, but the entity's primary mission is not as a health care provider. For instance, a grocery store's primary role is the retail sale of groceries and ancillary items including over-the-counter medications, but the grocery store has a small pharmacy section that provides prescription drugs and some DME to Medicare beneficiaries. A large drug store has a pharmacy department that supplies prescriptions and DME to Medicare beneficiaries, but most of the store's revenue and most of their employees are not involved with prescription drugs or DME and concentrate on non-related departments of the store, such as groceries, film development, cosmetics, electronics, cleaning supplies, etc. A county government uses the same EIN for all county employees but their health care provider services are limited to furnishing of emergency medical care and ambulance transport to residents.

For FTE calculation purposes, it is acceptable to include only those staff members of the grocery store, drug store, or county government involved with, or that support the provision of, health care in the FTE count when assessing whether a small provider waiver may apply. Support staff who are to be included in the FTE calculation in these instances include, but are not necessarily limited to, those that restock the pharmacy or ambulance, order supplies, maintain patient records, or provide billing and personnel services for the pharmacy or emergency medical services department if under the same EIN. FTEs should be calculated according to the number of hours on average that each staff member contributes to the department that furnishes the services or supplies for which the Medicare provider number was issued.

Neither unpaid volunteers nor individuals that perform services for a provider under independent contract, such as individuals employed by a billing agency or medical placement service, for whom a provider does not withhold taxes, should be considered toward an entity's FTE count when determining if a provider of services or supplier can be considered as “small” for electronic billing waiver purposes.

Comment: Several commenters requested that the Medicare HIPAA contingency plan extend to paper claims so as to avoid cash flow problems among providers.

Response: The ASCA enacted on December 27, 2001 (Pub. L. 107-105) requires the electronic submission of Medicare claims in an electronic form specified by the Secretary of the HHS. The statute waives this requirement only in limited situations, which are detailed in § 424.32 of this regulation. The “electronic form” specified by the Secretary generally means the electronic transactions and code sets standards adopted as part of the HIPAA as detailed in 45 CFR parts 160 and 162.

In response to HHS contingency plan guidance for the electronic transactions and code sets standards under HIPAA, issued on July 24, 2003, Medicare announced its HIPAA contingency plans on September 23, 2003. Medicare's contingency plans allowed for the submission of claims in non-compliant electronic formats on and after October 16, 2003, for an unspecified period of time. However, Medicare has revised its contingency plan; it is paying electronic, HIPAA non-compliant claims no sooner than 27 days after receipt, beginning with claims received on or after July 1, 2004. Continued paper submission of Medicare claims is not a part of Medicare's HIPAA transactions contingency plan. The statute affords no latitude for those who do not meet one of the exceptions, but Medicare will take into consideration the good faith efforts by a provider to comply with the electronic billing requirement when enforcing the provision.

Comment: One commenter expressed concerns that Medicare would not be able to handle an increase in paper claims submission if a larger portion of providers eligible for the “small provider of services or supplier” waiver opted to continue, or drop back to, paper claims submission.

Response: Approximately 98 percent of claims submitted to FIs, and 83 percent of carrier claims are electronic. With the benefits and efficiencies gained through electronic billing, we do not believe that electronic billers who are eligible to bill on paper will indeed revert to paper. Paper claims are more cumbersome to complete and are paid less timely than electronic claims. Moreover, we do not expect difficulty with Medicare contractors' ability to handle paper claims if there were an increase in volume. Since the interim final rule's October 16, 2003 effective date, Medicare contractors have not experienced any problems in receiving and processing electronic claims, and we have not observed any increase in electronic billers who are eligible to bill by paper reverting to paper claims submissions.

We received a number of comments related to our definition of “initial Medicare claim.” In the interim final rule, this term was defined in § 424.32(d)(1)(v) as a claim submitted to Medicare for payment under Part A or Part B of the Medicare program for the first time for processing, including for secondary payment purposes. Some disagree with our decision to require electronic submission of Medicare Secondary Payer (MSP) claims. We have responded to comments submitted on this definition below and provided added clarity. Some commenters also expressed concerns with their ability to submit an electronic MSP claim with a paper attachment.

Comment: We received one comment on resubmission of initial Medicare claims. The commenter was concerned that claims submitted before the compliance deadline of October 16, 2003 on paper and then resubmitted after the deadline on paper would be rejected.

Response: We understand the concerns of the provider community regarding resubmission of claims previously submitted on paper in an electronic format; however, the statute does not afford us any flexibility in allowing for paper claims submission following the compliance deadline.

We have interpreted the intent of the statute to mean claims submitted to the Medicare claims processing system for the first time, including claims submitted after having been previously rejected (which were not previously considered as submitted claims since they were never accepted into the processing system), claims with paper attachments, demand bills, claims where Medicare is secondary and there is only one primary payer, and non-payment claims, as claims that must be submitted electronically barring any waiver or exception. Initial Medicare claims do not include adjustments submitted to intermediaries on previously submitted claims or appeal requests.

Comment: One commenter expressed concerns with our inclusion of a claim sent to Medicare for secondary payment (MSP) purposes in our definition of “initial Medicare claim.” They argued that although primary claims and MSP claims use the same HIPAA 837 standard, the HIPAA regulations make a distinction between the two transactions and, as a result, MSP claims should be treated differently than other Medicare claims.

Response: While MSP claims were not specifically highlighted, the statutory language does not exclude them from consideration as initial Medicare claims. Furthermore, we do not believe that MSP claims should be treated as a different type of claims transaction for purposes of Medicare electronic claims submission, because submission of a secondary claim would still constitute an initial submission of a claim to Medicare. Therefore, we have interpreted the statute to mean they must not be excluded from the electronic submission requirement. Our definition of an “initial Medicare claim” is consistent with this interpretation.

Claims submitted to Medicare when there is more than one primary payer must be submitted on paper as it is difficult to submit service level data for more than one primary payer electronically at this time. The only alternative is for providers to submit those claims to Medicare on paper with copies of the explanation of benefits (EOBs)/remittance advices (RAs) from the primary payers attached.

Comment: We received comments from providers concerning submission of EOBs/RAs. For instance, one commenter was under the impression that an 835 electronic remittance advice transaction is needed to submit an 837 MSP claim. The commenter proposed as an alternative that the electronic submission of claims for which Medicare is secondary be phased in and only required when providers receive an 835.

Response: In order for a provider to be reimbursed for an MSP claim, the provider must submit to Medicare certain payment information contained in the EOB/RA from the primary payer(s). We encourage providers to work with their payers to receive the remittance advice in the 835 electronic format, but that is not mandated by HIPAA or ASCA. A provider may receive this information from the primary payer(s) either on paper or electronically. A provider does not need to receive an 835 electronic remittance advice transaction from a primary payer, however, in order to generate a secondary claim for Medicare.

Comment: We received some comments on timely reimbursement of electronic claims submitted with paper attachments. In one case, a provider believed that it was unable to receive reimbursement for an electronic claim unless a paper claim was also submitted.

Response: Transmittal 44, CR 2966, December 19, 2003, required Medicare contractors to issue further guidance to providers and submitters on the submission of electronic claims when there are paper attachments. Providers and submitters who experience difficulty getting their electronic claims that have paper attachments processed must first contact their Medicare contractor. If problems persist, providers and submitters are encouraged to contact their regional CMS office to troubleshoot these issues. Phone numbers for Medicare contractors and CMS regional offices can be found on our Web site at: http://www.cms.hhs.gov/physicians/default.asp.

Comment: Another commenter was concerned with Medicare connecting paperwork and hard copy EOBs with an electronic claim, resulting in untimely reimbursement and extra follow-up time.

Response: Once the electronic claims attachment standard is adopted and entities have properly implemented it, this issue will be resolved. In the meantime, and prior to the claims attachment standard compliance date, paper attachments must be properly associated with the corresponding electronic claims by incorporating correct and appropriate data and indicating in the electronic claims transaction that separate paper documentation is being sent. Separate submission of electronic claims and related paper attachments should consequently not cause a discernable delay in payment of claims. Providers and other electronic claim submitters are advised to contact the Medicare contractor to which they submit their claims if they have further questions about the locally published process.

Pending issuance of the future instructions concerning submission of medical records for electronic claims, providers and Medicare contractors can continue current policies and practices regarding submission of attachments with claims, whether in a proprietary format, on paper, via fax, or by other means.

While commenters expressed their support for electronic claims submission, they were also pleased with the flexibility afforded by the outlined exceptions, which permit continued paper claims submission such as in the case of roster vaccinations billing and certain Medicare demonstration claims. We received a number of comments on “unusual cases,” asking for further clarity.

Comment: One commenter stated the interim final rule was unclear concerning whether paper claims would be allowable after the compliance deadline. The commenter proposed designating the HIPAA transition period to a largely electronic submission environment for Medicare, an “unusual case.”

Response: The “unusual case” provision is intended to operate as an exception to a situation in which Medicare providers are generally submitting claims electronically. The commenter, however, proposes making the exception to be the norm, which would appear to be contrary to what the Congress intended.

Comment: Another commenter suggested we expand the criteria for the service interruption to include power outages, which result in a phone or communication service interruption.

Response: We have interpreted an “unusual case” exception to be one applied to a temporary situation outside of a provider's control that effectively precludes electronic submission of claims. For a situation to fall under an “unusual case” exception, the circumstances must be truly out of the ordinary and they must genuinely prevent the provider from complying with the applicable electronic submission requirement.

In the August 15, 2003 interim final rule, we described three situations that we believe meet the criteria for an unusual case exception. The three situations we listed were submission of dental claims, a service interruption outside the control of the submitter, and other extraordinary circumstances deemed satisfactory to the Secretary.

We also specified that the service interruption exception is limited to submitters who have experienced a loss of phone or communication service. We agree with the commenter that it may be possible for an interruption in the mode of service used to submit a claim to occur resulting from something other than inclement weather or phone company problems. We further recognize that a loss of power could occur that does not result in the loss of the use of a phone or other communication services but precludes or severely inhibits a submitter from sending claims electronically. In this rare and unanticipated situation, a waiver may be granted for service interruption. This is addressed in Medicare manual instructions, Transmittal 44, CR 2966, December 19, 2003.

Based on comments received and our assessment of the reasonableness of an entity's ability to comply, we have identified the following two additional “unusual case” situations we consider to be eligible for a waiver under § 424.32(d)(4). First, an unusual case is deemed to exist when an entity submits fewer than 10 claims to Medicare per month on average. We believe entities that submit such low volumes of Medicare claims are “unusual cases” in that the volume does not support mandating the acquisition of hardware/software to submit claims electronically. The exception for small providers indicates to us the Congress's intention that the electronic submission requirement not apply to providers for whom the electronic submission requirement of claims would be truly burdensome. This would be the case for providers who submit fewer than 10 claims per month, as the cost of converting their billing systems for so few claims would be uneconomic. If the volume increases, then electronic claim submission would be required, unless another exception applies. This is self-assessable and the entity need not submit a waiver request. Second, it is deemed to be an unusual case when the entity submitting a claim furnishes services only outside of the U.S. territory. The HIPAA transactions and code sets standards are consensus-based, American National Standards Institute (ANSI)-accredited standards that rely upon hardware and software that meet certain specifications, which may not be readily available outside of the U.S. territory. We believe that entities furnishing services solely outside of the U.S. in many cases could not properly submit electronic claims. Moreover, we think those entities are few in number and truly constitute an unusual case. This is also self-assessable and the entity need not submit a waiver request. Section 424.32(d)(4) is revised to include these two additional “unusual case” situations.

Instructions to the Medicare contractors that describe how to go about requesting an “unusual case” waiver were issued December 19, 2003 (Transmittal 44, CR 2966).

Comment: One commenter urged Medicare contractors to furnish all providers and mass immunizer billers and suppliers with free electronic roster billing software, in order to reduce dependence on paper roster billing and increase cost savings to the program. Another commenter suggested there remains a need for continued outreach to educate providers on these topics.

Response: We are considering these suggestions; however, claims submission for roster billing for vaccinations is still considered exempt from the electronic claims submission requirement. To the extent certain Medicare contractors' software permits electronic submission of roster bills, we encourage providers to use it; however, it is not required.

We have issued instructions to the Medicare contractors that describe in greater detail how this regulation is operationalized, including instructions for requesting an “unusual case” waiver (refer to Transmittal 44, CR 2966, dated December 19, 2003). In addition, Medicare contractors will be instructed to include information on their provider Web sites and in their newsletters that addresses these and other issues pertinent to operationalization of the regulation.

Comment: Several commenters expressed concerns regarding low HIPAA transaction testing rates between providers and Medicare.

Response: Medicare testing has increased over the past several months and rose steadily in the weeks leading up to the HIPAA compliance deadline. As of September 10, 2004, approximately 97.7 percent of inbound claims were being submitted to Medicare in the HIPAA-compliant format.

Medicare invoked its HIPAA contingency plan to afford added flexibility to providers and submitters who were not ready to submit claims in the HIPAA electronic format on the deadline of October 16, 2003, to continue to prepare for the electronic claims submission requirement in the adopted formats. Many Medicare contractors were ready to test the 837 and 835 for 6 or more months before the October 16, 2003 deadline. Medicare's revised HIPAA contingency plan encourages further HIPAA compliance because, effective July 1, 2004, non-compliant electronic claims are paid no sooner than 27 days after the date of receipt while compliant claims are paid sooner.

Comment: Another commenter requested that Medicare relax the technical edits to HIPAA transactions so that claims may continue to be processed after the deadline.

Response: We believe that Medicare has tried to make reasonable accommodations regarding its technical edits, while remaining considerate of how changes in its claims processing systems may affect various other submitters (some of whom could be adversely affected by inappropriate technical edits).

Comment: Several commenters expressed concerns surrounding the overall level of readiness by the industry for implementing the HIPAA transaction and code set standards due to possible industry variations in the interpretation of the standards. They were concerned that unresolved questions pertaining to complying with the HIPAA standards could impact a provider's ability to submit claims electronically and, therefore, comply with the Medicare electronic claims submission requirement.

Response: We recognize that a number of HIPAA implementation issues exist and present obstacles to HIPAA compliance; however, these issues and obstacles extend beyond the scope of this regulation. We are addressing these concerns through other channels. Medicare's HIPAA contingency plan may afford some additional latitude to entities as they work toward compliance with the HIPAA standards. In the meantime, Medicare's contingency plan allows for providers, under specified circumstances, to continue to send HIPAA non-compliant electronic claims to Medicare and, therefore, facilitate compliance with the ASCA mandate.

Comment: One commenter identified a few issues related to compliance with HIPAA's electronic transactions and code sets standards such as a request for new data elements, which could impact compliance with the Medicare electronic claims submission requirement.

Response: For any change to a standard to become effective and compliance required, the designated standard maintenance organization would first have to hold public hearings and ultimately the Secretary would need to adopt the change formally.

Comment: Another commenter suggested we find an alternate term for “audit” when discussing enforcement.

Response: We accept this comment; therefore, in the future we will reference the Secretary's ability to “audit” an entity as the ability to “review” an entity for compliance. In addition, the preliminary enforcement process will be conducted on a prospective basis and will focus on providers that appear to be submitting extraordinarily high numbers of paper claims. If a review establishes that a provider is submitting paper claims without properly qualifying for a waiver, the provider will be notified that any paper claims submitted after a certain date will be rejected by Medicare. However, providers will be afforded a reasonable amount of time under the circumstances to come into compliance with the electronic claim submission requirement.

A future Medicare manual instruction to Medicare contractors will explain the criteria for review and the enforcement requirements for providers that are determined to have incorrectly submitted paper claims.

Comment: One commenter requested that we provide a more realistic estimate of the costs associated with converting from paper claims submission to electronic claims submission. Several commenters believe that the requirement to submit Medicare claims electronically represents a costly expense without the potential for reimbursement to providers.

Response: When considering this comment, we reviewed again the basis for the cost estimate and considered further possible paperwork burden and capital investment issues in the impact analysis of the interim final rule. We concluded that the cost estimate remains the most accurate, given the data that were available.

Due to the high number of Medicare claims already submitted electronically and the waivers issued for “small providers,” moderately sized providers are most likely to be affected by this requirement. While we do agree that a provider's staff will need some time to become fully familiar and proficient with the use of the free/low cost Medicare billing software, a physician's office (which presently submits claims on paper) can purchase hardware to enable compliance with this requirement for less than $1,000. Although the electronic conversion will not be reimbursed, we continue to believe that we have tried to provide the most economical software for providers, and we will even provide free technical support on the installation and usage through our Medicare contractors.

Comment: One commenter requested that Medicare guidance communications or program changes to physicians be completed on paper rather than electronically.

Response: Although we appreciate this commenter's concern, because these issues were not addressed in the August 15, 2003 interim final rule, we are not able to address this concern in this final rule.

Comment: Another commenter suggested that we reimburse for nursing service claims.

Response: Although we appreciate the commenter's concerns, nursing service claim reimbursement was not covered in the August 15, 2003 interim final rule. Therefore, we are unable to address this concern in this final regulation.

With some minor editing and modification to include two additional “unusual cases” for an automatic exception and changed “unusual circumstances” to “unusual cases”, we are adopting all of the provisions set forth in the August 15, 2003 interim final rule as final.

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

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

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

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

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

Therefore, we are soliciting public comments on each of these issues for the information collection requirements discussed below.

The information collection requirements and associated burdens in § 424.32 are subject to the PRA. The burden of submitting the information required is addressed under OMB approval number:

0938-0866, HIPAA Standards for Coding Electronic Transactions, with a one-time burden of 34,000,000 hours. The current approval expires 5/31/05.

0938-0279, Medicare Uniform Institutional Provider Bill, with an annual burden of 1,666,208 hours (form CMS-1450). The current approval expires 12/31/05.

0938-0008, Common Claim form, instructions, and supporting regulations at § 414.40, § 424.32, and § 414.40, with an annual burden of 44,189,007 hours (form CMS-1500). The current approval expires 3/31/06.

Approximately 205,409 providers and suppliers will be affected by this final rule and will have to change the format for the claims they submit. They will incur some costs, either that of switching to clearinghouses, which will not affect the time it takes to submit the information for a claim, but may cost them approximately $.30 per claim, or that of purchasing computer equipment, which we estimate at $500 to $1,000.

In the final rule published to implement the electronic transactions and code sets standards, we estimated that it would take an average of 10 hours per entity to switch over to the mandated standard transaction. (The switch could be from paper to electronic or from another electronic format to the standard format.)

For purposes of this discussion, we are estimating that 37.5 percent of the affected providers and suppliers (that is, those not meeting one of the exceptions) already own computers and will not incur capital costs. We are also estimating that 50 percent of the affected providers and suppliers will start using a clearinghouse or billing service, which will not impose any capital costs subject to the PRA. The remaining 12.5 percent (25,676) will buy computers at an average of $750, for a total capital cost of $19.3 million.

On the other hand, the providers and suppliers who own or who will buy a computer will require less time to submit claims. Form CMS-1450 takes approximately 9 minutes to submit in hard copy and 0.5 minutes to submit electronically; form CMS-1500 takes 15 minutes and 1 minute, respectively.

If 50 percent of the entities that will bill us directly are responsible for 25 percent of the paper bills (we assume that half of the bills are submitted by entities that will be excepted from the requirements, and that 25 percent will be submitted through an intermediate party), they will save 7,651,089 million hours for form 1500 and 129,196 hours for form 1450. Mailing costs will be reduced by approximately $.40 per claim on average and the cost of the forms by $.03 for the form 1450 and form 1500 (the third form is furnished by us).

As required by section 3504(h) of the PRA of 1995, we have submitted a copy of the revision to § 424.32 to OMB for its review of the information collection requirements. The revision is not effective until OMB has approved it.

If you comment on these information collection and recordkeeping requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic Operations and Regulatory Affairs, Regulations Development and Issuances Group, Attn: Jimmy Wickliffe, CMS-0008-F, Room C5-11-04, 7500 Security Boulevard, Baltimore, MD 21244-1850.

Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503, Attn: Christopher Martin, Desk Officer, CMS-0008-F.

Comments submitted to OMB may also be e-mailed to the following address: e-mail: christophermartin@omb.eop.gov ; or faxed to OMB at (202)395-6974.

We have examined the impacts of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.

For the purpose of this analysis, we use a pre-statute baseline; therefore, all costs and benefits identified in this impact analysis are attributed to this final rule. Nevertheless, the ASCA mandates most aspects of this final rule. In particular, the ASCA requires Medicare providers to submit claims electronically and stipulates the exceptions that will and may be granted. However, we did have discretion in setting the conditions for exceptions, and believe that these exceptions reduce the burden relative to the burden that was imposed by ASCA without this implementing regulation.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This is not a major rule. While additional costs will be imposed on those entities that do not meet any of the exception requirements and which must purchase the capability to bill Medicare electronically, we estimate the impact to be less than $100 million. Our estimates of the cost impact are based on the following analysis. (Note: The primary sources of data contained herein are the Medicare Program's “Contractor Reporting of Operational Workload Data” (CROWD), the “2002 CMS Statistics” Handbook, and the Year 2000 “Statistics of U.S. Business” issued by the U.S. Census Bureau.)

The Administrative Simplification provisions under HIPAA establish the standards for electronic data transmission when transactions are conducted electronically, but they do not require physicians, practitioners, facilities, suppliers, and other health care providers to transmit claims and other transactions electronically. ASCA, however, does require Medicare physicians, practitioners, facilities, suppliers, and other health care providers (except those for which this rule provides for an exception) to submit claims electronically to Medicare. Consequently, Medicare claims must be submitted in the HIPAA-prescribed electronic format. Thus, this rule will only have an impact on that group of entities that now submit paper claims to the Medicare Program and that do not fall into one of the excepted groups.

Approximately 139 million paper claims were submitted to Medicare in FY 2002. This represents about 13.9 percent of all claims processed. Broken down between paper claims submitted to FIs and carriers, the number of paper claims in FY 2002 was 3.4 million and 136 million, respectively (source of data is CROWD).

Over the past 4 years, Medicare's electronic media claims (EMC) rate has slowly grown at an average of 0.3 percent per year for FIs and 0.9 percent per year for carriers (source of data is CROWD). We do not expect a change in this trend for the immediate future. Therefore, we assume that similar changes will continue for FY 2004, the first year of implementation of mandatory Medicare electronic media claims (EMC). Using workload growth projections from our FY 2004 budget submission to the Congress, we estimate the FY 2004 volume of paper claims impacted by the ASCA, factoring out Medicare's continuing trend of higher EMC rates, will be 2.5 million for Medicare FIs and 133.7 million for carriers. These volumes could be even smaller in FY 2004 due to the simultaneous implementation of HIPAA. However, the impact of HIPAA, coupled with Medicare's EMC trends, cannot be quantified, though the impact would only further reduce the cost/savings impact of ASCA and further support that a RIA is not needed.

We do not know at this time how many providers will be excepted from the ASCA requirements, but projections have been made based upon the percentage of health care providers reported in the Census Bureau's “Year 2000 Statistics of U.S. Businesses,” which includes data on the number of health care providers by type with fewer than 20 employees and the numbers of physician, practitioner, and supplier entities with fewer than 10 employees. The Census figures do not differentiate between part-time and full-time employees, and would be expected to result in inflated numbers on the whole when applied to Medicare, but that is acceptable for impact assessment purposes. The Census did not have a category for fewer than 25 employees; fewer than 20 employees was their closest statistic. Overall, the Census data would still be reliable indicators of the anticipated worse case scenario of the maximum number of Medicare providers, physicians, practitioners, and suppliers likely to be impacted by this regulation. The percentages of small providers, physicians, practitioners, and suppliers based on employment numbers for the universe of all U.S. providers, physicians, practitioners, and suppliers should be comparable to the percentage of the subset of those providers that bill the Medicare program.

The Census figures did not include each of the same provider, physician, practitioner, and supplier breakouts as tracked by Medicare's statistics, but the Census figures did include the largest provider, physician, practitioner, and supplier types. The Census figures included 90 percent of all Medicare providers, physicians, practitioners, and suppliers by type. The provider types, tracked differently by the Census Bureau and us, include regional referral centers, Christian Science Sanitoria, rural health clinics, critical access facilities, and hospices. The “2002 CMS Statistics” directory (number of providers) and the 2000 Census data health care establishment totals (percentage of providers with less than 20 employees) reported the following:

As there was a 10 percent difference between the Census provider, physician, practitioner, and supplier types and the Medicare provider types, due to differences in type of collection, the numbers impacted would need to be increased by 10 percent to account for the difference. Increased by 10 percent, approximately 11,032 (31.4 percent) of all Medicare providers, and 753,853 (66.1 percent) of all Medicare physicians, practitioners, and suppliers could qualify for an exception of the electronic claim-filing requirement based on provider size, leaving approximately 24,126 providers and 386,692 physicians, practitioners, and suppliers (a total of 410,818) potentially affected by the ASCA Medicare requirement nationally.

Approximately 98 percent of providers, and 83 percent of physicians, practitioners, and suppliers already submit claims to Medicare electronically, and are expected to continue doing so, so the total impacted must be further reduced to determine the approximate number of current paper claim submitters that would likely be affected. It is reasonable to assume that the majority of the paper claims received by Medicare are submitted by smaller providers, physicians, practitioners, and suppliers. As a result, it would not be accurate to reduce the number of affected providers by the full 98 percent or 83 percent. In the absence of reliable statistics to project the current source of all paper claims, however, the number of providers potentially affected by the mandatory Medicare electronic claim requirement will be conservatively estimated at a maximum of 50 percent of the entities that would not qualify for a waiver. This leaves 12,063 providers and 193,346 physicians, practitioners, and suppliers (a total of 205,409) that would need to begin submitting claims to Medicare electronically.

Statistics collected for PRA clearance of the Medicare paper claim forms and referenced in the “Collection of Information Requirements” section of this preamble indicate that, in the absence of a mandatory electronic claim requirement effective for FY 2004, 2.5 million paper claims are expected to be sent to Medicare intermediaries and 133.7 million paper claims are to be sent to Medicare carriers.

Prior to HIPAA, many Medicare providers used billing agents or clearinghouses to bill the Medicare program. Many providers, physicians, practitioners, and suppliers that submitted paper claims indicated anecdotally that they used paper as they would rather avoid the “hassle” of dealing with the multiple electronic claim formats required by payers, and the need to have staff keep abreast of the updates to those formats. HIPAA largely eliminates format differences among payers, but there will always be differences concerning use of certain “situational” segments and data elements in the formats. It is reasonable to assume that up to half (205,409 × 50 percent = 102,704) of those entities that do not submit claims to Medicare electronically today would prefer to contract with a third party to deal with such differences on their behalf.

A small sampling of Medicare contractors indicated an average cost of $0.30 per claim for billing agent and clearinghouse services. The total cost to physicians, practitioners, facilities, suppliers, and other health care providers to use a billing agent or clearinghouse should not be more than $7,055,895 (that is, $.30 × {the sum of 2.5 million paper claims sent to intermediaries as estimated previously for FY 2004 multiplied by the 68.6 percent of providers that would not meet the exception criteria, plus 133.7 million paper claims estimated to be sent to carriers multiplied by the 33.9 percent of physicians, practitioners, and suppliers that would not meet the exception criteria}).

Finally, in regard to the balance of 102,704 (205,409 × 50 percent) providers, physicians, practitioners, and suppliers that would not be expected to meet the criteria to submit paper claims, we conservatively estimate that approximately 75 percent of these already own personal computers that are used to prepare the paper claim forms they currently submit to Medicare. Very few hand-written or manually typed claims are submitted to Medicare. Although many paper claim submitters have not used personal computers for electronic billing, they have used them for claims preparation, patient scheduling, and other aspects of their practice.

We estimate that, at a maximum, the remaining total of 25,676 (25 percent of 102,704) providers, physicians, practitioners, and suppliers will obtain personal computers to allow them to submit their claims directly to Medicare electronically. A recent review of computer costs in the marketplace indicated that personal computers sufficient to meet the mandatory electronic claim requirement could be obtained for $500 to $1,000 for hardware (personal computer, monitor, printer, and modem). Billing software is available free or at low cost (less than $25 for shipping and handling) from Medicare. At the average rate of $750, it would cost $19.3 million to purchase 25,676 personal computer systems. More expensive equipment and peripherals could be used, but would not be necessary for basic compliance. Therefore, the total maximum cost should be no higher than $26.4 million ($7.1 million for users of clearinghouses or billing services, and $19.3 million for those that obtain personal computers).

Following the HIPAA savings calculation used in the Transaction Rule, but projected to FY 2004 to account for inflation, a savings of $615 per provider could result in a total provider savings of approximately $15.8 million (that is, 25,676 times $615).

We note that the Transaction Final Rule (65 FR 50353 through 50359) used a 10-year timeframe to capture the full extent of costs and savings that could be attributed to the use of the transactions adopted under HIPAA. Data from the 2000 edition of Faulkner and Gray's “Health Data Directory,” from a Workgroup for Electronic Data Interchange study report, and from the Department of Labor was used in those calculations to determine total claims in the health care industry, costs to use the transactions electronically, savings expected to be realized, the historical growth rate for claims overall as well as electronic claims, the percentage of electronic health care claims nationally in 2000, and the anticipated inflation rate for the 10-year period.

Thus, we estimate that the total cost-plus savings would be approximately $42.2 million, which is less than the $100 million threshold for an RIA. Again, these total costs and savings attributable to ASCA could be even less if we were able to factor in the impact HIPAA may have on electronic billing growth.

The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. According to the Small Business Administration's (SBA's) data, approximately 95 percent of offices of physicians are considered small businesses (see the Small Business Administration's final rule titled “Small Business Size Standards, Health Care,” published in the Federal Register on November 17, 2000, 65 FR 69432). Most practitioners, facilities, suppliers, and other providers are small entities either because of nonprofit status or because of having revenues of $6 million to $29 million or less in any 1 year. For purposes of the RFA, all physicians, practitioners, facilities, suppliers, and other health care providers that serve Medicare beneficiaries are considered to be small entities. However, as stated earlier, this rule in and of itself does not impose a regulatory burden. The ASCA mandates most aspects of this rule, in particular, the ASCA requires Medicare providers to submit claims electronically and stipulates the exceptions that will and may be granted. We did have discretion however, in setting conditions for exceptions, and believe these exceptions reduce the burden relative to the burden that may have been imposed by ASCA without this implementing regulation. If this final rule has an average annual impact that exceeds 3 to 5 percent of total costs or revenues, it would be considered significant according to the Department of Health and Human Services (HHS) Guidelines. However, at a cost of $750 per computer and savings of $615 ($750-$615), we expect this to fall significantly below the revenue rule given by the HHS. Therefore, we have determined that this rule will not have a significant economic impact on a substantial number of small entities. Individuals and States are not considered small entities. Therefore, no regulatory relief options are considered.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. As indicated above, this rule could have an impact on those small rural hospitals that bill Medicare and that do not meet one of the exceptions. However, we do not believe the impact is significant since the cost of compliance is relatively small ($500 to $1,000) and small rural hospitals may be able to qualify for the small provider exception. Therefore, no regulatory impact analysis is required as the impact on small rural hospitals is not significant.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million. This final rule will not have an impact of that size on State, local, or tribal governments or on the private sector. Instead, the primary impact on State, local, or tribal governments, or the private sector will be that entities that must begin billing Medicare electronically as a result of the ASCA are likely to use that capability to also bill other payers (such as State, local, or tribal governments and the private sector).

Executive Order 13132 establishes certain requirements that an agency must meet when it publishes a final rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This final rule will not have a substantial effect on State or local governments for the reasons noted in this section of this final rule.

The anticipated effects on Medicare's beneficiaries will be that additional attention and services may be provided by their health care physician because, for example, electronic billing should reduce administrative paperwork. (This assertion was made by the medical community in numerous forums over the years, although documentation to this effect is not available.)

The anticipated effects on the entities required to bill electronically will reduce or eliminate paper in their administrative operations, realizing increased efficiencies and indeterminable savings. These savings may be increased by the fact that the Administrative Simplification provisions of HIPAA mandate a standard transaction for electronic claim submissions, and this will facilitate electronic claims submissions to all health care payers. At this time, we do not have additional data to estimate those savings to Medicare physicians, practitioners, facilities, suppliers, and other healthcare providers. As previously stated, there will be a cost incurred by those entities that cannot satisfy one of the exceptions and would be required to bill Medicare in electronic form.

Implementation of this final rule will result in a savings to the Medicare program. If the FY 2004 projected paper claims submissions of 136.2 million (HHS FY 2004 Budget submission to the Congress and estimated electronic media claims rate), are reduced by half and we assume a savings of $1.40 per claim as a result, the program could realize administrative savings of over $95 million per year. (Note: The $1.40 per claim savings is our estimate of savings based upon a 1990 Industrial Engineering Study, contracted by CMS (then HCFA). The study documented that FI paper claims cost about $3.30 more to process than electronic claims and, similarly, carrier paper claims cost about $1.00 more to process than electronic claims. Weighing these differences by the 2004 workloads and combining them yields the $1.40 estimated per claim savings.)

We might expect similar types of savings for the States, which administer the Medicaid Program. That is, Medicare providers who become electronic billers due to ASCA may decide to begin billing Medicaid electronically as well. However, this would depend on which of the affected Medicare physicians, practitioners, facilities, suppliers, and other healthcare providers also bill Medicaid. Again, the fact that the Administrative Simplification provisions of HIPAA mandate a standard transaction for electronic claim submissions will facilitate electronic claims submissions to all health care payers.

Section 3 of the ASCA mandated that all Medicare claims on or after October 16, 2003, be submitted electronically. Since the statute requires the electronic submission of claims, no alternatives to electronic submission were considered. However, we are interpreting the statutory provisions of the ASCA to allow for reasonable and limited exceptions to the electronic submission requirement.

As described above in section VI.A., this final rule establishes the requirements for implementing the statutory provisions under section 3 of the ASCA. The statute requires, with few exceptions, that physicians, practitioners, facilities, suppliers, and other health care providers that bill Medicare do so electronically. Coupled with the electronic standard transaction requirements under HIPAA, this rule facilitates greater administrative efficiencies for the Medicare program as well as for those that bill Medicare. There will be a cost incurred for those entities that are unable to meet one of the statutory exceptions, but we expect these initial costs to be offset by increased efficiencies and lower ongoing costs attributable to Medicare claims processing.

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

Title I of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) created a new title XXVII of the Public Health Service (PHS) Act (42 U.S.C. 300gg, et seq. ) that requires group health plans and health insurance issuers to provide certain guarantees for availability and renewability of health coverage in the group and individual health insurance markets.

HIPAA created a series of parallel provisions that were placed in the Employee Retirement Income Security Act (ERISA), which is within the jurisdiction of the Department of Labor; the Public Health Service (PHS) Act, which is within the jurisdiction of the Department of Health and Human Services; and the Internal Revenue Code, which is within the jurisdiction of the Department of the Treasury. These “shared provisions” set forth Federal requirements relating to portability of and access to group health plan coverage, as well as group health insurance coverage provided by issuers. The shared provisions contain rules limiting the use of preexisting condition exclusion periods, and prohibiting discrimination against participants and beneficiaries based on health status.

Section 104 of Title I of HIPAA requires that the Secretaries of the three Departments ensure through an interagency Memorandum of Understanding (MOU) that regulations, rulings, and interpretations issued by each of the Departments relating to the same matter over which two or more departments have jurisdiction, are administered so as to have the same effect at all times. Under section 104, the Departments, through the MOU, are to provide for coordination of policies relating to enforcement of the same requirements in order to have a coordinated enforcement strategy that avoids duplication of enforcement efforts and assigns priorities in enforcement. The Secretaries of the three departments signed and published the MOU in 1999 (64 FR 70164).

HIPAA also added certain provisions governing insurance in the group and individual markets, and with respect to non-Federal governmental plans, which are contained only in the Public Health Service Act and are not within the regulatory jurisdiction of the Department of Labor or the Department of the Treasury.

Under section 101(b) of HIPAA the Department of Labor is not authorized to enforce any of the portability requirements of part 7 of ERISA (the “shared” provisions) against a health insurance issuer offering health insurance coverage in connection with a group health plan, although individuals covered under ERISA can bring suit against the issuer. Also, governmental plans, while they are defined in section 3(32) of ERISA, are exempt from ERISA requirements. (See section 4(b)(1) of ERISA.) Thus, the scope of the MOU is limited, with respect to coordination of enforcement activities, to enforcement of shared provisions. Enforcement of these provisions constitutes only a relatively small portion of our responsibilities.

The Newborns' and Mothers' Health Protection Act of 1996 (NMHPA) amended the PHS Act and ERISA (with corresponding provisions in the Tax Code) to provide protections for mothers and their newborn children with regard to the length of hospital stay following childbirth. The Mental Health Parity Act of 1996 (MHPA) further amended the PHS Act and ERISA (with corresponding provisions in the Tax Code) to provide for parity in the application of certain annual and lifetime dollar limits on mental health benefits with annual and lifetime dollar limits on medical/surgical benefits. The Women's Health and Cancer Rights Act of 1998 (WHCRA) amended the PHS Act (and ERISA) to provide certain protections for patients who elect breast reconstruction in connection with a mastectomy. (As used hereafter in this preamble, “HIPAA” refers to title XXVII of the PHS Act, as added by the Health Insurance Portability and Accountability Act of 1996, and later amended by MHPA, NMHPA, and WHCRA).

HIPAA added two preemption provisions to the PHS Act. With respect to HIPAA's preexisting condition exclusion rules, and the special enrollment rights contained in section 2701 of the PHS Act, State law cannot differ in any way from the Federal requirements, except to expand the protections in one of several ways specifically permitted by the statute. (See section 2723(b) of the PHS Act.) With respect to HIPAA's other requirements (except for NMHPA and WHCRA), including the non-discrimination provisions in section 2702 of the PHS Act, State laws are preempted only to the extent they prevent the application of any requirement of HIPAA. (See section 2723(a) of the PHS Act.) In addition, the NMHPA does not apply to health insurance issuers in States that have certain types of laws regulating coverage for the length of post-childbirth hospitalization. WHCRA does not preempt State laws in effect on the date of WHCRA's enactment with respect to health insurance coverage that requires coverage of at least the coverage of reconstructive breast surgery otherwise required under WHCRA.

HIPAA affirms that the States are the primary regulators of health insurance coverage in each State. However, in the event that a State either does not enact legislation that meets or exceeds the Federal requirements, or if it otherwise fails to substantially enforce the HIPAA standards, we enforce the HIPAA requirements that apply to health insurance issuers offering coverage within that State.

We are also responsible for enforcing the HIPAA requirements with respect to non-Federal governmental plans. Non-Federal governmental plans that self-insure, rather than purchasing health insurance coverage may elect exemption from one or more requirements of HIPAA, but must comply with requirements regarding certification and disclosure of creditable coverage.

On April 8, 1997, we published regulations to implement HIPAA by adding 45 CFR parts 144, 146, and 148. Included in those regulations were enforcement provisions. After gaining some experience with direct Federal enforcement in some States, we determined that it was necessary to provide more detail on the procedures that will be used to enforce HIPAA when a State does not do so. Therefore, on August 20, 1999, we published interim final regulations (HCFA-2019-IFC) (64 FR 45786) that added a new part that revised and expanded the provisions contained in § 146.184, § 148.200, and § 148.202. Those sections were deleted.

That new part, 45 CFR part 150, consists of four subparts. Subpart A explains the basis and scope of the regulation and presents definitions that supplement definitions located in 45 CFR 144.103 and 148.103. Subpart B describes how we determine whether to assume enforcement authority in a State and explains the process for transferring authority back to the State. Subpart C describes procedures for assessing civil money penalties. Examples of specific situations that may trigger the assessment are listed in Appendix A to subpart C. Subpart D describes the administrative appeals process.

We refer the reader to the August 20, 1999, interim final rule with comment period for greater detail.

We received no public comments on the August 20, 1999 interim final rule.

The provisions of this final rule are identical to the provisions of the August 20, 1999, interim final rule with comment period, except that we have deleted the appendix to subpart C that listed examples of specific situations that may trigger the assessment of civil money penalties. We believe the inclusion of that document is unnecessary, in light of the fact that assessments are triggered by breaches of the provisions within the regulation itself.

Additionally, in § 150.311(e), the cross-reference made to the document described in § 150.307 incorrectly identified that document as the notice of intent to assess a penalty. We are correcting that cross-reference in 150.311(e) so it references the notice to the responsible entity or entities described in § 150.307.

This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995.

In drafting the interim regulation that this regulation finalizes, we had examined the impacts of the interim final regulation as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. We published a Regulatory Impact Statement addressing all those impacts in the preamble to the interim regulation (64 FR 45786, 45792). This regulation merely finalizes that interim final regulation, and makes no substantive changes to it. Therefore, that Regulatory Impact Statement applies to this final regulation as well, and we refer the reader to it. However, we note that under Executive Order 12866 (58 FR 551735, October 4, 1993), the Department must determine whether a regulatory action is “significant” and therefore subject to the requirements of the Executive Order and subject to review by the Office of Management and Budget (OMB). Under section 3(f), the order defines a “significant regulatory action” as an action that is likely to result in a rule (1) having an annual effect on the economy of $100 million or more, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (also referred to as “economically significant”); (2) creating serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. We have determined that this action is not economically significant for the reasons stated in the preamble to the interim final regulation. The action also does not create any serious inconsistency or interfere with another agency's action or planned action, nor does it materially alter any budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof. Additionally, because this final regulation merely keeps in force an interim regulation already in effect before the publication of this final regulation, and makes no substantive changes to it, this final regulation does not raise any novel legal or policy issues.

We also note that Executive Order 12612 (“Federalism”) has been revoked subsequent to the issuance of the interim final regulation, and has been replaced by Executive Order 13132 (“Federalism”). Executive Order 13132 outlines fundamental principles of Federalism. It requires adherence to specific criteria by federal agencies in formulating and implementing policies that have “substantial direct effects” on the States, the relationship between the national government and States, or on the distribution of power and responsibilities among the various levels of government. Federal agencies promulgating regulations that have these federalism implications must consult with State and local officials, and describe the extent of their consultation and the nature of the concerns of State and local officials in the preamble to the regulation.

In the Department's view, these final regulations have Federalism implications because they may have substantial direct effects on the States, the relationship between the national government and States, or on the distribution of power and responsibilities among the various levels of government. This is because the process set forth in these regulations impacts the relationship between national government and the States. However, in the Department's view, the Federalism implications of these final regulations are minimal. This is evidenced by the fact that no State submitted any comments on the interim final regulations suggesting that the regulations would in fact materially impact States' relationship with the national government, or would unduly infringe on States' historical function of regulating health insurance issuers. Additionally, the Department notes that the PHS Act provides that the States may enforce the provisions of title XXVII as they pertain to issuers, but that the Secretary of Health and Human Services must enforce any provisions that a State fails to substantially enforce. Currently, HHS enforces the title XXVII group market portability and nondiscrimination provisions in only one State  1 in accordance with that State's specific request to do so. Additionally, HHS enforces the NMHPA provisions in title XXVII in one State  2 that has not enacted conforming legislation, and has varying levels of direct enforcement responsibility in four States  3 with respect to the WHCRA provisions in title XXVII. In these instances, the Department complied with the procedures set forth in the interim final regulation (and this regulation) before assuming such enforcement responsibilities. 4 When exercising its responsibilities in this regard, HHS works cooperatively with the State for the purpose of addressing the State's concerns and avoiding conflicts with the exercise of State authority.

In compliance with Executive Order 13132's requirements that agencies examine closely any policies that may have Federalism implications or limit the policymaking discretion of the States, HHS has engaged in numerous efforts to consult and work cooperatively with affected State and local officials. For example, the Department has worked closely with State insurance regulators and the National Association of Insurance Commissioners (NAIC). The NAIC is a non-profit corporation established by the insurance commissioners of the 50 States, the District of Columbia, and four U.S. territories. In most States the insurance commissioner is appointed by the Governor, in approximately 14 States, the insurance commissioner is an elected official. Among other activities, it provides a forum for the development of uniform policy when uniformity is appropriate. Its members meet, discuss and offer solutions to mutual problems. The NAIC sponsors quarterly meetings to provide a forum for the exchange of ideas and in-depth consideration of insurance issues by regulators, industry representatives and consumers. CMS staff have been consistently attending these quarterly meetings to listen to the concerns of the State Insurance Departments regarding HIPAA enforcement and other issues. In addition to the general discussions, committee meetings, and task groups, the NAIC sponsors the standing CMS/Department of Labor meeting on HIPAA issues for members during the quarterly conferences. This meeting provides CMS (and the Department of Labor) with the opportunity to provide updates on enforcement actions, regulations, bulletins, and outreach efforts regarding, among other things, title XXVII of the PHS Act.

The Department has also cooperated with the States in several ongoing outreach initiatives, through which information on, among other things, title XXVII of the PHS Act, is shared among Federal regulators, State regulators, and the regulated community. In particular, CMS has sponsored conferences with the States—the consumer Outreach and Advocacy conferences in March 1999 and June 2000, and the Implementation and Enforcement of HIPAA National State-Federal Conferences in August 1999, 2000, 2001, 2002, and 2003. Furthermore, CMS websites offer links to important State websites and other resources, facilitating coordination between State and federal regulators and the regulated community. Throughout the process of developing these regulations, to the extent feasible, the Department has attempted to balance the States' interests in regulating health insurance issuers, and Congress' intent to ensure federal enforcement of the provisions of title XXVII in instances where a State fails to substantially enforce those provisions.

Pursuant to the requirements set forth in section 8(a) of Executive Order 13132, and by the signatures affixed to these final regulations, the Department certifies that the CMS has complied with the requirements of Executive Order 13132 for the attached final regulation, Federal Enforcement in Group and Individual Health Insurance Markets (RIN 09-38-AN35), in a meaningful and timely manner.

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

This is a summary of the Commission's First Report and Order in EB Docket No. 04-296, FCC 05-191, adopted November 3, 2005, and released November 10, 2005. The complete text of this document is available for inspection and copying during normal business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC, 20554. This document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, or via e-mail at http://www.bcpiweb.com. It is also available on the Commission's Web site at http://www.fcc.gov . This document contains new information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public to comment on the information collection requirements contained in this document as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency comments are due January 24, 2006. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission previously sought specific comment on how the Commission might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”

In this present document, the Commission has assessed the effects of expanding the reach of EAS to cover DTV, DAB, digital cable, DBS and SDARS providers, and finds that this imposes minimal regulation on small entities to the extent consistent with the Commission's goal of advancing its public safety mission.

1. Background. In the Notice of Proposed Rulemaking (NPRM) (69 FR 16193, August 30, 2004), the Commission sought comment on whether the EAS in its present form is the most efficient mechanism for warning the American public of an emergency and, if not, on how the Emergency Alert System (EAS) can be improved. The main objective of the NPRM was to seek comment on whether the EAS as currently constituted is the most effective and efficient public warning system that best takes advantage of appropriate technological advances and best responds to the public's need to obtain timely emergency information. The NPRM sought comment on the current efficacy of EAS in an age when the communications landscape has evolved from what it was when EAS predecessors, and EAS itself, were originally conceived.

2. Introduction. In the First Report and Order , the Commission takes steps to advance its important public safety mission by adopting rules that expand the reach of EAS, as currently constituted, to cover digital communications technologies that are increasingly being used by the American public to receive news and entertainment—digital television and radio, digital cable, and satellite television and radio.

3. Discussion. The Commission's immediate concern, and the subject of this First Report and Order , is to ensure that increasingly popular digital technologies deliver some level of basic national or regional warning now, while more sophisticated alert and warning systems are being developed. It is an essential element of the Commission's mission to ensure that the American public receives public alerts and warnings. For the reasons indicated below, the Commission believes that the current EAS is overall the most effective way to provide such a basic level of warning as the Commission transitions to more sophisticated systems. Accordingly, the Commission adopts rules to ensure that digital television (DTV), digital audio broadcasting (DAB), digital cable, direct broadcast satellite (DBS) and satellite digital audio radio service (SDARS) consumers are provided with effective, basic alert and warning information now, in a manner that will neither interfere with nor impede the ongoing development of a fully integrated state of the art warning system. The Commission seeks to facilitate this steady transition to a digital warning system by extending the EAS obligations of analog broadcasters and cable systems to these additional digital communications systems.

4. The Commission believes that the benefits of requiring DTV, DAB, digital cable, DBS and SDARS licensees to participate in the current EAS far outweigh any burdens associated with implementing these requirements. EAS represents a significant and valuable investment that provides effective alert and warning during the time that new, digitally-based public alert and warning systems are being developed. The Commission agrees with those commenters who argue that EAS should remain an important component of any future alert and warning system. Further, in most cases, the digital platforms affected by this First Report and Order either have in place the ability to distribute EAS warnings, or can do so in a reasonable amount of time and with reasonable cost. Accordingly, based on the Commission's examination of the record in this proceeding, it does not believe that requiring these digital services to install and use EAS equipment will impose undue regulatory or financial burdens. The Commission will continue, along with other agencies and industry, to explore ways in which emergency information might be made available in a more efficient, effective, and technologically current fashion.

5. Digital Television. Television broadcasting in the United States is in the midst of a conversion from analog to digital technology. The majority of television stations serving all markets in the United States are already airing DTV programming, and the Commission set a target date of December 31, 2006 for the completion of the DTV transition. When the DTV transition is complete, some of the spectrum currently used for broadcast television will be reclaimed and put to other uses, notably public safety. The Commission has adopted standards and rules that address the transition of the nation's television broadcasters from analog to DTV, which are set forth in Part 73 of the Commission's rules. None of these rules, however, have addressed EAS participation.

6. In the NPRM, the Commission sought comment on whether to make participation compulsory. The Commission asked commenters to address the possibility that when television stations turn off their analog signals as part of the DTV transition, they could leave a market devoid of an EAS participating broadcaster. The Commission also noted that DTV broadcasters have the ability to multicast, i.e. , to transmit more than one program stream on their assigned channel. The Commission sought comment on whether DTV broadcasters should be required to transmit EAS messages on all program streams, or whether they should be permitted to transmit on only one stream and force tune receivers to that stream.

7. Based on the record before the Commission, the Commission finds that revising its EAS rules to apply to DTV broadcasters furthers the public interest by ensuring that the public—regardless of the form of technology used—receives emergency information. Accordingly, the Commission will require DTV broadcasters to comply with the Commission's part 11 rules. DTV broadcasters must participate in all national EAS activations. Participation in state and local EAS activations will remain voluntary, but if DTV broadcasters choose to transmit state and local EAS messages they must comply with the Commission's part 11 rules governing those messages. Essentially, DTV providers will now have the same EAS obligations as analog television broadcasters, including, inter alia , the obligations to install ENDEC units so that the monitoring and transmitting functions are available during the times stations are in operation and transmit EAS test messages. These requirements will be effective on December 31, 2006.

8. In addition, the Commission concludes that when a DTV broadcaster participates in EAS activations, it must provide the EAS message to viewers of all program streams that the DTV broadcaster provides over a particular channel. All DTV viewers should have access to the potentially life-saving emergency information contained in EAS messages. The Commission concludes that all viewers should be informed of critical emergency information regardless of which program stream they are viewing.

9. Digital Cable . Cable systems, like broadcasters, are required to carry Presidential EAS messages, and permitted to transmit state and local EAS messages on a voluntary basis. In 1997, the Commission extended EAS requirements to wireless cable systems. The Commission's EAS requirements do not specifically refer to digital cable, which was not in widespread use in 1994 when EAS was implemented. In the NPRM, the Commission sought comment on whether it should extend EAS obligations to digital media, including digital cable television. In addition, the Commission raised technical questions regarding digital cable service participation in EAS.

10. Digital cable offers a number of advantages over analog cable. For instance, the digital format eliminates unwanted noise and interference from programming. Further, digital compression allows more than five times the number of stations to be delivered via the same bandwidth, on additional channel capacity that allows digital cable operators to deliver “near on-demand” programming by staggering the start times of programs on different channels. Because of these advantages, digital cable is increasingly deployed with analog cable in the marketplace. By 2005, more than 23 percent of TV households subscribed to digital cable.

11. The Commission specifically extends the EAS obligations set forth in Part 11 of its rules to digital cable systems. For purposes of this First Report and Order and Part 11 of the Commission's rules only, the term “digital cable systems” is defined as the portion of a cable system that delivers channels in digital format to subscribers. Essentially, digital cable systems will now have the same EAS obligations as analog cable systems. Specifically, the Commission will require digital cable systems to participate in national level EAS activations. Participation in state and local EAS activations will continue to be voluntary, but digital cable systems that choose to participate must comply with the part 11 rules.

12. The Commission will permit digital cable systems that are participating in EAS activations to determine the method they will use to distribute EAS messages to viewers of digital cable channels as long as all viewers receive the complete EAS message on the channel that they are watching. For example, digital cable systems may transmit EAS messages on all digital channels or transmit EAS messages on a single channel and force tune all receivers to that channel. Under the rules adopted in the EAS First Report and Order, digital cable systems with fewer than 5,000 subscribers must, like analog and wireless cable systems with fewer than 5,000 subscribers, provide a video interruption and an audio alert message on all channels and the EAS message on at least one channel.

13. Digital Audio Broadcasting . Radio stations using in-band, on-channel (IBOC) digital audio broadcasting (DAB) technology are able to provide enhanced sound fidelity, improved reception, multiple audio streams, and new data services to digital-ready radio receivers. This technology makes use of the existing AM and FM bands (In-Band) by adding digital carriers to a radio station's analog signal, allowing broadcasters to transmit digitally on their existing channel assignments (On-Channel) while simultaneously maintaining their analog service. Thus, IBOC permits the transmission of both analog and digital signals within the spectral emission mask of a single AM or FM channel, placing digital information on frequencies immediately adjacent to the analog signal. This technology allows new radios to receive both digital broadcasts and analog broadcasts from stations that have not yet converted to digital. This system is designed to blend to analog when digital reception fails. Radio stations will eventually convert to all-digital modes of operation. DAB does not require use of additional spectrum and there is no statutory mandate to convert to a digital format.

14. The Commission revises its part 11 EAS rules to apply to DAB broadcasters. The Commission will require DAB broadcasters to air all national EAS messages. Participation in state and local EAS activations will be voluntary, as it is for analog radio broadcasters. If DAB broadcasters choose to participate in state and local EAS activations, they must comply with the Commission's part 11 EAS rules. Essentially, DAB providers will now have the same EAS obligations as analog radio broadcasters. The Commission will also require DAB broadcasters to transmit all EAS messages that they air on all audio streams. Because DAB broadcasters will face similar burdens of equipment purchase, installation and training as DTV and digital cable providers, the Commission will apply the same date of compliance that it applied for DTV and digital cable. Accordingly, these rules will be effective December 31, 2006.

15. The Commission agrees with commenters who argue that EAS requirements should apply to all audio streams because the goal of EAS as a public warning system is to reach as many people as possible with lifesaving information and to do otherwise would result in the reduced effectiveness of EAS as digital radio listenership increases. All listeners should be informed of critical emergency information regardless of which audio stream they are listening to. The Commission sees no reason to exempt subscription-based streams. Further, as the Commission afforded to DTV broadcasters, the Commission affords DAB broadcasters more than a year to comply with these rules and grant DAB broadcasters the flexibility to determine the method they will use to distribute EAS messages to listeners of all audio streams as long as all listeners receive the complete and timely EAS message on the stream that they are listening to.

16. Satellite Digital Audio Radio Service. Governed by part 25 of the Commission's rules, SDARS provides a wide variety of digital radio programming on a subscription basis to subscribers throughout the contiguous United States. Most SDARS programming is created in the licensees' central headquarters in New York City (Sirius) and Washington, DC (XM), but SDARS licensees also re-transmit the programming of third-party content providers. Content is currently transmitted exclusively on a nationwide basis. SDARS licensees have recently begun providing metropolitan area traffic and weather updates on a round-the-clock basis by means of dedicated channels, but all subscribers receive each of these channels on a nationwide basis. SDARS, however, is not a broadcast service, and is not currently required to participate in EAS. In the NPRM, the Commission sought comment on whether it should adopt rules extending EAS obligations to other digital networks, such as SDARS.

17. The Commission amends part 11 of its rules to require that all SDARS licensees participate in EAS. The new rules will require SDARS licensees to transmit national level EAS messages on all channels. The Commission will require that SDARS licensees receive national EAS messages through an encoder/decoder (ENDEC) unit, the same manner as currently required of broadcasters and cable systems, from which they must directly monitor at least two sources, including one PEP station, or must directly monitor FEMA. This should not be difficult to accomplish as XM currently already monitors EAS alerts from an LP-1 station through an ENDEC unit located at its Washington, D.C. headquarters. The Commission strongly encourages SDARS licensees to have the ability to receive EAS alerts from state and local emergency managers and the ability to disseminate state and local EAS warnings on local traffic and weather channels that the SDARS licensees provide. The Commission will require SDARS licensees to inform their customers of the channels that will and will not be capable of supplying state and local EAS messages. Finally, the Commission will require SDARS licensees to test their ability to receive and distribute EAS messages in the same manner required of other EAS participants in section 11.61 of the Commission's rules and to keep records of all tests. Because SDARS licensees will face burdens of equipment purchase, installation and/or training similar to those of DTV and DAB broadcasters and digital cable providers, these new rules will also take effect December 31, 2006.

18. The Commission will allow SDARS licensees that choose to implement the ability to receive state and local EAS warnings to develop the methods by which they can receive state and local EAS messages. In addition, the Commission encourages SDARS licensees that choose to implement the ability to receive and transmit state and local EAS warnings to develop additional ways of distributing EAS messages to the appropriate listeners, regardless of the channel they are listening to. Finally, the Commission requires SDARS licensees to inform their customers of the channels that will and will not supply state and local EAS messages. This information should be provided on the SDARS licensee's website and also distributed in writing to customers at least annually.

19. To alert listeners to an emergency announcement that may interest them, Sirius also suggested exploring the possibility of pre-empting the text box that normally contains the channel name and current programming, to announce the state or region and type of alert, and the channel number transmitting detailed information. The Commission strongly encourages such developments, and the use of the SDARS and DAB text box to display entire EAS messages, which the Commission hopes to see included in any next generation public alert and warning system.

20. Direct-to-Home Satellite Services. DTH satellite services include DBS and Home Satellite Dish (HSD) services. Under the Commission's current part 11 rules, DBS providers and HSD providers are not required to participate in EAS, but may participate on a voluntary basis. The Commission has encouraged such participation. For purposes of this First Report and Order , DBS providers include the entities set forth in section 25.701(a) of the Commission's rules. Accordingly, DBS providers include: (1) Entities licensed to operate satellites in the 12.2 to 12.7 GHz DBS frequency bands; (2) entities licensed to operate satellites in the Ku band fixed satellite service (FSS) and that sell or lease capacity to a video programming distributor that offers service directly to consumers providing a sufficient number of channels so that four percent of the total applicable programming channels yields a set aside of at least one channel of non commercial programming pursuant to section 25.701(e) of the Commission's rules, or (3) non U.S. licensed satellite operators in the Ku band that offer video programming directly to consumers in the United States pursuant to an earth station license issued under part 25 of this title and that offer a sufficient number of channels to consumers so that four percent of the total applicable programming channels yields a set aside of one channel of non commercial programming pursuant to section 25.701(e) of the Commission's rules. This definition ensures that the EAS rules apply to the vast majority of existing DTH satellite services, particularly those for which viewers may have expectations as to available warnings based on experience with broadcast television services. The use of this definition will make the EAS obligations applicable to DTH-FSS licensees, including those who provide capacity to video programming distributors.

21. HSD providers originally supplied satellite television; however, currently, DBS providers serve most satellite television consumers. Over the past 5 years, the number of DBS subscribers has steadily increased from almost 13 million in June 2000 to over 27 million in June 2005. During the same time period, the number of HSD subscribers has steadily decreased from almost 1.5 million to fewer than 150,000. DTH satellite service provides multi-channel video programming and now reaches almost 25% of U.S. households with a television. DTH satellite providers receive programming from national programmers, such as HBO, ESPN, and CNN, and from local channels, such as the broadcast affiliates in a particular area, and then transmit these programs to customers' receivers. Because of this pass-through system, a satellite television customer receives EAS messages only if he receives the local broadcast stations as part of his programming package, and those stations carry the EAS message.

22. In the NPRM, the Commission sought comment on: (1) Whether it should adopt rules extending EAS obligations to DBS; (2) whether it serves the public interest to continue to exempt such satellite services that reach increasingly larger numbers of Americans from any requirement to provide public warning; (3) what burdens extending the EAS obligations would place on such services and whether the benefits outweigh the burdens; and (4) technical issues involved with requiring DBS providers to comply with the Commission's EAS rules.

23. In order to ensure that DBS subscribers receive an EAS message from the President in the event of a national emergency, the Commission modifies its EAS rules to require DBS providers to participate in national EAS activations by discontinuing regular programming and providing the national EAS message to viewers of all channels. Accordingly, DBS providers will be required to comply with the Commission's part 11 EAS rules. DBS providers must install equipment capable of encoding and decoding the EAS protocol and generating and detecting all EAS codes. DBS providers may install this equipment at the location most convenient to their system designs. In addition to ensuring that EAS equipment complies with Commission rules, providers must also monitor two EAS sources upon receipt of an emergency action notification and ensure that their EAS monitoring equipment is operational. Finally, the Commission will require DBS licensees to test their ability to receive and distribute EAS messages. The Commission concludes that extending national level EAS requirements to DBS providers serves the public interest by ensuring that the significant portion of the American public that are DBS subscribers have access to this critical emergency information.

24. Although participation in state and local EAS activations remains voluntary, the Commission will require DBS providers to pass through all EAS messages aired on local channels to subscribers receiving those channels. Therefore, subscribers viewing local channels through DBS services will receive all EAS messages transmitted over those local channels. Additionally, the Commission concludes that DBS providers must be capable of receiving (from state and local emergency managers) and distributing state and local EAS messages or they must disclose their inability to do on their Web site and in writing to their customers at least annually. Most emergencies originate at the state and local level and the current EAS system includes an interface for state and local emergency managers, providing a way to access the system and originate and relay EAS messages. The Commission encourages DBS licensees to design their systems to include this capability and, specifically, to design their converter boxes to be capable of receiving the appropriate regional, state and local EAS messages. Any future Public Alert and Warning System will likely include EAS and may require DBS licensees to increase participation in regional, state and local EAS activations.

25. The Commission acknowledges that there are technical issues that will need to be resolved in order for DBS licensees to make the necessary changes to their systems and wishes to give maximum flexibility to DBS providers. Accordingly, the Commission will permit DBS providers to determine the method they will use to distribute EAS messages to viewers, as long as all viewers receive national EAS messages regardless of the channel that they are watching. Because of the complexity associated with ensuring that national alert messages will be transmitted on all channels that do not originate at local broadcast stations, the Commission is providing DBS providers more time to comply with these rules. DBS providers will need to modify their satellite uplink facilities at multiple locations. DBS providers will also need to develop and implement technologies within each of several dozen different satellite transponder data streams. Estimates indicate that such efforts will likely require approximately 18 months to implement fully. Accordingly, these rules will take effect May 31, 2007. The Commission encourages DBS providers that have the capability to participate in EAS activations to do so as soon as possible.

26. The Commission will require DBS licensees to test their ability to receive and distribute EAS messages in a manner similar to that required of other EAS participants in section 11.61 of its rules and to keep records of all tests. DBS licensees should monitor a state or local primary source to participate in testing. Accordingly, the Commission will require that DBS providers conduct EAS tests each month on at least 10 percent of the total channels they provide. For purposes of this calculation, the total number of channels should not include those channels that the DBS provider passes through with the embedded national, state or local EAS message. The channels tested should vary each month, and over the course of a year all channels should be tested. DBS providers must log receipt of weekly tests in their records. Requiring that only 10 percent of channels be tested each month and that weekly tests must only be logged in records should reduce the burdens associated with EAS testing for DBS providers. Any remaining burdens are outweighed by the public interest benefits of testing which ensures that DBS providers are able to receive and transmit EAS messages. These testing requirements are no more onerous to DBS providers than those required of any other EAS participant. Due to the potential technical difficulties and costs associated with transmission of weekly tests, in the Further Notice , the Commission seeks comment regarding weekly test transmission requirements for DBS providers.

27. Although the Commission encourages participation by HSD providers, the Commission will not require their participation in EAS because: (1) There were only approximately 145,000 HSD users in June 2005 and that number continues to decrease; and (2) as HSD users receive programming directly from programmers, it would be very burdensome for HSD providers to distribute EAS messages to subscribers.

28. Administrative Matters. The Commission receives numerous questions about and requests for clarification and corrections of its EAS rules. The Commission finds that several minor administrative changes to the EAS rules are in order. Accordingly, the Commission amends its EAS rules to delete all reference to the “FCC EAS mailing list” which the Commission no longer maintains. EAS information may now be obtained from the Web site http://www.fcc.gov/eb/eas and from the general FCC information number 1888-CALL-FCC. Further, the Commission amends section 11.41 to change “Operating Handbook” to “EAS Operating Handbook.” In section 11.52(b) of the Commission's rules, the Commission will change the reference to 11.51(j)(2) to 11.51(m)(2). Section 11.53(c) provides that, prior to commencing operations, broadcast stations must determine whether the EAS has been activated by monitoring the assigned EAS sources. In order to clarify how EAS monitoring assignments are determined, the Commission amends this section to add the following to the end of section 11.53(c): “as specified in their State or Local plan.” Finally, because section 76.305 no longer exists, the reference to that section in 11.54(b)(13) is changed to the correct reference: section 76.1711.

29. Conclusion. The Commission expands the reach of EAS, as currently constituted, to ensure that more Americans are able to receive national and/or regional public alerts and warnings. Digital technologies are rapidly becoming the norm for communications technologies and public alert and warning must keep pace with this digital revolution. Government and industry are engaged in the early stages of efforts to develop a fully integrated, state of the art, digitally-based public alert and warning system for the American public. Increasingly popular digital technologies must have the ability to deliver some level of basic national or regional warning now, during the time that more sophisticated alert and warning systems are being developed. Further, the Commission amends its EAS rules to ensure that persons with disabilities have equal access to public warnings.

30. This document contains new information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public to comment on the information collection requirements contained in this Report and Report and Order as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency comments are due January 24, 2006.

31. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the NPRM. The Commission sought written public comment on the proposals in the NPRM, including comment on the IRFA. The Commission received no comments specifically directed toward the IRFA. This Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

32. Today's Order establishes rules that expand the reach of the Emergency Alert System (EAS), as currently constituted, to cover the following digital communications technologies that are increasingly being used by the American public to receive news and entertainment—digital television and radio, digital cable, and satellite television and radio. As noted in the Order, one of the most fundamental and significant statutory mandates of the Commission is the promotion of safety of life and property through the use of wire and radio communication. Clearly, some level of EAS participation must be established for new digital services to ensure that large portions of the American public are able to receive national and/or regional public alerts and warnings.

33. This Order is a follow-up to the NPRM that was issued last year. In the NPRM, the Commission solicited comment on an array of questions and potential rule changes to contribute to an efficient and technologically current public alert and warning system. The NPRM also solicited comments and participation of state and local emergency planning organizations and all telecommunications industries to develop a more effective EAS. The EAS First Report and Order takes initial steps to resolve the issues raised in the NPRM.

34. There were no comments filed that specifically addressed the IRFA. Nonetheless, the agency considered the potential impact of the rules discussed in the IRFA on small entities and reduced the compliance burden for all small entities (as discussed in Appendix A of the NPRM) in order to reduce the economic impact of the rules enacted herein on such entities.

35. The RFA directs agencies to provide a description of, and, where feasible, an estimate of, the number of small entities that may be affected by the rules adopted herein. 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) 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).

36. A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 2002, there were approximately 1.6 million small organizations. 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, the Commission estimates the number of small governmental jurisdictions overall to be 84,098 or fewer. Nationwide, there are a total of approximately 22.4 million small businesses, according to SBA data.

37. Television Broadcasting . The SBA has developed a small business sized standard for television broadcasting, which consists of all such firms having $12 million or less in annual receipts. Business concerns included in this industry are those primarily engaged in broadcasting images together with sound. According to Commission staff review of BIA Publications, Inc. Master Access Television Analyzer Database, as of May 16, 2003, about 814 of the 1,220 commercial television stations in the United States had revenues of $12 million or less. The Commission notes, however, that, in assessing whether a business concern qualifies as small under the above definition, business (control) affiliations must be included. The Commission's estimates, therefore, likely overstate the number of small entities that might be affected by its action, because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. There are also 2,127 low power television stations (LPTV). Given the nature of this service, the Commission will presume that all LPTV licensees qualify as small entities under the SBA size standard.

38. Radio Stations . The revised rules and policies potentially will apply to all AM and commercial FM radio broadcasting licensees and potential licensees. The SBA defines a radio broadcasting station that has $6 million or less in annual receipts as a small business. A radio broadcasting station is an establishment primarily engaged in broadcasting aural programs by radio to the public. Included in this industry are commercial, religious, educational, and other radio stations. Radio broadcasting stations which primarily are engaged in radio broadcasting and which produce radio program materials are similarly included. However, radio stations that are separate establishments and are primarily engaged in producing radio program material are classified under another NAICS number. According to Commission staff review of BIA Publications, Inc. Master Access Radio Analyzer Database on March 31, 2005, about 10,840 (95%) of 11,410 commercial radio stations have revenue of $6 million or less. The Commission notes, however, that many radio stations are affiliated with much larger corporations having much higher revenue. The Commission's estimate, therefore, likely overstates the number of small entities that might be affected by this action.

39. Cable and Other Program Distribution . The SBA has developed a small business size standard for cable and other program distribution, which consists of all such firms having $12.5 million or less in annual receipts. According to Census Bureau data for 1997, in this category there was a total of 1,311 firms that 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 to $24,999,999. Thus, under this size standard, the majority of firms can be considered small. In addition, limited preliminary census data for 2002 indicate that the total number of cable and other program distribution companies increased approximately 46 percent from 1997 to 2002.

40. Cable System Operators (Rate Regulation Standard) . The Commission has developed its own small business size standard for cable system operators, for purposes of rate regulation. Under the Commission's rules, a “small cable company” is one serving fewer than 400,000 subscribers nationwide. The Commission has estimated that there were 1,439 cable operators who qualified as small cable system operators at the end of 1995. Since then, some of those companies may have grown to serve over 400,000 subscribers, and others may have been involved in transactions that caused them to be combined with other cable operators. Consequently, the Commission estimates that there are now fewer than 1,439 small entity cable system operators that may be affected by the rules and policies proposed herein.

41. Cable System Operators (Telecom Act Standard) . The Communications Act of 1934, as amended, also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” The Commission has determined that there are 67,700,000 subscribers in the United States. Therefore, an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Based on available data, the Commission estimates that the number of cable operators serving 677,000 subscribers or fewer, totals 1,450. The Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, and therefore are unable, at this time, to estimate more accurately the number of cable system operators that would qualify as small cable operators under the size standard contained in the Communications Act of 1934.

42. Multipoint Distribution Systems . The established rules apply to Multipoint Distribution Systems (MDS) operated as part of a wireless cable system. The Commission has defined “small entity” for purposes of the auction of MDS frequencies 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. This definition of small entity in the context of MDS auctions has been approved by the SBA. The Commission completed its MDS auction in March 1996 for authorizations in 493 basic trading areas. Of 67 winning bidders, 61 qualified as small entities. At this time, the Commission estimates that of the 61 small business MDS auction winners, 48 remain small business licensees.

43. MDS also includes licensees of stations authorized prior to the auction. As noted above, the SBA has developed a definition of small entities for pay television services, cable and other subscription programming, which includes all such companies generating $12.5 million or less in annual receipts. This definition includes MDS and thus applies to MDS licensees that did not participate in the MDS auction. Information available to us indicates that there are approximately 392 incumbent MDS licensees that do not generate revenue in excess of $11 million annually. Therefore, the Commission estimates that there are at least 440 (392 pre-auction plus 48 auction licensees) small MDS providers as defined by the SBA and the Commission's auction rules which may be affected by the rules adopted herein. In addition, limited preliminary census data for 2002 indicate that the total number of cable and other program distribution companies increased approximately 46 percent from 1997 to 2002.

44. Instructional Television Fixed Service . The established rules would also apply to Instructional Television Fixed Service facilities operated as part of a wireless cable system. The SBA definition of small entities for pay television services also appears to apply to ITFS. There are presently 2,032 ITFS licensees. All but 100 of these licenses are held by educational institutions. Educational institutions are included in the definition of a small business. However, the Commission does not collect annual revenue data for ITFS licensees and is not able to ascertain how many of the 100 non-educational licensees would be categorized as small under the SBA definition. Thus, the Commission tentatively concludes that at least 1,932 are small businesses and may be affected by the established rules.

45. Satellite Telecommunications and Other Telecommunications . The Commission has not developed a small business size standard specifically for providers of satellite service. The appropriate size standards under SBA rules are for the two broad categories of Satellite Telecommunications and Other Telecommunications. Under both categories, such a business is small if it has $12.5 or less in average annual receipts. For the first category of Satellite Telecommunications, Census Bureau data for 1997 show that there were a total of 324 firms that operated for the entire year. Of this total, 273 firms had annual receipts of under $10 million, and an additional twenty-four firms had receipts of $10 million to $24,999,999. Thus, the majority of Satellite Telecommunications firms can be considered small.

46. The second category— Other Telecommunications —includes “establishments primarily engaged in * * * providing satellite terminal stations and associated facilities operationally connected with one or more terrestrial communications systems and capable of transmitting telecommunications to or receiving telecommunications from satellite systems.” Of this total, 424 firms had annual receipts of $5 million to $9,999,999 and an additional 6 firms had annual receipts of $10 million to $24,999,990. Thus, under this second size standard, the majority of firms can be considered small.

47. In the Order, the Commission takes steps to advance its public safety mission by adopting rules that expand the reach of EAS, as currently constituted, to cover the following digital communications technologies: digital television and radio, digital cable, and satellite television and radio.

48. As indicated above, the Commission has revised its EAS rules to make them apply to DTV broadcasters. The Order requires that DTV broadcasters comply with the Commission's part 11 rules. Thus, DTV broadcasters must participate in all national EAS activations. Participation in state and local EAS activations will remain voluntary, but if DTV broadcasters choose to transmit state and local EAS messages they must comply with the Commission's part 11 rules governing those messages. Essentially, DTV providers will now have the same EAS obligations as analog television broadcasters. In addition, the Order requires that, when DTV broadcasters participate in EAS activations, they must provide the EAS message to viewers of all program streams.

49. The Commission has revised its EAS rules to require digital cable systems to participate in national level EAS activations. Digital cable systems will now have the same EAS obligations as analog cable systems. Participation in state and local EAS activations will continue to be voluntary, but digital cable systems that choose to participate must comply with the part 11 rules. The Order requires that digital cable systems with fewer than 5,000 subscribers must, like analog and wireless cable systems with fewer than 5,000 subscribers, provide a video interruption and an audio alert message on all channels and the EAS message on at least one channel.

50. The Commission also has revised its EAS rules to make them apply to digital audio broadcasting (DAB) providers. The Order requires digital audio broadcasters to air all national EAS messages. Participation in state and local EAS activations will be voluntary, as it is for analog radio broadcasters. If DAB providers choose to participate in state and local EAS activations, they must comply with part 11 of the Commission's rules. DAB providers will now have the same EAS obligations as analog radio broadcasters. The Order also requires DAB providers to transmit all EAS messages that they air on all audio streams.

51. The Commission has revised its EAS rules to require that all Satellite Digital Audio Radio Service (SDARS) licensees participate in EAS in its current form. The Order requires SDARS licensees to transmit national level EAS messages on all channels.

52. The Commission also strongly encourages SDARS licensees to have the ability to receive EAS alerts from state and local emergency managers and the ability to disseminate state and local EAS warnings on any local traffic and weather channels that the SDARS licensees provide. The Commission has required SDARS licensees to inform their customers of the channels that will and will not supply state and local EAS messages. This information should be provided on the SDARS licensee's Web site and should also be distributed in writing to customers at least annually.

53. In addition, in order to ensure that DBS satellite subscribers receive an EAS message from the President in the event of a national emergency, the Commission has revised its EAS rules to require that DBS satellite service providers participate in national EAS activations. For purposes of this Order, DBS providers include the entities set forth in section 25.701 of the Commission's rules. The Order permits DBS satellite service providers to determine the method they will use to distribute EAS messages to viewers, as long as all viewers receive the national EAS message on the channel they are watching. The Commission notes that SBCA commented that DBS operators need additional development time to participate in national EAS activations. SBCA focuses on the technical and operational difficulties involved in investing in new hardware and software, but has provided no cost estimate. However, DIRECTV commented that it was prepared to commit the assets to develop the systems and procedure necessary to deliver National EAS messages. The Commission has determined that the public safety benefit that would result from imposing a timely public alert and warning obligation on DBS providers far outweighs the burdens to such providers from implementing these new requirements.

54. Although participation in state and local EAS activations remains voluntary, the Commission has required DBS providers to pass through all EAS messages aired on local channels to subscribers receiving those channels so that subscribers viewing local channels through DBS services will receive all EAS messages transmitted over those local channels. The Commission has also required DBS providers to be capable of receiving (from state and local emergency managers) and distributing state and local EAS messages or they must disclose their inability to do on their website and in writing to their customers at least annually.

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

56. The NPRM invited Comments on a number of alternatives to the imposition of EAS obligations on the digital communications technologies discussed in this Order that are increasingly being used by the American public. For example, the NPRM specifically sought comment on the technical alternatives to providing EAS messages. In particular, the NPRM sought comment on whether the EAS system could be made more efficient. Should it be phased out in favor of a new model? If so, what would the new model look like? If a new model were to be adopted, what legal and practical barriers would have to be overcome to ensure its implementation and effectiveness? What technologies should serve as the basis for such a model? Alternatively, should EAS requirements be extended to other services such as cellular telephones?

57. The Commission has considered each of the alternatives described above, and in the EAS First Report and Order imposes minimal regulation on small entities to the extent consistent with the Commission's goal of advancing its public safety mission by adopting rules that expand the reach of EAS. The affected service providers have generally expressed their willingness to cooperate in a national warning system, and the Commission anticipates that this addition of new providers to EAS can be accomplished swiftly and smoothly. The Commission believes that the benefits of requiring DTV, DAB, digital cable, satellite DTH and SDARS providers to participate in the current EAS far outweigh any burdens associated with implementing these requirements. EAS represents a significant and valuable investment that is able to provide effective alert and warning during the time that new, digitally-based public alert and warning systems are being developed. The Commission agrees with those commenters who argue that EAS should remain an important component of any future alert and warning system. Further, in most cases, the digital platforms affected by this Order either have in place the ability to distribute EAS warnings, or can do so in a reasonable amount of time and with minimal cost. As indicated above, the Commission will continue, along with other agencies and industry, to explore ways in which emergency information might be made available in an efficient, effective, and technologically current fashion.

58. The Commission will send a copy of the Order, including this FRFA, in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Order and FRFA (or summaries thereof) will also be published in the Federal Register .

59. Accordingly, it is ordered that pursuant to sections 1, 4(i), 4(o), 303(r), 403, 624(g) and 706 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i) and (o), 303(r), 403, 554(g) and 606, the First Report and Order in EB Docket No. 04-296 is adopted , and that part 11 of the Commission's rules, 47 CFR part 11, is revised as set forth in the rule changes. The rules set forth in the First Report and Order shall become effective for digital television broadcasters, digital audio broadcasters, digital cable systems and SDARS licensees on December 31, 2006, and for DBS providers on May 31, 2007, except §§ 11.15, 11.21, 11.35, 11.51, 11.52, 11.55 and 11.61 which contains information that has not been approved by OMB. The Commission will publish a document in the Federal Register announcing the effective dates of these sections.

60. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this First Report and Order , including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

DOE is adopting as final the Interim Final Rule published on December 15, 2004, at 69 FR 75001 amending the DEAR at Part 909 to state separate debarring and suspending officials for the National Nuclear Security Administration (NNSA) and DOE and adding policy and procedures to Part 970 including a standard contract clause for the performance of work for others by DOE management and operating contractors.

DOE, including NNSA, owns or sponsors major scientific research and development, and manufacturing facilities throughout the United States that are managed and operated by contractors. DOE permits these contractors to perform non-DOE work for other Federal agencies and non-Federal entities on a fully reimbursable basis when such work is authorized by law and the work requires DOE's unique technologies and capabilities.

Performance of this work is conducted under DOE's Work for Others Program. The Work for Others Program makes available for use special or unique services or facilities that are otherwise unavailable in the private sector. The Work for Others Program requires that funding for Work for Others projects be provided by a non-DOE sponsor. Performance of this work has allowed DOE and its management and operating contractors to assist other Federal agencies in accomplishing their missions and has provided assistance to non-Federal entities to solve complex and challenging technological issues.

The purpose of this rule is to establish a uniform contract clause that will provide authority to DOE's management and operating contractors to perform fully reimbursable work under the terms and conditions set forth in their contracts.

This rule amends Part 970 of the DEAR that governs DOE contracts with entities that manage and operate DOE-owned or -leased facilities. The rule applies to contracts when the contractor performs fully reimbursable work for other Federal agencies and non-Federal entities and does not relate to the expenditure of DOE's appropriated funds.

DOE is also making a technical amendment to 48 CFR part 909 to identify an NNSA official as the debarment and suspension official for NNSA contracts.

DOE invited comments from the public, which were to be submitted on or before January 14, 2005. No comments were received. DOE has determined that no changes are needed to the Interim Final Rule and adopts the DEAR amendments as final without change.

Issuance of this Final Rule has been approved by the Office of the Secretary of Energy.

NMFS manages the groundfish fishery in the BSAI according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The 2005 Pacific cod TAC in the BSAI is 190,550 metric tons (mt) as established by the 2005 and 2006 final harvest specifications for groundfish in the BSAI (70 FR 8979, February 24, 2005). Pursuant to § 679.20(a)(7)(i)(A), 3,811 mt was allocated to vessels using jig gear, 97,181 mt to vessels using hook-and-line or pot gear, and 89,559 mt to vessels using trawl gear. The share of the Pacific cod TAC allocated to trawl gear was further allocated 50 percent to catcher vessels and 50 percent to catcher/processor vessels (§ 679.20(a)(7)(i)(B)). The share of the Pacific cod TAC allocated to hook-and-line or pot gear was further allocated 80 percent to catcher/processor vessels using hook-and-line gear; 0.3 percent to catcher vessels using hook-and-line gear; 3.3 percent to catcher/processor vessels using pot gear; 15 percent to catcher vessels using pot gear; and 1.4 percent to catcher vessels less than 60 ft (18.3 meters (m)) length overall (LOA) that use either hook-and-line or pot gear (§ 679.20(a)(7)(i)(C)).

On April 13, 2005, 1,150 mt of Pacific cod from the A season apportionment of the jig gear allocation was reallocated to catcher vessels less than 60 feet (18.3 m) LOA using hook-and-line or pot gear (70 FR 19708, April 14, 2005). On May 17, 2005, 350 mt of Pacific cod from the B season apportionment of the jig gear allocation was reallocated to catcher vessels less than 60 feet (18.3 m) LOA using hook-and-line or pot gear (70 FR 28486, May 18, 2005). On August 5, 2005, an additional 500 mt of Pacific cod from the B season apportionment of the jig gear allocation was reallocated to catcher vessels less than 60 feet (18.3 m) LOA using hook-and-line or pot gear (70 FR 46436, August 10, 2005). On October 5, 2005, 17,962 mt of Pacific cod allocated to trawl vessels and 1,611 mt of Pacific cod allocated to jig vessels was reallocated to vessels using hook- and-line gear and vessels using pot gear (70 FR 58983, October 11, 2005).

As of November 14, 2005, the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that trawl catcher vessels will not be able to harvest 243 mt of Pacific cod allocated to those vessels under § 679.20(a)(7)(i)(B). The Regional Administrator has also determined that catcher vessels using pot gear will not be able to harvest 2,410 mt and catcher vessels using hook-and-line gear will not be able to harvest 60 mt. Also catcher/processor vessels using pot gear will not be able to harvest any additional Pacific cod. Therefore, in accordance with § 679.20(a)(7)(ii)(C), NMFS apportions 2,713 mt of Pacific cod to catcher/processor vessels using hook-and-line gear.

The Regional Administrator has also determined that vessels using jig gear will not harvest 34 mt of their Pacific cod allocation by the end of the year. Also, catcher vessels less than 60 feet (18.3 m) LOA using hook-and-line or pot gear will not be able to harvest 753 mt. Therefore, in accordance with § 679.20(a)(7)(ii)(C)( 1 ) and § 679.20(a)(7)(ii)(B), NMFS is reallocating the unused amount of 787 mt of Pacific cod allocated to vessels using jig gear and catcher vessels less than 60 feet (18.3 m) LOA using hook-and-line or pot gear to catcher/processor vessels using hook-and-line gear.

The harvest specifications for Pacific cod included in the harvest specifications for groundfish in the BSAI (70 FR 8979, February 24, 2005) are revised as follows: 166 mt to vessels using jig gear, 99,519 mt to catcher/processor vessels using hook-and-line gear, 12,828 mt to catcher vessels using pot gear, 230 mt to catcher vessels using hook-and-line gear, 35,847 mt to catcher vessels using trawl gear, and 2,601 mt to catcher vessels less than 60 feet (18.3 m) LOA using hook-and-line or pot gear.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA) finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the reallocation of projected unused amounts of Pacific cod in the BSAI. NMFS was unable to publish an action providing time for public comment because the most recent, relevant data only became available as of November 15, 2005.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.20 and is exempt from review under Executive Order 12866.