The Animal and Plant Health Inspection Service (APHIS) of the United States Department of Agriculture (USDA) regulates the importation of animals and animal products into the United States to guard against the introduction of animal diseases. The regulations in 9 CFR parts 93, 94, and 95 (referred to below as the regulations) govern the importation of certain animals, birds, poultry, meat, other animal products and byproducts, hay, and straw into the United States in order to prevent the introduction of various animal diseases, including exotic Newcastle disease (END).

Currently, the regulations at § 94.6(c) provide two mechanisms by which flocks in foreign regions where END is considered to exist can be found free of END and thus approved for the purpose of exporting eggs (except hatching eggs) to the United States. One method requires the placement of sentinel birds (at least 1 per 1,000 birds) at the rate of at least 30 sentinel birds per house. These sentinel birds must remain free of clinical and immunological evidence of END as demonstrated by tests performed by a salaried veterinary officer of the national government of the region of origin. The second method requires weekly testing of any carcasses of poultry from the flock in question that died in that week as well as other testing performed on at least 10 percent of live birds.

These two options have proven problematical. Many foreign egg producers cannot use sentinel birds because their flocks are vaccinated with strains of Newcastle disease. Even though the sentinel birds themselves cannot be vaccinated against END, they may nevertheless develop antibodies as a result of exposure to birds vaccinated with a live virus. Sentinel birds may therefore produce false positives when tested for END, necessitating the expense of further testing to differentiate a vaccine-induced response from a field infection. In such a situation, 10 percent flock testing becomes the only available option; however, many foreign egg producers find this approach to be time consuming, costly, and potentially statistically excessive.

We are proposing to amend the regulations in order to provide for the use of a statistically valid testing regimen that would ensure the detection of infected birds in a timely and effective way while eliminating the need for potentially excessive testing. 1

Disease biology is an important consideration in testing for the presence of END. Of the three strains of END—mesogenic, lentogenic, and velogenic—we are concerned only with the velogenic strain. General sampling results (i.e., samples taken from live, apparently healthy birds as well as dead or sickly birds) may prove inaccurate, as sampling of birds infected with non-velogenic strains of END, which produce a minimal mortality rate, and birds that have been vaccinated against the disease may result in false positives. Additionally, clinically normal birds may shed virus only intermittently. If the choice of testing is to look for the presence of the virus in clinically normal flocks, the prevalence of birds shedding virus at any given time may be expressed in fractions of a percent. In order to derive an accurate picture of infection rates in this situation, the sample size required would be prohibitively large with very poor confidence of detecting the virus. In comparison, the proposed approach utilizing only sick or dead birds is a more efficient and accurate testing method. The prevalence of velogenic END is likely to be quite high in the population of sick or dead birds if the flock is, in fact, infected and the needed sample size would be quite small. According to our research and other available information, sampling 5 sick or dead birds in a group of up to 50,000 birds provides a 95 percent confidence of detecting infection in a house.

Therefore, we propose to replace the current options for flock testing with a requirement that at least 1 cull (sick or dead) bird for each 10,000 live birds occupying each poultry house certified for exporting table eggs be tested for END virus at days 7 and 14 of the 21-day period before the certificate is signed and tested using a virus isolation test at a laboratory approved by the veterinary services organization of the national government of the region of origin. The tests must present no clinical or immunological evidence of END by either embryonated egg inoculation technique from tissues of dead birds or negative hemagglutination inhibition tests conducted on blood samples of sick birds collected by a salaried veterinary officer of the national government of the region of origin, or by an accredited veterinarian.

We have prepared a risk assessment document titled “Justification for the proposed changes to the current 9 CFR 94.6 regulations governing the importation of table eggs from regions where exotic Newcastle disease exists into the United States.” This document assesses the effectiveness of sentinel birds, random sampling, and targeted sampling of sick or dead birds as surveillance methods. You may view the document on the Regulations.gov Web site or in our reading room. (Instructions for accessing Regulations.gov and information on the location and hours of the reading room are provided under the heading ADDRESSES at the beginning of this proposed rule.) In addition, copies may be obtained by calling or writing to the individual listed under FOR FURTHER INFORMATION CONTACT .

The risk assessment document explains why the sentinel bird approach currently required does not provide the desired level of assurance that END virus is absent in a flock. It assesses random sampling as an alternative method of disease detection, and concludes that targeted sampling of cull (sick or dead) birds detects infections more efficiently and effectively than either sentinel birds or random sampling. It also concludes that targeted sampling provides more biological assurances about the absence of END virus when infection is absent than random sampling and the use of sentinel birds combined.

We additionally propose to amend the requirements for importing eggs (other than hatching eggs) in order to require that the accompanying health certificate contain a specific additional certification that egg drop syndrome (EDS) is notifiable in the region of origin and that there have been no reports of EDS in the flocks of origin, or within a 50 kilometer radius of the flocks, for 90 days prior to export. EDS is characterized by soft shelled and shell-less eggs produced by otherwise healthy looking birds. The virus is spread horizontally, primarily in commercial flocks, via contaminated eggs, droppings, and needles used to draw blood and administer vaccinations. There is no known treatment for EDS. Vaccines administered during the bird's growth phase (14 to 18 weeks of age) have been successful at reducing, but not eliminating, virus shedding. Since the United States is the only area in the world free of EDS, we believe that the proposed certification requirements are warranted to help prevent the introduction of the disease into domestic flocks.

Currently, the regulations provide that flock inspections be conducted by a salaried veterinary officer of the national government of the region of origin. However, Mexico's Ministry of Agriculture developed a system for accrediting veterinarians who are not salaried employees of the national government of Mexico to perform official work in connection with the export of animals and animal products from Mexico. This work includes testing, examining, and certifying animals for export to the United States. Since 1992, we have allowed Mexican accredited veterinarians to perform certain necessary services detailed in 9 CFR part 93. These services, which were previously performed only by salaried veterinarians of the Mexican Government, are required by our regulations to prevent the introduction of communicable animal diseases into the United States through the entry of animals and animal products.

We are therefore proposing to amend the regulations to allow veterinarians accredited by the Mexican Government to inspect the flocks of origin and issue animal health certificates as required by the regulations for the importation of eggs from Mexico into the United States. However, we also propose that each certificate issued by a veterinarian accredited by the Mexican Government must also be endorsed by a full-time salaried veterinary officer of the national government of Mexico. Under this system, the accredited veterinarian would make the necessary determinations about the health of the flock of origin and issue the certificate, and the Mexican Government veterinarian would endorse it, indicating that the issuing veterinarian is properly accredited and that the certificate is properly completed. These proposed provisions are identical to the provisions in part 93 that allow veterinarians accredited by the national government of Mexico to perform certain functions related to the export of animals to the United States.

The title of part 94 is “Rinderpest, Foot-and-Mouth Disease, Fowl Pest (Fowl Plague), Exotic Newcastle Disease, African Swine Fever, Classical Swine Fever, and Bovine Spongiform Encephalopathy: Prohibited and Restricted Importations.” We would update the part heading so that it also refers to swine vesicular disease, a disease that is addressed in several sections of the regulations. Conversely, we would remove the part heading's reference to “fowl pest (fowl plague),” as the regulations in part 94 currently contains no provisions regarding fowl pest (fowl plague).

The regulations in § 94.6(c)(1) set out the information to be included on certificates accompanying shipments of table eggs. We would make editorial changes to paragraphs (c)(1)(v) and (c)(1)(ix) to clarify that we expect the certificate to confirm compliance with the specific requirements of those paragraphs.

Finally, the removal of the sentinel bird provisions and footnote 7 in § 94.6(c)(ix)(C) would make it necessary to renumber the remaining footnotes in part 94.

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

We are proposing to amend the regulations regarding the importation of animal products in order to modify the requirements concerning the importation of eggs (other than hatching eggs) from regions where END exists. This action is necessary in order to provide a more sound testing option for determining the END status of flocks producing eggs (other than hatching eggs) for export to the United States.

The ultimate goal of this proposed rule is to make our import regulations more effective, more consistent with the available science, and less restrictive while continuing to protect domestic poultry from END. One mechanism by which foreign producers located in regions affected with END can currently export table eggs into the United States is to place sentinel birds within their flocks and then test these birds for presence of the disease. As many of these foreign producers vaccinate their flocks, such testing may produce false-positive results. Sentinel birds may therefore produce false positives when tested for END, necessitating the expense of further testing to differentiate a vaccine-induced response from a field infection. The second mechanism currently authorized, testing 10 percent of the flock, is viewed by foreign egg producers as problematic and potentially an excessive requirement. As such, this proposed rule seeks to replace the current options for flock testing with one that more accurately directs testing at those birds most likely to be infected.

The United States is the world's largest producer of poultry meat and the second largest egg producer after China. Statistics indicated there was a domestic inventory of 449 million chickens in 2003, excluding commercial broilers, with a total cash value of $1.11 billion. 2 In 2004, broilers, which are raised specifically for meat production, had a total cash value of $20.4 billion, the total number produced being 8.74 billion. Also in 2004, turkey production totaled 7.3 billion pounds, with a cash value of $3.07 billion. 3 Table egg production during the year ending November 30, 2003, totaled 74.4 billion eggs. 4

The potential scope of any domestic effects of these proposed changes is somewhat uncertain. As the compliance costs for the flock testing requirements would decrease for producers exporting eggs to the United States due to the decrease in the number of birds required to be tested to demonstrate flock freedom from END, there is a potential for a small increase in the volume of table egg imports. In 2003, table egg imports from regions considered free of END, as listed in § 94.6(a)(2), totaled 77,861 dozen with an overall cash value of $411,000. For that same year, table egg imports from regions where END is considered to exist totaled 1,088,341 dozen, with an overall cash value of $709,000. 5 Total imports of table eggs for 2003 represented less than 0.02 percent of the total domestic supply for that year. 6 Usually, an increase in supply drives down the price of commodities. When both the retail and wholesale sectors of a market are inelastic, as is the case with table eggs, a small change in supply has the potential to have a large effect on price. 7 Consequently, if there is an increase in table egg imports as a result of the proposed changes, this could have an effect on the domestic market price of table eggs, causing the price to decrease as the supply of table eggs increases. In this case, there could be a slightly negative effect on domestic producers of table eggs due to declining price receipts. By contrast, if there is a slight increase in supply due to increased imports, the declining price will be a benefit to domestic consumers. Of course, any discernable changes in domestic prices of table eggs are also affected by domestic production, population changes, and changes in demand. Ultimately, as imports of table eggs represent less than 0.02 percent of the domestic supply available, we are confident that any increase in supply resulting from this proposed rule would not cause a significant change in the domestic market.

The Regulatory Flexibility Act requires agencies to consider the economic impact of their regulations on small entities. According to the guidelines established by the Small Business Association (SBA), domestic companies engaging in chicken egg production come under the North American Industry Classification System code 112310. The SBA defines a small chicken egg-producing entity as one that nets no more than $10.5 million per year. As of February 2004, the American Egg Board reported that there were approximately 260 egg-producing companies with flocks of 75,000 hens or more. These 260 companies represent about 95 percent of all the layers in the United States. 8 The exact number of operations engaged in table egg production is unclear. However, the 2002 agricultural census estimated that there were 83,381 domestic poultry and egg farms. While concrete information on the size distribution is unknown, the census does indicate that only 29,393 of those poultry operations have annual sales of $50,000 or more. As such, it is safe to assume that the majority of operations engaged in table egg production would be considered small entities by SBA standards. In the case of this proposed change, there are no direct effects on small entities, but the possibility of increased imports of table eggs does could result in an indirect effect. As mentioned previously, if there is an increase in table egg imports as a result of lower testing costs for exporters, thereby increasing supply to the domestic market, there is the potential for the domestic price of table eggs to decrease. However, given the fact that imports constitute such a small percentage of the domestic supply (0.02 percent) and because price is also affected by other factors including domestic production levels, population changes, and domestic demand, the prospects for any decrease in price as a direct result of the changes we are proposing are uncertain. Even if this potentiality is realized, we believe it is unlikely that the proposed changes would result in any significant economic effects on small entities.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action would not have a significant economic impact on a substantial number of small entities.

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

In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), the information collection or recordkeeping requirements included in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB). Please send written comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, DC 20503. Please state that your comments refer to Docket No. APHIS-2007-0014. Please send a copy of your comments to: (1) Docket No. APHIS-2007-0014, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road, Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence Avenue, SW., Washington, DC 20250. A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication of this proposed rule.

APHIS is proposing to amend the regulations regarding the importation of eggs (other than hatching eggs) from regions where END exists. This action is necessary in order to provide a more sound testing option for determining the END status of flocks producing eggs (other than hatching eggs) for export to the United States. The conditions for importation require, among other things, certification from a salaried veterinary officer of the national government of the region of origin, or a certificate issued by a veterinarian accredited by the national government of Mexico and endorsed by a full-time salaried veterinary officer of the national government of Mexico, thereby indicating that the veterinarian is authorized to issue the certificate. The certificate must also state that egg drop syndrome is notifiable in the region of origin and there have been no reports of egg drop syndrome in flocks of origin of the eggs, or within a 50 kilometer radius of the flock of origin, for the 90 days prior to the issuance of the certificate.

APHIS is asking the Office of Management and Budget (OMB) to approve its use of these information collection activities for 3 years.

We are soliciting comments from the public (as well as affected agencies) concerning our proposed information collection and recordkeeping requirements. These comments will help us:

(1) Evaluate whether the proposed information collection is necessary for the proper performance of our agency's functions, including whether the information will have practical utility;

(2) Evaluate the accuracy of our estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;

(3) Enhance the quality, utility, and clarity of the information to be collected; and

(4) Minimize the burden of the information collection on those who are to respond (such as through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g., permitting electronic submission of responses).

Estimate of burden: Public reporting burden for this collection of information is estimated to average 1.3 hours per response.

Respondents: Veterinarians accredited by the Mexican Government.

Estimated annual number of respondents: 5.

Estimated annual number of responses per respondent: 2.

Estimated annual number of responses: 10.

Estimated total annual burden on respondents: 13 hours. (Due to averaging, the total annual burden hours may not equal the product of the annual number of responses multiplied by the reporting burden per response).

Copies of this information collection can be obtained from Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at (301) 734-7477.

The Animal and Plant Health Inspection Service is committed to compliance with the E-Government Act to promote the use of the Internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this proposed rule, please contact Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at (301) 734-7477.

Accordingly, we propose to amend 9 CFR part 94 as follows:

For additional information see the Direct Final Rule published in the Final Rules section of this Federal Register .

Because NRC considers this action noncontroversial and routine, we are publishing this proposed rule concurrently as a direct final rule. The direct final rule will become effective on October 29, 2007. However, if the NRC receives significant adverse comments on the proposed rule by September 12, 2007, then the NRC will publish a document to withdraw the direct final rule. If the direct final rule is withdrawn, the NRC will address the comments received in response to the proposed revisions in a subsequent final rule. Absent significant modifications to the proposed revisions requiring republication, the NRC will not initiate a second comment period for this action if the direct final rule is withdrawn.

A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:

(1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:

(a) The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;

(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or

(c) The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.

(2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.

(3) The comment causes the staff to make a change (other than editorial) to the rule.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; and 5 U.S.C. 553; the NRC is proposing to adopt the following amendments to 10 CFR parts 32 and 35.

Comments Invited

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2006-26491; Directorate Identifier 2006-CE-76-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

We proposed to amend 14 CFR part 39 with an earlier NPRM for the specified products, which was published in the Federal Register on January 8, 2007 (72 FR 676). That earlier NPRM proposed to require actions intended to address the unsafe condition for the products listed above.

Since that NPRM was issued, we determined that replacing any type 1 fuel fittings with type 2 fuel fittings, not just leaking type 1 fuel fittings, is needed in order to eliminate future fuel leaks.

The Civil Aviation Authority of New Zealand, which is the airworthiness authority for New Zealand, has issued AD DCA/R2000/12, dated June 29, 2006 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

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

AVIONS PIERRE ROBIN (current type certificate responsibility with Alpha Aviation Design Limited) has issued Avions Pierre Robin Service Bulletin No. 86, dated July 30, 1980. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

We received no comments on the earlier NPRM.

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

Certain changes described above expand the scope of the earlier NPRM. As a result, we have determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on the proposed AD.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a Note within the proposed AD.

Based on the service information, we estimate that this proposed AD would affect about 10 products of U.S. registry. We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour. Required parts would cost about $100 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these costs. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here.

Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $1,800, or $180 per product.

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

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

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

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

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

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

The Commodity Futures Trading Commission (Commission) published comprehensive final regulations for trading facilities on August 10, 2001. 1 The final regulations codified the procedural provisions common to exempt boards of trade and ECMs operating pursuant to sections 5d or 2(h)(3) through (5) of the Act, respectively, in part 36 of the Commission's regulations. The final regulations also codified the procedural provisions common to DCMs, derivatives transaction execution facilities (DTEF), and derivatives clearing organizations (DCO) in part 40 of the Commission's regulations, and further established the regulatory framework necessary to implement and interpret the provisions of the CEA, as amended by the Commodity Futures Modernization Act of 2000 (CFMA), 2 pertinent to trading facilities. Based upon its subsequent experience in administering the Act, the Commission herein proposes several amendments to parts 36 and 40 of the Commission's regulations to better implement the Act and provide clearer direction as to the Commission's regulatory requirements thereunder.

The CFMA created a qualified exemption from the Commission's jurisdiction for transactions executed or traded on ECMs. Section 2(h)(3) of the Act, which was added by the CFMA, applies the exemption to transactions in exempt commodities executed or traded on an electronic trading facility that are entered into on a principal-to-principal basis solely between persons that are eligible commercial entities. 3 The CEA specifically reserves the applicability of the Commission's antifraud and antimanipulation authority to transactions executed or traded on ECMs in section 2(h)(4) of the Act  4 and gives the Commission the authority to issue ECM special calls for information to, among other things, enforce that authority. 5

In July 2004, the Commission amended regulation 36.3(b), which governs the Commission's access to ECM transaction data, to improve the quality of accessible information relevant to its antifraud and antimanipulation authority. 6 In that rulemaking, the Commission stated that aberrant price behavior on ECMs may require further Commission investigation and the eventual use of the Commission's special call authority to identify wrongful conduct. 7 The authority to issue special calls to ECMs currently is delegated to the Directors of the Division of Market Oversight (DMO) and the Division of Clearing and Intermediary Oversight and their designees. Given the importance of the authority to issue special calls to the Commission's ability to enforce its reserved antifraud and antimanipulation authority with respect to ECM transactions, the Commission herein proposes to amend regulation 36.3 to expand the set of persons with delegated authority to issue special calls pursuant to section 2(h)(5)(B)(iii) of the Act to include the Director of the Division of Enforcement and that Director's designees.

Part 40 of the Commission's regulations currently does not clearly indicate that the procedural requirements for listing, clearing or implementing dormant contracts and rules  8 are identical to the requirements established for initial submissions of contracts and rules that have never been approved by, or certified with, the Commission. 9 The current product and rule filing provisions of part 40 also do not clearly indicate that a DCM or DCO, in general, must choose either to comply with the rule approval process established in part 40 or, in the alternative, the certification process established in part 40 prior to listing, clearing, or implementing any product or rule, including any product or rule that has become dormant. 10 The Commission therefore proposes to amend the language in regulations 40.2(a), 40.3(a), 40.4(a), 40.5(a) and 40.6(a) to clarify that a DCM or DCO in general must choose either to list, clear, or implement a product or rule, including any dormant product or rule, pursuant to the self-certification provisions of part 40 or, in the alternative, pursuant to the process established in part 40 for receiving the Commission's prior approval. 11

The Commission has applied the concept of dormancy to registered entities by defining a dormant market or clearing organization as a registered entity that has been designated by, or registered with, the Commission for a period of thirty-six months or more but has not served as a facility for the trading or clearing of transactions for a period of twelve consecutive calendar months. 12 The Commission recognizes that a significant period of inactivity can potentially have a negative impact on a registered entity's ability to implement rules and list and clear contracts in a manner that remains consistent with current market conditions, the Commission's regulations, and self-regulatory best practices. 13 Accordingly, the Commission has deemed that upon a registered entity becoming dormant, its rules and contracts shall also become dormant. 14

In contrast to this view, the current language of the Commission's regulations implies that the earliest possible time that a rule can become dormant, regardless of whether a registered entity has entered into dormancy, is at the end of a twelve month implementation period. 15 Similarly, the current language of the Commission's regulations implies that the earliest possible time that a contract can become dormant, regardless of whether a registered entity has entered into dormancy and absent affirmative action on the part of the registered entity, is at the end of a thirty-six month contract development period. To remedy any uncertainty, the Commission proposes to amend regulation 40.1(b), the definition of dormant product or contract, and regulation 40.1(f), the definition of a dormant rule, to clearly establish that the dormancy of a registered entity will automatically and separately trigger the dormancy of that entity's contracts and rules. In addition, the Commission is proposing a technical amendment to the definition of a dormant DCM, DTEF, and DCO in regulation 40.1 to conform the language used to define those terms to the proposed amendments of regulations 40.1(b) and 40.1(f).

The Commission's regulations give registered entities the ability to implement rules in response to an emergency without certifying, or receiving the Commission's approval of, such rules prior to implementation. 16 The current definition of emergency implies that the full governing board of a registered entity must itself make the determination as to whether a circumstance is an emergency before operating under emergency procedures. 17 This notice of rulemaking proposes to amend Commission regulation 40.1(g), the definition of emergency, to clarify that persons other than members of the governing board may determine that a particular occurrence or circumstance constitutes an emergency. In a letter commenting on a previous notice of proposed rulemaking, the New York Mercantile Exchange (NYMEX) suggested that the full governing board of an exchange, under emergency conditions, may not be able to issue an opinion in a timely manner to address an emergency. 18 In such a situation, it may be optimal for a duly authorized subcommittee or exchange official to have the ability to respond to fast developing emergency conditions.

The Commission is in agreement with NYMEX. Accordingly, the Commission proposes to amend the definition of emergency in part 40 to clarify that duly authorized persons may determine whether a particular occurrence or circumstance is an emergency that “requires immediate action and threatens or may threaten such things as the fair and orderly trading in, or the liquidation of or delivery pursuant to, any agreements, contracts or transactions.”  19 The amendment would require that the rules of the registered entity specify in detail (1) the persons authorized to issue an emergency opinion on behalf of the governing board; and (2) the procedures for the exercise of such authority. 20

In contrast to other registered entity rules that may be implemented pursuant to the self-certification process established in part 40, DCM rules that, as determined by the Commission, materially change a term or condition of a contract with open interest that is based on an agricultural commodity enumerated in section 1a(4) of the Act must be approved by the Commission prior to implementation. 21 Since a finding of materiality is by statute at the reasonable discretion of the Commission, part 40 affords DCMs the opportunity to request a materiality opinion from the Commission for rules that a submitting DCM characterizes as non-material. Upon request the Commission will determine whether a DCM rule submitted under regulation 40.4(b)(9) at least ten business days prior to implementation is material within the meaning of section 5c(c) of the Act. 22

DCMs often simultaneously request that agricultural rule changes be reviewed for materiality, and if found to be material, approved by the Commission. Currently, Commission regulation 40.5 does not clearly specify when the approval period commences with respect to rules submitted for materiality review under the process framed by regulation 40.4(b)(9). 23 To establish certainty, the amendments to regulation 40.5 propose to commence the rule approval period at the conclusion of the 10-day materiality review period under regulation 40.4(b)(9). The Commission believes that commencing the approval period at this point is appropriate because the determination as to whether a registered entity rule should be approved (that is whether a rule is consistent with the Act and the Commission's regulations thereunder) requires an analysis that is qualitatively different from the analysis required to determine whether the same rule is material within the meaning of section 5c(c) of the Act.

The Commission understands that there may be some confusion as to how far in advance of implementation registered entities must submit self-certified products and rules to the Commission. Commission regulations 40.2(a) and 40.6(a) provide that such submissions must be filed electronically with the Commission at or before the close of business on the business day preceding implementation. Questions have arisen as to whether these provisions refer to the Commission's business day or the business day of the submitting registered entity.

The proposed regulations clarify that the specified date is the Commission's business day. For clarity and in order to ensure proper notice of certified products and rules, the Commission proposes to define business day in part 40 and add language to Commission regulations 40.2(a) and 40.6(a) to expressly require the filing of certified submissions with the Commission at least one full Commission business day prior to implementation. 24 In addition, to ensure that the appropriate operating divisions of the Commission have the ability to access electronic copies of submissions at the time of filing, the proposed regulations add the e-mail addresses submissions@cftc.gov and DMOSubmissions@cftc.gov to, and specify each regional branch chief in, Commission regulations 40.2(a)(1) and 40.6(a)(2) as additional mandatory recipients of electronically filed submissions.

a. Additional Rule Categories . As discussed above, the Commission's regulations generally permit a registered entity to implement a new or dormant rule without seeking prior Commission approval by certifying to the Commission that the rule complies with the Act and the regulations thereunder on the business day preceding implementation. 25 Registered entities, however, are not required to file certified submissions prior to implementing several categories of registered entity rules that are enumerated in regulation 40.6(c)(2). 26 Registered entity rules that come within these categories typically are limited in scope and are implemented under enabling rules that have already been approved by, or certified with, the Commission. In order to lessen the burden placed on registered entities as well as better utilize Commission resources, the Commission proposes to codify several additional registered entity rule categories that may be implemented without prior certification or Commission approval if subsequently included in a weekly notification of rule changes under regulation 40.6(c)(2). The Commission proposes to add (1) changes in trading months with no open interest that are consistent with previously approved or certified standards; (2) changes in lists of producers' brands or markings that are made pursuant to previously approved or certified standards or criteria relating to quality specifications, and for existing delivery locations, (3) changes in lists of approved delivery facilities and delivery service providers that are made pursuant to previously approved or certified standards or criteria  27 to the categories of rules enumerated in regulation 40.6(c)(2).

A registered entity's ability to notice file changes that relate to trading months under proposed regulation 40.6(c)(2) only extends to trading months within currently established cycles of trading months. By way of example, assume that the currently established cycle of trading months for a particular contract is December, March, May, July and September. Under the proposed regulations, the listing of a new trading month, such as November, would not qualify for notice filing under regulation 40.6(c) while an earlier than anticipated listing of a July contract could properly be notice filed. With respect to producers, facilities and service providers, the Commission reviews the relevant enabling standards and criteria to ensure their consistency with cash market practices and to ensure that their terms do not unreasonably restrain trade by inappropriately prohibiting the open participation of certain producers, facilities or service providers. 28 The identification of producers' brands and enumerated delivery facilities and service providers at a delivery location does not alter certified or Commission approved qualifying delivery standards or criteria, nor does it change exchange procedures that verify compliance with those standards or criteria. The Commission therefore proposes to be kept apprised of changes in lists of approved producers' brands or markings, changes in lists of delivery location delivery facilities and service providers, and changes in trading months with no open interest that are consistent with previously certified or approved standards through weekly notices of rule changes filed under regulation 40.6(c)(2) as opposed to requiring that such changes be certified with or approved by the Commission prior to implementation. 29

b. Implementing Rules without Notification . Rule changes that may appear in a weekly notification pursuant to regulation 40.6(c)(2)(iv) also include “[c]hanges to option contract rules relating to the strike price listing procedures, strike price intervals, and the listing of strike prices on a discretionary basis.”  30 The Commission currently receives substantially the same information under part 16 of the Commission's regulations, which specifies the daily reporting requirements that apply to DCMs. 31 In particular, regulation 16.01(b) stipulates that each reporting market must submit to the Commission on a daily basis various trade data, including trade volume, open interest and price information for all listed option strike prices, including discretionary prices. 32

In January 2006, DMO staff granted no-action relief to permit DCMs to satisfy the regulation 40.6(c)(2)(iv) notification requirement by complying with the daily reporting requirements of regulation 16.01 of the Commission's regulations. 33 In order to codify the no-action relief granted by DMO and avoid duplicative regulatory requirements, the Commission proposes to amend regulation 40.6(c)(2)(iv) and add paragraph (G) to regulation 40.6(c)(3)(ii) to allow registered entities that are in compliance with regulation 16.01(b) to implement the specified changes relating to option contract strike prices without either prior approval, certification or inclusion in a weekly notification to the Commission. 34

The Commission is making a similar proposal with respect to registered entity rules denoting changes to contract trading months within currently established cycles of trading months to the categories of rules that may be implemented pursuant to a regulation 40.6(c)(2) notification filing. 35 As with rules that are changes to option contract strike prices, the Commission currently receives adequate notification of the same information under regulation 16.01(a). In order to avoid duplicative regulatory requirements, the Commission proposes to add paragraph (H) to regulation 40.6(c)(3)(ii) to provide that registered entities that are in compliance with regulation 16.01(a) may implement changes to the listing of contract trading months with no open interest, other than the delisting of contract trading months or the relisting of temporarily delisted contract trading months, without prior approval, certification or inclusion in a weekly notification to the Commission. 36

Section 15(a) of the Act requires the Commission to consider the costs and benefits of its actions before issuing new regulations under the Act. Section 15(a) does not require the Commission to quantify the costs and benefits of new regulations or to determine whether the benefits of the proposed regulations outweigh their costs. Rather, section 15(a) requires the Commission to consider the cost and benefits of the subject regulations. Section 15(a) further specifies that the costs and benefits of the proposed regulations shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission may, in its discretion, give greater weight to any one of the five enumerated areas of concern and may, in its discretion, determine that, notwithstanding its costs, a particular regulation is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the Act.

The proposed regulations expand the set of persons delegated by the Commission with the authority to issue ECM special calls to include the Director of the Division of Enforcement and that Director's designees. The proposed rules do not expand the basis for issuing ECM special calls; rather, they simply expand the set of persons authorized to issue such special calls. There are no regulatory costs imposed by this extension of delegated special call authority.

The proposed regulations clarify that a DCM or DCO must generally choose either to comply with the rule approval process established in part 40 of the Commission's regulations or, in the alternative, the certification process established in part 40, prior to listing or clearing any product, or implementing any rule, including any product or rule that has become dormant. The proposed regulations also clearly establish that the dormancy of a registered entity will automatically and separately trigger the dormancy of that entity's contracts and rules. These clarifications are consistent with current Commission practice, do not impose any regulatory cost, and serve the public interest by facilitating regulatory certainty for persons subject to the Act and the Commission's regulations thereunder.

The proposed regulations clarify that the definition of emergency allows persons other than members of the governing board of a registered entity to declare an emergency on behalf of the governing board. The proposed regulations expressly recognize that the governing board of an exchange under emergency conditions may not be able to issue an opinion in a timely manner to address an emergency. Accordingly, the Commission's proposed definition of emergency in part 40 clearly permits duly authorized persons to determine whether a particular occurrence or circumstance is an emergency. The proposed regulations facilitate the ability of registered entities to undertake timely action in response to emergency events and thereby better protect market participants and the financial integrity of transactions executed and cleared on registered entities. The proposed regulations also limit the potential costs that may arise from any misuse of authority by requiring registered entities to adopt detailed procedural rules to effectuate the exercise of this delegated authority.

The proposed regulations clearly set forth the duration of the rule approval period for DCM rules that may change a material term or condition of a contract based on the agricultural commodities enumerated in section 1a(4) of the Act by proposing to commence the rule approval period at the conclusion of the 10-day materiality review period under regulation 40.4(b)(9). Commencing the approval period at this point gives the Commission additional time to effectively discharge its separate regulatory responsibilities to review registered entity rule changes for their impact on contracts with open interest and to determine whether such changes are consistent with the Act and the Commission's regulations thereunder. The proposed review period is consistent with current Commission regulatory practice and should not place any additional cost or burden on submitting DCMs.

The proposed regulations address how far in advance of implementation registered entities must submit self-certified contracts and rules to the Commission pursuant to regulations 40.2(a) and 40.6(a) by clarifying that the date specified in those regulations refers to the Commission's business day. The proposed regulations ensure that there is at least one full Commission business day between the submission of a certified product or rule and such product or rule's listing or implementation. The proposed regulations provide regulatory clarity and impose no additional cost or burden.

The proposed regulations lessen the burden placed on registered entities as well as better utilize Commission resources by codifying several additional rule categories that may be implemented without prior certification or Commission approval if noticed to the Commission through other required filings or disclosure requirements or subsequently included in a weekly notification of rule changes to the Commission under regulation 40.6(c)(2). The proposed regulations add lists of approved producers' brands or markings, changes in lists of approved delivery facilities and delivery service providers, certain changes in contract trading months, and certain specified changes to option contract strike prices to the categories of rules may be implemented without prior certification or Commission approval, or as applicable, notification. Registered entity rules that come within these categories typically are limited in scope and are implemented under enabling rules that have already been approved by, or certified with, the Commission. Permitting their implementation without certification or approval, or as applicable, notification, avoids unnecessary or duplicative regulatory requirements and better utilizes the Commission's resources.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq. , requires that agencies consider the impact of their regulations on small businesses. The requirements related to the proposed amendments fall mainly on registered entities. The Commission has previously determined that registered entities are not “small entities” for the purposes of the RFA. 37 In addition, these proposed regulations, collectively, tend to relieve regulatory burdens. Accordingly, the Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that the actions proposed to be taken herein will not have a significant economic impact on a substantial number of small entities.

C. Paperwork Reduction Act

When publicizing proposed regulations, the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501 et seq. ) imposes certain requirements on Federal agencies (including the Commission) in connection with their conducting or sponsoring any collection of information as defined by the PRA. The information collection requirements associated with the proposed regulations are administered under Office of Management and Budget control numbers 3038-0022 and 3038-0054. These proposed amendments to parts 36 and 40 of the Commission's regulations would not impose any new or additional recordkeeping or information collection requirement that would require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq. Accordingly, the PRA is inapplicable. We solicit comment on the accuracy of our estimate that no additional recordkeeping or information collection requirements or changes to existing collection requirements would result from the amendments proposed herein.

In consideration of the foregoing, and pursuant to the authority contained in the Act, and, in particular, sections 2, 4, 5, 5a, 5b, 5c, 5d and 8a of the Act, the Commission hereby proposes to amend Chapter I of Title 17 of the Code of Federal Regulations as follows:

Electronic Version

The electronic file of this document is available on the date of publication in the Federal Register at http://www.gpoaccess.gov/fr/index.html .

Public Law 106-170 was enacted on December 17, 1999. This law added section 1148 of the Social Security Act (Act), which directs the Commissioner of Social Security to establish the Ticket to Work program. Congress provided for the establishment of the Ticket to Work program to provide beneficiaries with a “real choice in obtaining the services and technology they need to find, enter, and maintain employment” in order to “greatly improve their short and long-term financial independence and personal well-being” (section 2(a)(10) of Pub. L. No. 106-170, 113 Stat. 1860, 1863). These proposed revisions to our regulations are based on our experience implementing the existing rules and comments made in response to our request for comment in the Notice of Proposed Rulemaking (NPRM) that we published on September 30, 2005 (70 FR 57222, 57227). In that NPRM, we asked for comment on, among other things, whether and how we should simplify the definition of “using a ticket” and on how we might revise the timely progress requirements set forth in our current rules.

As part of the Ticket to Work program, the Commissioner of Social Security (the Commissioner) issues a “ticket” to eligible Social Security disability beneficiaries and to eligible disabled or blind Supplemental Security Income (SSI) beneficiaries for participation in the program. In this voluntary program, each beneficiary receiving a ticket has the option of using that ticket to obtain services from a provider known as an employment network (EN) or from a State vocational rehabilitation (VR) agency. ENs may also choose to whom they provide services. If the beneficiary and an EN or State VR agency agree to work together, the beneficiary and the EN or State VR agency will develop either an individual work plan (IWP) or an individualized plan for employment (IPE) which outlines any employment services, vocational rehabilitation services, and other support services necessary to assist the beneficiary to obtain and ultimately maintain self-supporting employment. The EN or State VR agency will provide, without charge to the beneficiary, the services outlined in the IWP or IPE. If the beneficiary achieves certain work outcomes, we will pay the EN or State VR agency for those outcomes based on an established payment schedule.

These proposed changes to our rules on “using a ticket” and the related timely progress requirements are integral to the operation of the Ticket to Work program and are essential to the overall changes we proposed for the program in the September 30, 2005 NPRM. We anticipate issuing one comprehensive final regulation covering the matters addressed in the 2005 NPRM and in this NPRM. In this NPRM, we are proposing changes to our rules for the Ticket to Work program in areas that were not addressed in the September 2005 NPRM. We describe the main changes we are proposing below:

• So that the program will be more accessible to beneficiaries who require additional training to return to work, we propose to add requirements for educational or technical training to supplement the work requirements under the timely progress guidelines for beneficiaries;

• We propose to revise the work requirements under the timely progress guidelines and the documentation and other requirements for progress reviews to simplify and streamline the process for determining whether a beneficiary is making timely progress toward self-supporting employment;

• We propose to eliminate the current “initial 24-month period” after ticket assignment during which a beneficiary is considered to be making timely progress if actively participating in his or her employment plan;

• We propose to replace this 24-month period with two successive 12-month progress certification periods during each of which the beneficiary must complete either a work requirement of an educational or technical training requirement in order to be considered to be making timely progress until the next scheduled progress review; and

• We propose to recognize one-stop delivery systems established under the program of the U.S. Department of Labor under subtitle B of title I of the Workforce Investment Act of 1998 as qualified ENs.

Section 1148(i) of the Social Security Act (42 U.S.C. 1320b-19(i)) provides that “[d]uring any period for which an individual is using * * * a ticket to work and self-sufficiency issued under this section, the Commissioner (and any applicable State agency) may not initiate a continuing disability review * * *.” Section 1148(i) also directs the Commissioner to define the term “using a ticket” for this purpose. Our current rules (§ 411.170) provide that “[t]he period of using a ticket begins on the effective date of the assignment of your ticket to an EN or State VR agency under § 411.140.” They provide in § 411.171 that the period of using a ticket will end with the “day before the effective date of a decision * * * that you are no longer making timely progress toward self-supporting employment.” The period of using a ticket may end earlier, if certain other events occur. The current rules further provide in § 411.180(a) that “[w]e consider you to be making timely progress toward self-supporting employment when you show an increasing ability to work at levels which will reduce or eliminate your dependence on these [disability or blindness] benefits.”

Section 411.180(c) of our current rules explains the guidelines we use to determine whether timely progress toward self-supporting employment is being made. Among other things, these guidelines include a goal of three months of work during the 12-month period that begins after the 24th month following the assignment of a ticket to an EN or State VR agency, as described in § 411.140. For subsequent 12-month periods, the current rules require work (as defined in § 411.185) for at least six of the 12 months.

We sought to balance two important objectives in establishing the current rules on using a ticket and related timely progress guidelines. First, we sought to define “using a ticket” in a way that should reduce a barrier to beneficiary participation in the program that arises from fear that a return to work would cause benefits to be terminated in a continuing disability review. Second, we sought to maintain the integrity of the disability programs by providing that beneficiaries who have medically improved do not continue to receive disability benefits for an undue length of time. Properly balancing these objectives remains our goal.

During the comment period we provided in the September 30, 2005 NPRM, we received numerous comments that educational programs should be equated with work for the purposes of determining timely progress under the Ticket to Work program. We agree with commenters who suggested that disruption of the pursuit of an education program, as our current requirements have the potential to do, is a counterproductive policy. Therefore, in this NPRM, we propose adding an educational and technical training requirement to supplement the work requirement, so that the program will be more accessible to beneficiaries who require additional training to return to work.

We are also proposing to eliminate the current “initial 24-month period” during which a beneficiary is considered to be making timely progress toward self-supporting employment if actively participating in his or her employment plan. We propose to eliminate this provision which requires only active participation in the plan for the beneficiary to be considered “using a ticket,” and therefore protected from initiation of a medical continuing disability review (CDR), during the first two years of participation in the program. We also propose to eliminate the current 24-month progress review, which a beneficiary must successfully complete in order to continue to be considered making timely progress and receive CDR protection during the third year of participation. For CDR protection to continue, the program manager must determine in this review that the beneficiary is actively participating in the employment plan; that the plan has a work goal meeting the work requirement for the third year of participation; and that, given the beneficiary's current progress in the plan, he or she can reasonably be expected to reach this goal by the end of the third year of participation. We are also proposing to eliminate the second step of the current 12-month progress reviews, which requires an expectation by both the beneficiary and the EN or State VR agency that the beneficiary will work at the level required during the next 12-month progress review period.

We are proposing to replace the “initial 24-month period” with two successive 12-month progress certification periods during each of which the beneficiary must complete either a work requirement or an educational or technical training requirement in order to be considered to be making timely progress until the next scheduled progress review. Thus, while our current rules require a specified level of work beginning with the third year of participation, these proposed rules would require a specified level of work activity (or coursework in an educational or technical training program) beginning with the first year of participation in the Ticket to Work program.

The table below summarizes the basic changes we are proposing to make to the definition of “using a ticket” and “timely progress” for purposes of maintaining CDR protection. In the table below, we use the term “SSDI” to refer to all categories of Social Security disability benefits under title II, and the term “SSI” to refer to Supplemental Security Income payments under title XVI based on disability or blindness.

In addition, these proposed rules address concerns expressed by ENs and State VR agencies that the current rules are unnecessarily burdensome. Comments received from some State VR agencies noted that the request for information received from the program manager (PM) in connection with a 12-month progress review under the timely progress guidelines required the State VR agency to submit evidence of a beneficiary's earnings. The commenters expressed the view that this represented a huge and largely unnecessary administrative burden for State VR agencies. Based on the comments from the State VR agencies and ENs, we propose to change the timely progress requirements to simplify reporting of information for the progress reviews. These proposed rules would generally define “timely progress” based on the achievement of milestones and outcomes under the EN payment systems proposed in the September 30, 2005 NPRM. The comments we received on the proposed expansion of the milestones were generally positive. We did not receive any negative comments that would cause us to change the proposed number of milestones or the periods and levels of work required for the milestones when developing final rules. The level of work and earnings required for outcome payments is mandated by the statute.

In that NPRM, we proposed a two-phased milestone system. Phase 1 milestones would be based on the beneficiary working specified periods of time at the trial work period level. For example, the second Phase 1 milestone would be achieved when a beneficiary works three months and has earnings in each of those months at the level for a trial work service month. This is the same standard which we propose for the work requirement during the first 12-month progress certification period in these proposed rules. We also propose to use the trial work earnings level for the six months of work which would be required during the second 12-month progress certification period.

A Phase 2 milestone would be achieved when a beneficiary works in a month and has gross earnings above the SGA threshold amount. We are proposing to use this same level of monthly earnings for the proposed nine months of work which would be required during the third and fourth 12-month progress certification periods. The level of earnings for the six months of work which would be required during the fifth and subsequent 12-month progress certification periods would be based on the earnings criteria for an outcome payment month under the EN payment systems. An outcome payment month occurs when a beneficiary's work or earnings are sufficient to preclude payment of Social Security disability benefits and Federal SSI cash benefits.

These proposed changes to the work requirements under the timely progress guidelines would allow us to determine administratively, without unnecessarily burdening the beneficiary or EN or State VR agency with requests for information, whether a beneficiary is making timely progress based on information in our EN/State VR agency payment records or our records of the beneficiary's earnings.

These proposed rules incorporate certain aspects of the proposed rules in the September 2005 NPRM, which would provide that a beneficiary who has a ticket otherwise available for assignment and who is receiving services under an IPE from a State VR agency which has chosen to be paid under the cost reimbursement payment system will be considered to be “using a ticket,” provided that the beneficiary is making timely progress toward self-supporting employment. The September 2005 NPRM also proposed that: (1) The ticket of a beneficiary in this situation would not be assigned to the State VR agency; (2) the beneficiary may assign his or her ticket after State VR services end; and (3) the period of using a ticket for such a beneficiary would end 90 days after State VR services end.

In these proposed rules, we are proposing to change the duration of the “extension period” described in §§ 411.166 and 411.220 from three months to 90 days. We are proposing this change to conform to the proposed 90-day period included in the September 2005 NPRM during which the ticket of a beneficiary in the situation described above may be considered “in use” after State VR services end.

In proposed § 411.226, we explain how we will apply the new timely progress provisions to a beneficiary who assigned his or her ticket prior to the effective date of the new rules. Beneficiaries already using a ticket assigned to a State VR agency that chose to be paid under the cost reimbursement payment system, may continue using a ticket under the new rules in subpart C. The new rules include provisions for transitioning to the revised timely progress guidelines.

However, the beneficiary's ticket will no longer be considered assigned to that State VR agency beginning on the effective date of the final regulations. We also explain that the beneficiary may assign his or her ticket after the State VR agency has closed his or her case.

Section 1148(f)(1)(B) of the Social Security Act (42 U.S.C. 1320b-19(f)(1)(B)) provides that an employment network serving under the Ticket to Work program “may consist of a one-stop delivery system established under subtitle B of title I of the Workforce Investment Act of 1998.” Our regulation at 20 CFR 411.305(c) states the same proposition. We are proposing to amend subpart E, §§ 411.310 and 411.315, to further state that one-stop delivery systems under subtitle B of title I of the Workforce Investment Act of 1998 may participate in the Ticket to Work program as ENs without responding to our request for proposal (RFP). In light of the nature of the one-stop systems and the statutory reference to them, we are simplifying the approval process for one-stop systems. We have consulted with the Department of Labor, the Federal agency responsible for oversight of the program for the one-stop delivery systems, regarding the entities that comprise one-stop systems and, based on those consultations, we have determined they meet our EN requirements. A one-stop delivery system still must enter into an agreement with us to serve as an EN under the Ticket to Work program and must maintain compliance with the rules that apply to ENs. We will seek to work with the appropriate entities that can enter into EN agreements with us. We believe this change, which would eliminate the RFP process for one-stop systems, will provide our beneficiaries with more choices because it would greatly expand the number of ENs for ticket holders living in all areas of the United States, particularly in counties where no ENs are currently qualified.

On September 30, 2005, we published an NPRM (70 FR 57222) proposing some important changes to the existing Ticket to Work program rules. In that NPRM, we proposed changes to the EN payment systems to provide greater incentives for EN participation; to eliminate the requirement for assignment of a beneficiary's ticket to a State VR agency which chooses the cost reimbursement payment system; and to include a rule providing that the ticket of such a beneficiary would be assignable after State VR services end. We also proposed in that NPRM that, for a beneficiary who has a ticket which would otherwise be available for assignment and who is receiving services under an IPE from a State VR agency which has chosen the cost reimbursement payment system, the beneficiary will be considered to be “using a ticket” until 90 days after VR services end, provided the beneficiary is making timely progress toward self-supporting employment.

In the September 2005 NPRM, we invited comments from the public on four additional matters. Two of these matters addressed specific changes in our rules proposed in the NPRM. One matter addressed in the NPRM concerned evidence requirements for EN payment; the other matter addressed payment of Phase 1 milestones after State VR services have been completed. We received public comments on both of these subjects, and will address these comments in our final Ticket to Work program rules.

The other two matters outlined in the September 2005 NPRM for which we invited public comments did not involve specific proposed changes to our current rules. (70 FR at 57227.) Rather, we requested comments on questions which we presented concerning whether and how we should proceed to develop specific proposed changes. The first of these questions is whether a beneficiary should be eligible for more than one ticket in a single period of entitlement to title II or title XVI benefits. Our current rules provide for only one ticket for each period of entitlement. A number of comments that we received in response to this request pointed out that, in order to sustain gainful employment, many beneficiaries require ongoing support services beyond the period of time over which Milestone or Outcome payments are made. For example, beneficiaries with physical disabilities may require specialized transportation services over an indefinite period to get to and from the worksite, and, thus, may require a longer period of employment support in order to sustain employment. We recognize the concern expressed by the commenters that beneficiaries in some cases may need ongoing supports to sustain employment beyond the period of time over which Milestone or Outcome payments are made. However, we have decided not to propose any changes to our rules in this area at this time.

The second question on which we invited comment was whether and how we should simplify the definition of “using a ticket” under the Ticket to Work program and how we might best revise the timely progress requirements consistent with the intent of the legislation. It is primarily this question which we are addressing in this NPRM. As described earlier, this NPRM sets forth proposed changes in our rules to simplify the definition of “using a ticket” and to improve the related timely progress requirements. We believe that these proposed changes will provide greater opportunities for beneficiaries to participate in the Ticket to Work program and enhance their potential for a successful outcome.

Since these proposed changes are integral to the overall operation of the Ticket to Work program, we believe that it would be unwise to make final changes in the areas addressed by the September 30, 2005 NPRM before we make final changes in areas addressed by this NPRM. Issuing two separate final rules might both confuse our beneficiaries and impose a significant administrative burden on ENs and State VR agencies, which would be required to make two sets of operational changes based on two separate final rules. Accordingly, we intend to issue one comprehensive final rule on the Ticket to Work program in response to both the September 2005 NPRM and this NPRM.

Executive Order 12866, as amended, requires each agency to write all rules in plain language. In addition to your substantive comments on these proposed rules, we invite your comments on how to make these proposed rules easier to understand. For example:

• Have we organized the material to suit your needs?

• Are the requirements in the rules clearly stated?

• Do the rules contain technical language or jargon that is not clear?

• Would a different format (grouping and order of sections, use of headings, paragraphing) make the rules easier to understand?

• Would more (but shorter) sections be better?

• Could we improve clarity by adding tables, lists, or diagrams?

• What else could we do to make the rules easier to understand?

We have consulted with the Office of Management and Budget (OMB) and determined that these proposed rules are subject to OMB review because they meet the criteria for a significant regulatory action under Executive Order 12866, as amended. The Office of the Chief Actuary estimates that these proposed rules, if finalized in conjunction with the other provisions of expected final rules for the Ticket to Work program resulting from the NPRM published September 30, 2005 (70 FR 57222), would reduce the total cost of the combined final rules. Specifically, that Office estimates that the projected increased program outlays which would result from the adoption of the rules proposed in the September 2005 NPRM, which are described in that NPRM in the section “Executive Order 12866” (70 FR at 57228), would be reduced by the following amounts ($ in millions) if the rules we are now proposing and the September 2005 proposed rules were adopted in a combined final rule.

The main reason for this reduction in cost relative to the September 2005 proposed rules is that the current proposed rule would make changes to the timely progress specifications that are used to determine whether a ticket is in use and thus subject to certain protections against the possibility of benefit termination through a medical continuing disability review (CDR). The net effect of these changes is to shorten the duration of the CDR protection by about 24 months on average.

We certify that these proposed rules would not have a significant economic impact on a substantial number of small entities because they would primarily affect only individuals and those entities that voluntarily enter into a contractual agreement with us. Accordingly, a regulatory flexibility analysis as provided in the Regulatory Flexibility Act, as amended, is not required.

We have reviewed these proposed rules under the threshold criteria of Executive Order 13132, “Federalism,” and determined that they do not have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. These proposed rules will complement and enhance the existing State vocational rehabilitation program.

We are proposing to amend our regulations for the Ticket to Work and Self-Sufficiency Program, authorized under section 1148 of the Social Security Act. The Ticket to Work program provides beneficiaries with disabilities expanded options for access to employment, vocational rehabilitation, and other support services. We are proposing changes to our current Ticket to Work program rules to simplify and improve the definition of “using a ticket” and our related requirements for measuring “timely progress toward self-supporting employment.” As outlined in the table below, proposed §§ 411.192(b) and (c) and 411.210(b) require beneficiaries to submit a written request to the Program Manager (PM) to place a ticket in inactive status, reactivate a ticket, or be reinstated to in-use status. In addition, proposed § 411.200(b) requires beneficiaries, ENs and State VR agencies, when requested by the PM, to submit information the PM requires to determine if the beneficiary has met the timely progress guidelines. The requirement for beneficiaries to make a written request to change the status of their ticket, and the requirement for beneficiaries, ENs and State VR agencies to submit information requested by the PM, are public paperwork reporting burdens that require OMB clearance under the Paperwork Reduction Act of 1995. Respondents to these collections are Social Security disability beneficiaries, disabled or blind supplemental security income beneficiaries, and ENs and State VR agencies working with these beneficiaries. These burdens are a result of the agency's consideration of public comments received from the September 30, 2005, Ticket to Work and Self-Sufficiency Program NPRM.

An Information Collection Request has been submitted to OMB for clearance. We are soliciting comments on the burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility and clarity; and on ways to minimize the burden on respondents, including the use of automated collection techniques or other forms of information technology. Comments should be sent to OMB by fax or by e-mail to: Office of Management and Budget, Attn: Desk Officer for SSA, Fax Number: 202-395-6974, E-mail address: OIRA_Submission@omb.eop.gov.

Comments on the paperwork burdens associated with this rule will be accepted for up to 60 days after publication of this notice and will be most useful if received within 30 days of publication. Our suggestion of early comments does not affect the deadline for the public to submit comments to SSA on the proposed regulations.

These information collection requirements will not become effective until approved by OMB. When OMB has approved these information collection requirements, SSA will publish a notice in the Federal Register . To receive a copy of the OMB clearance package, you may call the SSA Reports Clearance Officer on 410-965-0454.

For the reasons set out in the preamble, we are proposing to amend subparts C and E of part 411 of chapter III of title 20 of the Code of Federal Regulations as set forth below:

Background

The notice of proposed rulemaking by cross-reference to temporary regulations that are the subject of this correction are under section 883(a) and (c) of the Internal Revenue Code.

As published, notice of proposed rulemaking by cross-reference to temporary regulations (REG-138707-06) contains errors that may prove to be misleading and are in need of clarification.

Accordingly, the publication of the proposed regulations (REG-138707-06), which was the subject of FR Doc. E7-12037, is corrected as follows:

1. On page 34650, column 2, in the preamble, under the paragraph heading “ Paperwork Reduction Act ”, line 1 of the fourth paragraph, the language “Whether the proposed collection of” is corrected to read “Whether the proposed collections of”.

2. On page 34650, column 2, in the preamble, under the paragraph heading “ Paperwork Reduction Act ”, line 2 of the fifth paragraph, the language “associated with the proposed collection” is corrected to read “associated with the proposed collections”.

3. On page 34651, column 1, in the preamble, under the paragraph heading “ Comments and Public Hearing ”, line 7, the language “and Treasury Department specifically” is corrected to read “and the Treasury Department specifically”.

4. On page 34651, column 2, in the preamble, under the paragraph heading “ Drafting Information ”, line 5, the language “personnel from the IRS and Treasury” is corrected to read “personnel from the IRS and the Treasury”.

On June 25, 2007, the Architectural and Transportation Barriers Compliance Board (Access Board) published a notice of intent to establish an advisory committee to make recommendations on issues related to the effectiveness of emergency alarm systems for individuals with hearing loss or deafness on passenger vessels. (72 FR 34653; June 25, 2007). The notice identified the interests that are likely to be significantly affected by this rulemaking:

• Individuals with hearing loss or deafness, and other individuals with disabilities concerned about emergency alarm systems on passenger vessels;

• Passenger vessel operators;

• Manufacturers and designers of emergency alarm systems on passenger vessels; and

• Voluntary codes and standards groups which address emergency alarms on passenger vessels.

For the reasons stated in the notice of intent, the Access Board has determined that establishing the Passenger Vessel Emergency Alarms Advisory Committee (Committee) is necessary and in the public interest. The Access Board has appointed the following organizations as members to the Committee:

• Community Emergency Preparedness Information Network.

• Cruise Lines International Association.

• Epilepsy Foundation.

• Gallaudet University.

• Hearing Access Program.

• Hearing Loss Association of America.

• National Association of the Deaf.

• National Fire Protection Association.

• Passenger Vessel Association.

• Society of Naval Architects and Marine Engineers.

Committee meetings will be open to the public and interested persons can attend the meetings and communicate their views. Members of the public will have opportunities to address the Committee on issues of interest to them and the Committee. Members of groups or individuals who are not members of the Committee may also have the opportunity to participate with subcommittees of the Committee. The Access Board believes that participation of this kind can be very valuable for the advisory committee process. Additionally, all interested persons will have the opportunity to comment when proposed rules regarding passenger vessel accessibility are issued in the Federal Register by the Access Board.

The meeting site is accessible to individuals with disabilities. Sign language interpreters, an assistive listening system, and computer assisted real-time transcription (CART) will be provided. Persons attending the meeting are requested to refrain from using perfume, cologne, and other fragrances for the comfort of other participants.

For further information, please see the information provided in the direct final action, with the same title, that is located in the Rules and Regulations section of this Federal Register publication. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not subject of an adverse comment.

Submitting Comments: We welcome comments from the public on all issues set forth in this rule to assist us in fully considering issues and developing policies. You can assist us by referencing the file code CMS-2261-P and the specific “issue identifier” that precedes the section on which you choose to comment.

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable (for example, names, addresses, social security numbers, and medical diagnoses) or confidential business information (including proprietary information) that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking. Click on the link “Electronic Comments on CMS Regulations” on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.

Section 1905(a)(13) of the Social Security Act (the Act) includes rehabilitative services as an optional Medicaid State plan benefit. Current Medicaid regulations at 42 CFR 440.130(d) provide a broad definition of rehabilitative services. Rehabilitative services are defined as “any medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his or her practice under State law, for maximum reduction of physical or mental disability and restoration of a recipient to his best possible functional level.” The broad general language in this regulatory definition has afforded States considerable flexibility under their State plans to meet the needs of their State's Medicaid population.

Over the years the scope of services States have provided under the rehabilitation benefit has expanded from physical rehabilitative services to also include mental health and substance abuse treatment rehabilitative services. For example, services currently provided by States under the rehabilitative benefit include services aimed at improving physical disabilities, including physical, occupational, and speech therapies; mental health services, such as individual and group therapy, psychosocial therapy services; and services for substance-related disorders (for example, substance use disorders and substance induced disorders). These Medicaid services may be delivered through various models of care and in a variety of settings.

The broad language of the current statutory and regulatory definition has, however, had some unintended consequences. It has also led to some confusion over whether otherwise applicable statutory or regulatory provider standards would apply under the rehabilitative services benefit.

As the number of States providing rehabilitative services has increased, some States have viewed the rehabilitation benefit as a “catch-all” category to cover services included in other Federal, State and local programs. For example, it appears some States have used Medicaid to fund services that are included in the provision of foster care and in the Individuals with Disabilities Education Improvement Act (IDEA). Our audit reviews have recently revealed that Medicaid funds have also been used to pay for behavioral treatment services in “wilderness camps,” juvenile detention, and similar facilities where youth are involuntarily confined. These facilities are under the domain of the juvenile justice or youth systems in the State, rather than Medicaid, and there is no assurance that the claimed services reflect an independent evaluation of individual rehabilitative needs.

This proposed regulation is designed to clarify the broad general language of the current regulation to ensure that rehabilitative services are provided in a coordinated manner that is in the best interest of the individuals, are limited to rehabilitative purposes and are furnished by qualified providers. This proposed regulation would rectify the improper reliance on the Medicaid rehabilitation benefit for services furnished by other programs that are focused on social or educational development goals in programs other than Medicaid.

This proposed regulation would provide guidance to ensure that services claimed under the optional Medicaid rehabilitative benefit are in fact rehabilitative out-patient services, are furnished by qualified providers, are provided to Medicaid eligible individuals according to a goal-oriented rehabilitation plan, and are not for services that are included in programs with a focus other than that of Medicaid.

Section 6411(g) of the Omnibus Budget Reconciliation Act of 1989 (OBRA 89) prohibits us from taking adverse action against States with approved habilitation provisions pending the issuance of a regulation that “specifies types of day habilitation services that a State may cover under paragraphs (9) (clinic services) or (13) (rehabilitative services) of section 1905(a) of the Act on behalf of persons with mental retardation or with related conditions.” We believe that issuance of a final rule based on this proposed rule will satisfy this condition. We intend to work with those States that have habilitation programs under the clinic services or rehabilitative services benefits in their State plans to transition to appropriate Medicaid coverage authorities, such as section 1915(c) waivers or the Home and Community-Based Services State plan option under section 1915 (i) of the Deficit Reduction Act (DRA) of 2005 (Pub. L. 107-171), enacted on February 8, 2006.

[If you choose to comment on issues in this section, please include the caption “PROVISIONS OF THE PROPOSED REGULATIONS” at the beginning of your comments.]

In 440.130(d)(1), we propose to define the terms used in this rule, as listed below:

• Recommended by a physician or other licensed practitioner of the healing arts.

• Other licensed practitioner of the healing arts.

• Qualified providers of rehabilitative services.

• Under the direction of.

• Written rehabilitation plan.

• Restorative services.

• Medical services.

• Remedial services.

In § 440.130(d)(1)(iii), we would define “qualified providers of rehabilitative services” to require that individuals providing rehabilitative services meet the provider qualification requirements applicable to the same service when it is furnished under other benefit categories. Further, the provider qualifications must be set forth in the Medicaid State plan. These qualifications may include education, work experience, training, credentialing, supervision and licensing, that are applied uniformly. Provider qualifications must be reasonable given the nature of the service provided and the population being served. We require uniform application of these qualifications to ensure the individual free choice of qualified providers, consistent with section 1902(a)(23) of the Act.

Under this proposed definition, if specific provider qualifications are set forth elsewhere in subpart A of part 440, those provider qualifications take precedence when those services are provided under the rehabilitation option. Thus, if a State chooses to provide the various therapies discussed at § 440.110 (physical therapy, occupational therapy, speech, language and hearing services) under § 440.130(d), the requirements of § 440.110 applicable to those services would apply. For example, speech therapy is addressed in regulation at § 440.110(c) with specific provider requirements for speech pathologists and audiologists that must be met. If a State offers speech therapy as a rehabilitative service, the specific provider requirements at § 440.110(c) must be met. It should be noted that the definition of Occupational Therapy in § 440.110 is not correct insofar as the following—Occupational Therapists must be certified through the National Board of Certification for Occupational Therapy, not the American Occupational Therapy Association.

We are proposing a definition of the term “under the direction of” because it is a key issue in the provision of therapy services through the rehabilitative services benefit. Therapy services may be furnished by or “under the direction of” a qualified provider under the provisions of § 440.110. We are proposing to clarify that the term means that the therapist providing direction is supervising the individual's care which, at a minimum, includes seeing the individual initially, prescribing the type of care to be provided, reviewing the need for continued services throughout treatment, assuming professional responsibility for services provided, and ensuring that all services are medically necessary. The term “under the direction of” requires each of these elements; in particular, professional responsibility requires face-to-face contact by the therapist at least at the beginning of treatment and periodically thereafter. Note that this definition applies specifically to providers of physical therapy, occupational therapy, and services for individuals with speech, hearing and language disorders. This language is not meant to exclude appropriate supervision arrangements for other rehabilitative services.

Consistent with the provision of section 1905(a)(13) of the Act, we have retained the current definition of rehabilitative services in § 440.130(d)(2) as including “medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his practice under State law, for maximum reduction of physical or mental disability and restoration of a recipient to his best possible functional level.” We would, however, clarify that rehabilitative services do not include room and board in an institution, consistent with the longstanding CMS interpretation that section 1905(a) of the Act has specifically identified circumstances in which Medicaid would pay for coverage of room and board in an inpatient setting. This interpretation was upheld in Texas v. U.S. Dep't Health and Human Servs., 61 F.3d 438 (5th Cir. 1995).

We propose to add a new requirement, at § 440.130(d)(3), that covered rehabilitative services for each individual must be identified under a written rehabilitation plan. This rehabilitation plan would ensure that the services are designed and coordinated to lead to the goals set forth in statute and regulation (maximum reduction of physical or mental disability and restoration to the best possible functional level). It would ensure transparency of coverage and medical necessity determinations, so that the beneficiary, and family or other responsible individuals, would have a clear understanding of the services that are being made available to the beneficiary. In all situations, the ultimate goal is to reduce the duration and intensity of medical care to the least intrusive level possible which sustains health. The Medicaid goal is to deliver and pay for the clinically-appropriate, Medicaid-covered services that would contribute to the treatment goal. It is our expectation that, for persons with mental illnesses and substance-related disorders, the rehabilitation plan would include recovery goals. The rehabilitation plan would establish a basis for evaluating the effectiveness of the care offered in meeting the stated goals. It would provide for a process to involve the beneficiary, and family or other responsible individuals, in the overall management of rehabilitative care. The rehabilitation plan would also document that the services have been determined to be rehabilitative services consistent with the regulatory definition, and will have a timeline, based on the individual's assessed needs and anticipated progress, for reevaluation of the plan, not longer than one year. It is our expectation that the reevaluation of the plan would involve the beneficiary, family, or other responsible individuals and would include a review of whether the goals set forth in the plan are being met and whether each of the services described in the plan has contributed to meeting the stated goals. If it is determined that there has been no measurable reduction of disability and restoration of functional level, any new plan would need to pursue a different rehabilitation strategy including revision of the rehabilitative goals, services and/or methods. It is important to note that this benefit is not a custodial care benefit for individuals with chronic conditions but should result in a change in status. The rehabilitation plan should identify the rehabilitation objectives that would be achieved under the plan in terms of measurable reductions in a diagnosed physical or mental disability and in terms of restored functional abilities. We recognize, however, that rehabilitation goals are often contingent on the individual's maintenance of a current level of functioning. In these instances, services that provide assistance in maintaining functioning may be considered rehabilitative only when necessary to help an individual achieve a rehabilitation goal as defined in the rehabilitation plan. Services provided primarily in order to maintain a level of functioning in the absence of a rehabilitation goal are not rehabilitation services.

It is our further expectation that the rehabilitation plan be reasonable and based on the individual's diagnosed condition(s) and on the standards of practice for provisions of rehabilitative services to an individual with the individual's condition(s). The rehabilitation plan is not intended to limit or restrict the State's ability to require prior authorization for services. The proposed requirements state that the written rehabilitation plan must:

• Be based on a comprehensive assessment of an individual's rehabilitation needs including diagnoses and presence of a functional impairment in daily living;

• Be developed by qualified provider(s) working within the State scope of practice acts with input from the individual, individual's family, the individual's authorized health care decision maker and/or persons of the individual's choosing;

• Ensure the active participation of the individual, individual's family, the individual's authorized health care decision maker and/or persons of the individual's choosing in the development, review and modification of these goals and services;

• Specify the individual's rehabilitation goals to be achieved, including recovery goals for persons with mental health and/or substance related disorders;

• Specify the physical impairment, mental health and/or substance related disorder that is being addressed;

• Identify the medical and remedial services intended to reduce the identified physical impairment, mental health and/or substance related disorder;

• Identify the methods that would be used to deliver services;

• Specify the anticipated outcomes;

• Indicate the frequency, amount and duration of the services;

• Be signed by the individual responsible for developing the rehabilitation plan;

• Indicate the anticipated provider(s) of the service(s) and the extent to which the services may be available from alternate provider(s) of the same service;

• Specify a timeline for reevaluation of the plan, based on the individual's assessed needs and anticipated progress, but not longer than one year;

• Document that the individual or representative participated in the development of the plan, signed the plan, and received a copy of the rehabilitation plan; and

• Document that the services have been determined to be rehabilitative services consistent with the regulatory definition.

We believe that a written rehabilitation plan would ensure that services are provided within the scope of the rehabilitative services and would increase the likelihood that an individual's disability would be reduced and functional level restored. In order to determine whether a specific service is a covered rehabilitative benefit, it is helpful to scrutinize the purpose of the service as defined in the care plan.

For example, an activity that may appear to be a recreational activity may be rehabilitative if it is furnished with a focus on medical or remedial outcomes to address a particular impairment and functional loss. Such an activity, if provided by a Medicaid qualified provider, could address a physical or mental impairment that would help to increase motor skills in an individual who has suffered a stroke, or help to restore social functioning and personal interaction skills for a person with a mental illness.

We are proposing to require in § 440.130(d)(3)(iii) that the written rehabilitation plan include the active participation of the individual (or the individual's authorized health care decision maker) in the development, review, and reevaluation of the rehabilitation goals and services. We recommend the use of a person-centered planning process. Since the rehabilitation plan identifies recovery-oriented goals, the individual must be at the center of the planning process.

We propose in § 440.130(d)(4) that rehabilitative services include services provided to an eligible individual to address the individual's physical needs, mental health needs, and/or substance-related disorder treatment needs. Because rehabilitative services are an optional service for adults, a State has flexibility to determine whether rehabilitative services would be limited to certain rehabilitative services (for example, only physical rehabilitative services) or will include rehabilitative treatment for mental health or substance-related disorders as well.

Provision of rehabilitative services to individuals with mental health or substance-related disorders is consistent with the recommendations of the New Freedom Commission on Mental Health. The Commission challenged States, among others, to expand access to quality mental health care and noted that States are at the very center of mental health system transformation. Thus, while States are not required to provide rehabilitative services for treatment of mental health and substance-related disorders, they are encouraged to do so. The Commission noted in its report that, “[m]ore individuals would recover from even the most serious mental illnesses and emotional disturbances if they had earlier access in their communities to treatment and supports that are evidence-based and tailored to their needs.”

Under existing provisions at § 440.230(a), States are required to provide in the State plan a detailed description of the services to be provided. In reviewing a State plan amendment that proposes rehabilitative services, we would consider whether the proposed services are consistent with the requirements in § 440.130(d) and section 1905(a)(13) of the Act. We would also consider whether the proposed scope of rehabilitative services is “sufficient in amount, duration and scope to reasonably achieve its purpose” as required at § 440.230(b). For that analysis, we will review whether any assistive devices, supplies, and equipment necessary to the provision of those services are covered either under the rehabilitative services benefit or elsewhere under the plan.

In § 440.130(d)(5), consistent with the provisions of section 1905(a)(13) of the Act, we propose that rehabilitative services may be provided in a facility, home, or other setting. For example, rehabilitative services may be furnished in freestanding outpatient clinics and to supplement services otherwise available as an integral part of the services of facilities such as schools, community mental health centers, or substance abuse treatment centers. Other settings may include the office of qualified independent practitioners, mobile crisis vehicles, and appropriate community settings. The State has the authority to determine in which settings a particular service may be provided. While services may be provided in a variety of settings, the rehabilitative services benefit is not an inpatient benefit. Rehabilitative services do not include room and board in an institutional, community or home setting.

In § 441.45(a), we set forth the assurances required in a State plan amendment that provides for rehabilitative services in this proposed rule. In § 441.45(b) we set forth the expenditures for which Federal financial participation (FFP) would not be available.

As with most Medicaid services, rehabilitative services are subject to the requirements of section 1902(a) of the Act. These include statewideness at section 1902(a)(1) of the Act, comparability at section 1902(a)(10)(B), and freedom of choice of qualified providers at section 1902(a)(23) of the Act. Accordingly, at § 441.45(a)(1), we propose to require that States comport with the listed requirements.

At § 441.45(a)(2), we propose to require that the State ensure that rehabilitative services claimed for Medicaid payment are only those provided for the maximum reduction of physical or mental disability and restoration of the individual to the best possible functional level.

In § 441.45(a)(3) and (a)(4), we propose to require that providers of the rehabilitative services maintain case records that contain a copy of the rehabilitation plan. We also propose to require that the provider document the following for all individuals receiving rehabilitative services:

• The name of the individual;

• The date of the rehabilitative service or services provided;

• The nature, content, and units of rehabilitative services provided; and

• The progress made toward functional improvement and attainment of the individual's goals.

We believe this information is necessary to establish an audit trail for rehabilitative services provided, and to establish whether or not the services have achieved the maximum reduction of physical or mental disability, and to restore the individual to his or her best possible functional level.

A State that opts to provide rehabilitative services must do so by amending its State plan in accordance with proposed § 441.45(a)(5). The amendment must (1) describe the rehabilitative services proposed to be furnished, (2) specify the provider type and provider qualifications that are reasonably related to each of the rehabilitative services, and (3) specify the methodology under which rehabilitation providers would be paid.

In § 441.45(b)(1) through (b)(8) we set forth limitations on coverage of rehabilitative services in this proposed rule.

We propose in § 441.45(b)(1) that coverage of rehabilitative services would not include services that are furnished through a non-medical program as either a benefit or administrative activity, including programs other than Medicaid, such as foster care, child welfare, education, child care, vocational and prevocational training, housing, parole and probation, juvenile justice, or public guardianship. We also propose in § 441.45(b)(1) that coverage of rehabilitative services would not include services that are intrinsic elements of programs other than Medicaid.

It should be noted however, that enrollment in these non-medical programs does not affect eligibility for Title XIX services. Rehabilitation services may be covered by Medicaid if they are not the responsibility of other programs and if all applicable requirements of the Medicaid program are met. Medicaid rehabilitative services must be coordinated with, but do not include, services furnished by other programs that are focused on social or educational development goals and are available as part of other services or programs. Further, Medicaid rehabilitation services must be available for all participants based on an identified medical need and otherwise would have been provided to the individual outside of the foster care, juvenile justice, parole and probation systems and other non-Medicaid systems. Individuals must have free choice of providers and all willing and qualified providers must be permitted to enroll in Medicaid.

For instance, therapeutic foster care is a model of care, not a medically necessary service defined under Title XIX of the Act. States have used it as an umbrella to package an array of services, some of which may be medically necessary services, some of which are not. In order for a service to be reimbursable by Medicaid, states must specifically define all of the services that are to be provided, provider qualifications, and payment methodology. It is important to note that provider qualifications for those who furnish care to children in foster care must be the same as provider qualifications for those who furnish the same care to children not in foster care. Examples of therapeutic foster care components that would not be Medicaid coverable services include provider recruitment, foster parent training and other such services that are the responsibility of the foster care system.

In § 441.45(b)(2), we propose to exclude FFP for expenditures for habilitation services including those provided to individuals with mental retardation or “related conditions” as defined in the State Medicaid Manual § 4398. Physical impairments and mental health and/or substance related disorder are not considered “related conditions” and are therefore medical conditions for which rehabilitation services may be appropriately provided. As a matter of general usage in the medical community, there is a distinction between the terms “habilitation” and “rehabilitation.” Rehabilitation refers to measures used to restore individuals to their best functional levels. The emphasis in covering rehabilitation services is the restoration of a functional ability. Individuals receiving rehabilitation services must have had the capability to perform an activity in the past rather than to actually have performed the activity. For example, a person may not have needed to drive a car in the past, but may have had the capability to do so prior to having the disability. Habilitation typically refers to services that are for the purpose of helping persons acquire new functional abilities. Current Medicaid policy explicitly covers habilitation services in two ways: (1) When provided in an intermediate care facility for persons with mental retardation (ICF/MR); or (2) when covered under sections 1915(c), (d), or (i) of the Act as a home and community-based service. Habilitation services may also be provided under some 1905(a) service authorities such as Physician services defined at 42 CFR 440.50, Therapy services defined at 42 CFR 440.110 (such as, Physical Therapy, Occupational Therapy, and Speech/Language/Audiology Therapy), and Medical or other remedial care provided by licensed practitioners, defined at 42 CFR 440.60. Habilitative services can also be provided under the 1915(i) State Plan Home and Community Based Services pursuant to the Deficit Reduction Act of 2005. In the late 1980s, the Congress responded to State concerns about disallowances for habilitation services provided under the State's rehabilitative services benefit by passing section 6411(g) of the OBRA 89. This provision prohibited us from taking adverse actions against States with approved habilitation provisions pending the issuance of a regulation that “specifies types of day habilitation services that a State may cover under paragraphs (9) [clinic services] or (13) [rehabilitative services] of section 1905(a) of the Act on behalf of persons with mental retardation or with related conditions.” Accordingly, this regulation would specify that all such habilitation services would not be covered under sections 1905(a)(9) or 1905(a)(13) of the Act. If this regulation is issued in final form, the protections provided to certain States by section 6411(g) of OBRA 89 for day habilitation services will no longer be in force. We intend to provide for a delayed compliance date so that States will have a transition period of the lesser of 2 years or 1 year after the close of the first regular session of the State legislature that begins after this regulation becomes final before we will take enforcement action. This transition period will permit States an opportunity to transfer coverage of habilitation services from the rehabilitation option into another appropriate Medicaid authority. We are available to States as needed for technical assistance during this transition period.

In § 441.45(b)(3), we propose to provide that rehabilitative services would not include recreational and social activities that are not specifically focused on the improvement of physical or mental health impairment and achievement of a specific rehabilitative goal specified in the rehabilitation plan, and provided by a Medicaid qualified provider recognized under State law. We would also specify in this provision that rehabilitative services would not include personal care services; transportation; vocational and prevocational services; or patient education not related to the improvement of physical or mental health impairment and achievement of a specific rehabilitative goal specified in the rehabilitation plan. The first two of these services may be otherwise covered under the State plan. But these services are not primarily focused on rehabilitation, and thus do not meet the definition of medical or remedial services for rehabilitative purposes that would be contained in § 440.130(d)(1).

It is possible that some recreational or social activities are reimbursable as rehabilitative services if they are provided for the purpose allowed under the benefit and meet all the requirements governing rehabilitative services. For example, in one instance the activity of throwing a ball to an individual and having her/him throw it back, may be a recreational activity. In another instance, the activity may be part of a program of physical therapy that is provided by, or under the direction of, a qualified therapist for the purpose of restoring motor skills and balance in an individual who has suffered a stroke. Likewise, for an individual suffering from mental illness, what may appear to be a social activity may in fact be addressing the rehabilitation goal of social skills development as identified in the rehabilitation plan. The service would need to be specifically related to an identified rehabilitative goal as documented in the rehabilitation plan with specific time-limited treatment goals and outcomes. The rehabilitative service would further need to be provided by a qualified provider, be documented in the case record, and meet all requirements of this proposed regulation.

When personal care services are provided during the course of the provision of a rehabilitative service, they are an incidental activity and separate payment may not be made for the performance of the incidental activity. For example, an individual recovering from the effects of a stroke may receive occupational therapy services from a qualified occupational therapy provider under the rehabilitation option to regain the capacity to feed himself or herself. If during the course of those services the individual's clothing becomes soiled and the therapist assists the individual with changing his or her clothing, no separate payment may be made for assisting the individual with dressing under the rehabilitation option. However, FFP may be available for optional State plan personal care services under § 440.167 if provided by an enrolled, qualified personal care services provider.

Similarly, transportation is not within the scope of the definition of rehabilitative services proposed by this regulation since the transportation service itself does not result in the maximum reduction of a physical or mental disability and restoration of the individual to the best possible functional level. However, transportation is a Medicaid covered service and may be billed separately as a medical assistance service under § 440.170, if provided by an enrolled, qualified provider, or may be provided under the Medicaid program as an administrative activity necessary for the proper and efficient administration of the State's Medicaid program.

Generally, vocational services are those that teach specific skills required by an individual to perform tasks associated with performing a job. Prevocational services address underlying habilitative goals that are associated with performing compensated work. To the extent that the primary purpose of these services is to help individuals acquire a specific job skill, and are not provided for the purpose of reducing disability and restoring a person to a previous functional level, they would not be construed as covered rehabilitative services. For example, teaching an individual to cook a meal to train for a job as a chef would not be covered, whereas, teaching an individual to cook in order to re-establish the use of her or his hands or to restore living skills may be coverable. While it may be possible for Medicaid to cover prevocational services when provided under the section 1915(c) of the Act, home and community based services waiver programs, funding for vocational services rests with other, non-Medicaid Federal and State funding sources.

Similarly, the purpose of patient education is one important determinant to whether the activity is a rehabilitative activity covered under § 440.130(d). While taking classes in an academic setting may increase an individual's integration into the community and enable the individual to learn social skills, the primary purpose of this activity is academic enhancement. Thus, patient education in an academic setting is not covered under the Medicaid rehabilitation option. On the other hand, some patient education directed towards a specific rehabilitative therapy service may be provided for the purpose of equipping the individual with specific skills that will decrease disability and restore the individual to a previous functioning level. For example, an individual with a mental disorder that manifests with behavioral difficulties may need anger management training to restore his or her ability to interact appropriately with others. These services may be covered under the rehabilitation option if all of the requirements of this regulation are met.

In § 441.45(b)(4), we propose to exclude payment for services, including services that are rehabilitative services that are provided to inmates living in the secure custody of law enforcement and residing in a public institution. An individual is considered to be living in secure custody if serving time for a criminal offense in, or confined involuntarily to, State or Federal prisons, local jails, detention facilities, or other penal facilities. A facility is a public institution when it is under the responsibility of a governmental unit or over which a governmental unit exercises administrative control. Rehabilitative services could be reimbursed on behalf of Medicaid-eligible individuals paroled, on probation, on home release, in foster care, in a group home, or other community placement, that are not part of the public institution system, when the services are identified due to a medical condition targeted under the State's Plan, are not used in the administration of other non-medical programs.

We also propose to exclude payment for services that are provided to residents of an institution for mental disease (IMD), including residents of a community residential treatment facility of over 16 beds, that is primarily engaged in providing diagnosis, treatment, or care of persons with mental illness, and that does not meet the requirements at § 440.160. It appears that in the past, certain States may have provided services under the rehabilitation option to these individuals. Our proposed exclusion of FFP for rehabilitative services provided to these populations is consistent with the statutory requirements in paragraphs (A) and (B) following section 1905(a)(28) of the Act. The statute indicates that “except as otherwise provided in paragraph (16), such term [medical assistance] does not include—(A) Any such payments with respect to care or services for any individual who is an inmate of a public institution; or (B) any such payments with respect to care or services for any individual who has not attained 65 years and who is a patient in an IMD.” Section 1905(a)(16) of the Act defines as “medical assistance” “* * * inpatient psychiatric hospital services for individuals under age 21 * * *”. The Secretary has defined the term “inpatient psychiatric hospital services for individuals under age 21” in regulations at § 440.160 to include “a psychiatric facility which is accredited by the Joint Commission on Accreditation of Healthcare Organizations, the Council on Accreditation of Services for Families and Children, the Commission on Accreditation of Rehabilitation Facilities, or by any other accrediting organization, with comparable standards, that is recognized by the State.” Thus, the term “inpatient psychiatric hospital services for individuals under age 21” includes services furnished in accredited children's psychiatric residential treatment facilities that are not hospitals. The rehabilitative services that are provided by the psychiatric hospital or accredited psychiatric residential treatment facility (PRTF) providing inpatient psychiatric services for individuals under age 21 to its residents would be reimbursed under the benefit for inpatient psychiatric services for individuals under age 21 (often referred to as the “psych under 21” benefit), rather than under the rehabilitative services benefit.

In § 441.45(b)(6), we propose to exclude expenditures for room and board from payment under the rehabilitative services option. While rehabilitative services may be furnished in a residential setting that is not an IMD, the benefit provided by section 1905(a)(13) of the Act is primarily intended for community based services. Thus, when rehabilitative services are provided in a residential setting, such as in a residential substance abuse treatment facility of less than 17 beds, delivered by qualified providers, only the costs of the specific rehabilitative services will be covered.

In § 441.45(b)(7), we propose to preclude payment for services furnished for the rehabilitation of an individual who is not Medicaid eligible. This provision reinforces basic program requirements found in section 1905(a) of the Act that require medical assistance to be furnished only to eligible individuals. An “eligible individual” is a person who is eligible for Medicaid and requires rehabilitative services as defined in the Medicaid State plan at the time the services are furnished.

The provision of rehabilitative services to non-Medicaid eligible individuals cannot be covered if it relates directly to the non-eligible individual's care and treatment. However, effective rehabilitation of eligible individuals may require some contact with non-eligible individuals. For instance, in developing the rehabilitation plan for a child with a mental illness, it may be appropriate to include the child's parents, who are not eligible for Medicaid, in the process. In addition, counseling sessions for the treatment of the child might include the parents and other non-eligible family members. In all cases, in order for a service to be a Medicaid coverable service, it must be provided to, or directed exclusively toward, the treatment of the Medicaid eligible individual.

Thus, contacts with family members for the purpose of treating the Medicaid eligible individual may be covered by Medicaid. If these other family members or other individuals also are Medicaid eligible and in need of the services covered under the State's rehabilitation plan, Medicaid could pay for the services furnished to them.

In § 441.45(b)(8), we propose that FFP would only be available for claims for services provided to a specific individual that are documented in an individual's case record.

We will work with States to implement this rule in a timely fashion using existing monitoring and compliance authority.

Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

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

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

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

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

We are soliciting public comment on each of these issues for the following sections of this document that contain information collection requirements:

This section outlines the scope of service for rehabilitative services provided by States. The services discussed in this section must be provided under a written rehabilitation plan as defined in § 440.130(d)(1)(v). Specifically, § 440.130(d)(3) states that the written rehabilitation plan must meet the following requirements:

(i) Be based on a comprehensive assessment of an individual's rehabilitation needs including diagnoses and presence of a functional impairment in daily living.

(ii) Be developed by a qualified provider(s) working within the State scope of practice act with input from the individual, individual's family, the individual's authorized health care decision maker and/or persons of the individual's choosing.

(iii) Ensure the active participation of the individual, individual's family, the individual's authorized health care decision maker and/or persons of the individual's choosing in the development, review, and modification of these goals and services.

(iv) Specify the individual's rehabilitation goals to be achieved including recovery goals for persons with mental illnesses or substance related disorders.

(v) Specify the physical impairment, mental health and/or substance related disorder that is being addressed.

(vi) Identify the medical and remedial services intended to reduce the identified physical impairment, mental health and/or substance related disorder.

(vii) Identify the methods that will be used to deliver services.

(viii)Specify the anticipated outcomes.

(ix) Indicate the frequency and duration of the services.

(x) Be signed by the individual responsible for developing the rehabilitation plan.

(xi) Indicate the anticipated provider(s) of the service(s) and the extent to which the services may be available from alternate provider(s) of the same service.

(xii) Specify a timeline for reevaluation of the plan, based on the individual's assessed needs and anticipated progress, but not longer than one year.

(xiii) Be reevaluated with the involvement of the beneficiary, family or other responsible individuals.

(xiv) Be reevaluated including a review of whether the goals set forth in the plan are being met and whether each of the services described in the plan has contributed to meeting the stated goals. If it is determined that there has been no measurable reduction of disability and restoration of functional level, any new plan would need to pursue a different rehabilitation strategy including revision of the rehabilitative goals, services and/or methods.

(xv) Document that the individual or representative participated in the development of the plan, signed the plan, and received a copy of the rehabilitation plan.

(xvi) Document that the services have been determined to be rehabilitative services consistent with the regulatory definition.

The burden associated with the requirements in this section is the time and effort put forth by the provider to gather the information and develop a specific written rehabilitation plan. While these requirements are subject to the PRA, we believe they meet the exemption requirements for the PRA found at 5 CFR 1320.3(b)(2), and as such, the burden associated with these requirements is exempt.

Section 441.45(a)(3) requires that providers maintain case records that contain a copy of the rehabilitation plan for all individuals.

The burden associated with these requirements is the time and effort put forth by the provider to maintain the case records. While these requirements are subject to the PRA, we believe they meet the exemption requirements for the PRA found at 5 CFR 1320.3(b)(2), and as such, the burden associated with these requirements is exempt.

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

Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a final document, we will respond to the comments in that document.

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 19, 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.

Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) 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 a major rule because of the size of the anticipated reduction in Federal financial participation that is estimated to have an economically significant effect of more than $100 million in each of the Federal fiscal years 2008 through 2012.

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 small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6.5 million to $31.5 million in any 1 year. The Secretary certifies that this major rule would not have a direct impact on providers of rehabilitative services that furnish services pursuant to section 1905(a)(13) of the Act. The rule would directly affect states and we do not know nor can we predict the manner in which states would adjust or respond to the provisions of this rule. CMS is unable to determine the percentage of providers of rehabilitative services that are considered small businesses according to the Small Business Administration's size standards with total revenues of $6.5 million to $31.5 million or less in any 1 year. Individuals and States are not included in the definition of a small entity. 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 603 (proposed documents) 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 for Medicaid payment regulations and has fewer than 100 beds. The Secretary certifies that this major rule would not have a direct impact on small rural hospitals. The rule would directly affect states and we do not know nor can we predict the manner in which states would adjust or respond to the provisions of this rule.

Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold level is currently approximately $120 million. Since this rule would not mandate spending in any 1 year of $120 million or more, the requirements of the UMRA are not applicable.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this rule would not impose any costs on State or local governments, preempt State law, or otherwise have Federalism implications, the requirements of E.O. 13132 are not applicable.

FFP will be available for rehabilitative services for treatment of physical, mental health, or substance-related disorder rehabilitation treatment if the State elects to provide those services through the approved State plan. Individuals retain the right to select among qualified providers of rehabilitative services. However, because FFP will be excluded for rehabilitative services that are included in other Federal, State and local programs, it is estimated that Federal Medicaid spending on rehabilitative services would be reduced by approximately $180 million in FY 2008 and would be reduced by $2.2 billion between FY 2008 and FY 2012. This reduction in spending is expected to occur because FFP for rehabilitative services would no longer be paid to inappropriate other third parties or other Federal, State, or local programs.

The estimated impact on Federal Medicaid spending was calculated starting with an estimate of rehabilitative service spending that may be subject to this rule. This estimate was developed after consulting with several experts, as data for rehabilitative services, particularly as it would apply to this rule, is limited. Given this estimate, the actuaries discounted this amount to account for four factors: (1) The ability of CMS to effectively identify the rehabilitative services spending that would be subject to this proposal; (2) the effectiveness of CMS's efforts to implement this rule and the potential that some identified rehabilitative services spending may still be permissible under the rule; (3) the change in States' plans that may regain some of the lost Federal funding; and (4) the length of time for CMS to fully implement the rule and review all States' plans.

The actual impact to the Federal Medicaid program may be different than the estimate to the extent that the estimate of the amount of rehabilitative services spending subject to this rule is different than the actual amount and to the extent that the effectiveness of the rule is greater than or less than assumed. Because a comprehensive review of these rehabilitative services had not been conducted at the time of this estimate and because we do not routinely collect data on spending for rehabilitative services, particularly as it relates to this rule, there is a significantly wide range of possible impacts.

Thus, we are unable to determine what fiscal impact the publication of this rule would have on consumers, individual industries, Federal, State, or local government agencies or geographic regions under Executive Order 12866. We invite public comment on the potential impact of the rule.

This proposed rule would amend the definition of rehabilitative services to provide for important individual protections and to clarify that Medicaid rehabilitative services must be coordinated with but do not include services furnished by other programs that are focused on social or educational development goals and available as part of other services or programs. We believe this proposed rule is the best approach to clarifying the covered rehabilitative services, and also because all stakeholders will have the opportunity to comment on the proposed rule. These comments will then be considered before the final document is published.

In considering regulatory options, we considered requiring States to license all providers as an alternative to only requiring that providers to be qualified as defined by the State. However we believe that giving States the flexibility to determine how providers are credentialed allows for necessary flexibility to States to consider a wide range of provider types necessary to cover a variety of rehabilitation services. We believe this flexibility will result in decreases in administrative and service costs.

We also considered restricting the rule to only include participant protections but not explicitly prohibiting FFP for services that are intrinsic elements of other non-Medicaid programs. Had we not prohibited FFP for services that are intrinsic elements of other programs, States would continue to provide non-Medicaid services to participants, the result would have been a less efficient use of Medicaid funding because increased Medicaid spending would not result in any increase in services to beneficiaries. Instead, increased Medicaid funding would have simply replaced other sources of funding.

As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf ), in the table below, we have prepared an accounting statement showing the classification of the savings associated with the provisions of this proposed rule. This table provides our best estimate of the savings to the Federal Government as a result of the changes presented in this proposed rule that Federal Medicaid spending on rehabilitative services would be reduced by approximately $180 million in FY 2008 and would be reduced by $2.24 billion between FY 2008 and FY 2012. All savings are classified as transfers from the Federal Government to State Government. These transfers represent a reduction in the federal share of Medicaid spending once the rule goes into effect, as it would limit States from claiming Medicaid reimbursement for rehabilitation services that could be covered through other programs.

Column 1: Category —Contains the description of the different impacts of the rule; it could include monetized, quantitative but not monetized, or qualitative but not quantitative or monetized impacts; it also may contain unit of measurement (such as, dollars). In this case, the only impact is the Federal annualized monetized impact of the rule.

Column 2: Primary Estimate —Contains the quantitative or qualitative impact of the rule for the respective category of impact. Monetized amounts are generally shown in real dollar terms. In this case, the federalized annualized monetized primary estimate represents the equivalent amount that, if paid (saved) each year over the period covered, would result in the same net present value of the stream of costs (savings) estimated over the period covered.

Column 3: Year Dollar —Contains the year to which dollars are normalized; that is, the first year that dollars are discounted in the estimate.

Column 4: Unit Discount Rate —Contains the discount rate or rates used to estimate the annualized monetized impacts. In this case, three rates are used: 7 percent; 3 percent; 0 percent.

Column 5: Period Covered —Contains the years for which the estimate was made.

Rows: The rows contain the estimates associated with each specific impact and each discount rate used.

“From Whom to Whom?” —In the case of a transfer (as opposed to a change in aggregate social welfare as described in the OMB Circular), this section describes the parties involved in the transfer of costs. In this case, costs previously paid for by the Federal Government would be transferred to the State Governments. The table may also contain minimum and maximum estimates and sources cited. In this case, there is only a primary estimate and there are no additional sources for the estimate.

Estimated Savings —The following table shows the discounted costs (savings) for each discount rate and for each year over the period covered. “Total” represents the net present value of the impact in the year the rule takes effect. These numbers represent the anticipated annual reduction in Federal Medicaid spending under this rule.

For these reasons, we are not preparing analyses for either the RFA or section 1102(b) of the Act because a comprehensive review of these rehabilitative services had not been conducted at the time of this estimate and because we do not routinely collect data on spending for rehabilitative services. Accordingly, there is a significantly wide range of possible impacts due to this rule. As indicated in the Estimated Savings table above, we project an estimated savings of $180 million in FY 2008, $360 million in FY 2009, $520 million in FY 2010, $570 million in FY 2011, and $610 million in FY 2012. This reflects a total estimated savings of $2.240 billion dollars for FY 2008 through FY 2012. We invite public comment on the potential impact of this rule.

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

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as set forth below:

The purpose of the consultation/dialogue sessions is to provide Native American organizations, museums and the scientific community, and the Native American Graves Protection and Repatriation Review Committee with an opportunity to consult on forthcoming regulations regarding the disposition of unclaimed Native American human remains, funerary objects, sacred objects, or objects of cultural patrimony excavated or discovered on Federal or tribal lands after November 16, 1990. Previous consultation meetings were held November 15-17, 2005, in Albuquerque, NM, and April 18-20, 2007, in Washington, DC.

The October 14, 2007, 8:30 a.m. to 10:30 a.m. consultation meeting supports the Secretary of the Interior's administrative policy on tribal consultation by encouraging maximum direct participation of representatives of tribal governments on important Departmental issues and processes.

The October 14, 2007, 10:45 a.m. to 12:45 p.m. consultation meeting supports the Secretary of the Interior's responsibility to consult with museums and the scientific community in the development of these regulations.

The October 14, 2007, 2:30 p.m. to 5:00 p.m. museum-tribal facilitated dialogue responds to a recommendation of the Review Committee.

The October 15-16, 2007 consultation meeting supports the Secretary of the Interior's responsibility to consult with the Review Committee regarding the development of regulations.

The Native American Graves Protection and Repatriation Act provides criteria for determining the ownership of Native American cultural items that are excavated or discovered on Federal or tribal lands after November 16, 1990 [25 U.S.C. 3002 (a)]. The ownership or control of such items is, with priority given in the order listed:

(1) in the case of Native American human remains and associated funerary objects, in the lineal descendants of the Native American; or

(2) in any case in which such lineal descendants cannot be ascertained, and in the case of unassociated funerary objects, sacred objects, and objects of cultural patrimony.

(A) in the Indian tribe or Native Hawaiian organization on whose tribal land such objects or remains were discovered;

(B) In the Indian tribe or Native Hawaiian organization which has the closest cultural affiliation with such remains or objects and which, upon notice, states a claim for such remains or objects; or

(C) If the cultural affiliation of the objects cannot be reasonably ascertained and if the objects were discovered on Federal land that is recognized by a final judgment of the Indian Claims Commission or the United States Court of Claims as the aboriginal land of some Indian tribe.

(i) Iin the Indian tribe that is recognized as aboriginally occupying the area in which the objects were discovered, if upon notice, such tribe states a claim for such remains or objects, or

(ii) If it can be shown by a preponderance of the evidence that a different tribe has a stronger cultural relationship with the remains or objects than the tribe or organization specified in paragraph (i), in the Indian tribe that has the strongest demonstrated relationship, if upon notice, such tribe states a claim for such remains or objects.

The Act directs that Native American cultural items not claimed under subsection (a) shall be disposed of in accordance with regulations promulgated by the Secretary of the Interior in consultation with the Review Committee, Native American groups, representatives of museums, and the scientific community [25 U.S.C. 3002 (b)]. One section of the regulations was reserved for procedures to effect the disposition of Native American cultural items that are not claimed [43 CFR 10.7].

Participants in the consultation meetings are requested to comment on the following issues:

(1) How should the regulations address distinctions between:

(a) human remains, funerary objects, sacred objects, or objects of cultural patrimony remaining in Federal care for which ownership or control is with a lineal descendant or an Indian tribe or Native Hawaiian organization on whose lands the cultural items were discovered?

(b) human remains, funerary objects, sacred objects, or objects of cultural patrimony remaining in Federal care for which an Indian tribe or Native Hawaiian organization has stated a claim based on cultural affiliation, aboriginal land, or cultural relationship?

(c) human remains, funerary objects, sacred objects, or objects of cultural patrimony remaining in Federal care for which a non-federally recognized Indian group has stated a claim based on a relationship of shared group identity?

(d) human remains and associated funerary objects remaining in Federal care for which no claim has been made?

(2) Do current regulations regarding the curation of Federally-owned and administered archaeological collections [36 CFR 79] adequately address the management, preservation, and use of human remains, funerary objects, sacred objects, or objects of cultural patrimony remaining in Federal care?