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

Pursuant to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by OMB under control number 0563-0053 through June 30, 2008.

FCIC is committed to complying with the E-Government Act of 2002, 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.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

It has been determined under section 1(a) of Executive Order 13132, Federalism, that this rule does not have sufficient implications to warrant consultation with the States. The provisions contained in this rule will not have a substantial direct effect on States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

FCIC certifies that this regulation will not have a significant economic impact on a substantial number of small entities. Administrative fee requirements for the Federal crop insurance program are the same for all producers regardless of the size of their operations. Whether a producer has 10 acres or 100 acres there is no difference in the administrative fee requirements. To ensure crop insurance is available to small entities, the Federal Crop Insurance Act authorizes FCIC to waive collection of administrative fees from limited resource farmers. FCIC believes this change helps ensure that small entities are given the same opportunities as large entities to manage their risks through the use of crop insurance. A Regulatory Flexibility Analysis has not been prepared since this regulation does not have an impact on small entities, and, therefore, this regulation is exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605).

This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450.

This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115, June 24, 1983.

This rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. With respect to any direct action taken by FCIC or to require the insurance provider to take specific action under the terms of the crop insurance policy, the administrative appeal provisions published at 7 CFR part 11 must be exhausted before any action against FCIC for judicial review may be brought.

This action is not expected to have a significant economic impact on the quality of the human environment, health, or safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

On May 22, 2008, the 2008 Farm Bill was enacted. Section 12006 of the 2008 Farm Bill requires that each producer pay an administrative fee for catastrophic risk protection (CAT) in the amount of $300 per crop per county. The provisions are very specific and mandate certain terms that do not allow FCIC any discretion in the provisions or their implementation. Currently, the administrative fee for catastrophic risk protection is $100 per crop per county. Further, that section expressly authorizes cooperative and trade associations to pay the administrative fee for CAT coverage under certain circumstances. Provisions have been modified to allow such associations to pay the CAT administrative fee.

To effectuate this mandated change, FCIC is revising the CAT Endorsement and the GRP policy.

Good cause is shown to make this rule effective upon filing for public inspection at the Office of the Federal Register . Good cause exists when notice and comment and the 30 day delay in the effective date is impracticable, unnecessary, or contrary to the public interest.

FCIC is merely making ministerial changes to the policy that are mandated by the 2008 Farm Bill. There is no discretion given to FCIC in the terms contained in this rule or their implementation. Further, the next applicable contract change date, the date by which changes to the policy must be made to have them effective for the next crop year, is June 30, 2008. Therefore, there is no time to conduct a notice and comment rulemaking.

For the reasons stated above, good cause exists to make these policy changes effective upon filing for public inspection at the Office of the Federal Register.

The FAA published a direct final rule with request for comments in the Federal Register April 2, 2008, (73 FR 17887), Docket No. FAA-2008-0163, that establishes additional Class E airspace at Indianapolis, IN. The FAA uses the direct final rule procedure for non-controversial rules where the FAA believes that there will be no adverse public comment. This direct final rule advised the public that no adverse comments were anticipated, and that unless a written adverse comment, or a written notice of intent to submit an adverse comment, was received within the comment period, the regulation would become effective on June 5, 2008. No adverse comments were received; thus, this notice confirms that the direct final rule will become effective on this date. Also an error was found in the geographic coordinates of Hendricks County Gordon Graham Field. This action corrects that error.

The incorporation by reference in 14 CFR 71.1 of FAA Order 7400.9R, Airspace Designations and Reporting Points, signed August 15, 2007, and effective September 15, 2007, is hereby amended as follows:

In the Federal Register dated April 2, 2008, (73 FR 14887), Federal Register Docket No. FAA-2008-0163, on page 17888, column 2, line 47, replace the coordinates for Hendricks County- Gordon Graham Field as follows: (Lat. 39°44′48″ N, Long. 86°28′31″ W).

The FAA published this direct final rule with a request for comments in the Federal Register on February 14, 2008 (73 FR 8593), Docket No. FAA 2007-0309; Airspace Docket No. 07-AEA-20. The FAA uses the direct final rulemaking procedure for a non-controversial rule where the FAA believes that there will be no adverse public comment. This direct final rule advised the public that no adverse comments were anticipated, and that unless a written adverse comment, or a written notice of intent to submit such an adverse comment, were received within the comment period, the regulation would become effective on June 5, 2009. No adverse comments were received, and this notice confirms that effective date.

On March 18, 2008, the FAA proposed to amend Title 14 Code of Federal Regulations (14 CFR) part 71 by establishing Class E airspace at Philippi, WV (73 FR 14408). This action provides adequate Class E airspace for IFR operations at Philippi/Barbour County Regional Airport. Designations for Class E airspace areas extending upward from 700 feet or more above the surface of the earth are published in FAA Order 7400.9R, dated August 15, 2007, and effective September 15, 2007, which is incorporated by reference in 14 CFR part 71.1. The Class E designations listed in this document will be published subsequently in the Order.

Interested parties were invited to participate in this rulemaking by submitting comments on the proposal to the FAA. No comments objecting to the proposal were received.

This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 establishes Class E airspace at Philippi, WV, to provide controlled airspace required to support the new Area Navigation (RNAV) Global Positioning System (GPS) Standard Instrument Approach Procedures (SIAP) Runways 08-26 that have been developed for Philippi/Barbour County Regional Airport.

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

This amendment to part 95 of the Federal Aviation Regulations (14 CFR part 95) amends, suspends, or revokes IFR altitudes governing the operation of all aircraft in flight over a specified route or any portion of that route, as well as the changeover points (COPs) for Federal airways, jet routes, or direct routes as prescribed in part 95.

The specified IFR altitudes, when used in conjunction with the prescribed changeover points for those routes, ensure navigation aid coverage that is adequate for safe flight operations and free of frequency interference. The reasons and circumstances that create the need for this amendment involve matters of flight safety and operational efficiency in the National Airspace System, are related to published aeronautical charts that are essential to the user, and provide for the safe and efficient use of the navigable airspace. In addition, those various reasons or circumstances require making this amendment effective before the next scheduled charting and publication date of the flight information to assure its timely availability to the user. The effective date of this amendment reflects those considerations. In view of the close and immediate relationship between these regulatory changes and safety in air commerce, I find that notice and public procedure before adopting this amendment are impracticable and contrary to the public interest and that good cause exists for making the amendment effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

1. This order addresses requests for rehearing and clarification of Order No. 710, a Final Rule issued on March 21, 2008, adopting revisions to the Commission's financial reporting requirements for natural gas pipelines, FERC Form Nos. 2, 2-A and 3-Q. 1

2. On September 20, 2007, the Commission issued a Notice of Proposed Rulemaking (NOPR) proposing changes to the financial forms and reporting requirements for natural gas pipelines. 2 The NOPR was issued following an in-depth review of financial reporting requirements for the natural gas, electric utility and oil pipeline industries in the fall of 2006. The staff's review, including outreach meetings with both form filers and users, culminated in the issuance of a Notice of Inquiry seeking comment on the need for changes or additions to the financial information reported in the Commission's quarterly and annual financial reports. 3

3. The changes adopted in the Final Rule were designed to enhance the transparency of financial reporting by interstate natural gas pipelines and better reflect the current market and cost information needed for the Commission's oversight of interstate natural gas pipeline rates. The Final Rule requires the forms' filers to provide additional information on costs and revenues related to the disposition of shipper-supplied gas, affiliate transactions, discounted and negotiated rate services, and deferred income tax and state tax issues. The Final Rule eliminated FERC Form No. 11 and incorporated the information contained in that form into Form Nos. 2 and 3-Q. The revisions to Form Nos. 2, 2-A and 3-Q are applicable January 1, 2008. The revised Form Nos. 2 and 2-A are required to be filed on April 30, 2009. The termination of FERC Form No. 11 is effective February 28, 2009.

4. Timely requests for clarification and/or rehearing were filed by the American Gas Association (AGA), Dominion Resources, Inc. (Dominion), the Interstate Natural Gas Association of America (INGAA), and the Kansas Corporation Commission (KCC).

5. INGAA and Dominion filed requests for clarification or rehearing of the elimination of an instruction on page 308 of Form Nos. 2 and 2-A. The Final Rule revised page 308 to provide more detail regarding revenues recorded in Account 495, Other Gas Revenues. Previously, pipelines were required to report this information in the aggregate and not required to include detailed information about the nature of the business activities from which the revenues are derived. The Commission determined that it was important for users of the data to understand which customer classes or groups are affected by the miscellaneous gas revenues reported in Form Nos. 2 and 2-A. 4 Accordingly, page 308 was revised to include a breakdown of the types of revenues in Account No. 495 to be separately reported on that schedule. 5

6. Prior to the revisions adopted in the Final Rule, the instructions for page 308 did not require the revenue information to be broken down but simply stated that transactions (identified in the instructions) with annual revenues of $250,000 or more were to be reported in the aggregate. In the Final Rule, miscellaneous revenue was broken out into ten separate categories and the instructions for page 308, including the $250,000 threshold, were eliminated. 6

7. INGAA and Dominion request that the Commission reinstate the $250,000 minimum threshold contained in the instructions to page 308 prior to revision of the forms. INGAA notes that in the Final Rule, the Commission reinstated a similar minimum threshold reporting requirement for one existing schedule and inserted the same threshold reporting requirement for another. 7 The Commission agreed with commenters who argued that the absence of such minimum thresholds could add a substantial burden to the forms' filers. 8 We grant rehearing. We agree that a similar burden could be imposed on filers absent the change sought by INGAA and Dominion. Accordingly, we will reinstate a minimum reporting threshold for page 308 and clarify that the reporting requirements for the ten categories of discrete miscellaneous revenues listed thereon be limited to transactions with annual revenues of $250,000 or greater.

8. The Final Rule adopted two new schedules to require natural gas companies to provide detailed information regarding the acquisition and disposition of shipper-supplied gas. 9 The Commission noted that, despite existing accounting and reporting requirements for gas used in operations, gas lost, and gas sold, Form Nos. 2 and 2-A users are unable to readily determine the disposition and value of shipper-supplied gas that exceeds the pipelines' operational needs or the source and cost of any gas acquired to meet deficiencies in shipper-supplied gas. 10 Given the rising cost of gas and a lack of detailed, current information, the Commission adopted new schedules for Form Nos. 2, 2-A and 3-Q to require the following information: (1) The difference between the volume of gas received from shippers and the volume of gas consumed in pipeline operations each month; (2) the disposition of any excess and the accounting recognition given to such disposition including the basis of valuing the gas and the specific accounts charged or credited; and (3) the source of gas used to meet any deficiency and the accounting recognition given to the gas used to meet the deficiency, including the accounting basis of the gas and the specific account(s) charged or credited. 11

9. The Final Rule declined to adopt additional information requirements related to shipper-supplied gas and concluded that the requested information was already available to the forms' users or that adding requirements might upset the delicate balance between burden and benefit. 12 On rehearing, AGA argues that the Commission erred by failing to adopt AGA's suggestion that the new information reported on pages 521a and 521b of Form Nos. 2, 2-A and 3-Q should be broken down by function and include, by function, the amount of fuel that has been waived, discounted, or reduced as part of a negotiated rate agreement. 13 The Commission declined to adopt the additional detail requested by AGA, pointing out that certain fuel information, broken out by function, is already available on page 520 of Form Nos. 2 and 2-A. 14

10. AGA's request for rehearing argues that, while page 520 of the form provides certain fuel information by function, the information is not adequate to enable a form user to determine where on the pipeline system fuel costs are being incurred and how they are being allocated. 15 As stated in the Final Rule, Page 520 of Form Nos. 2 and 2-A provides fuel losses by function (unaccounted for gas is broken out by function at lines 30-34). 16 AGA argues that additional detail regarding fuel costs is required for schedules 521a and 521b to ensure that the Commission and pipeline customers have the information required to assess the justness and reasonableness of pipeline rates. 17 The Final Rule approved extensive revisions to Form Nos. 2, 2-A and 3-Q with respect to the disposition of shipper supplied gas, adding two new schedules to the forms to accommodate the information collection. 18 INGAA and other pipeline commenters objected to the changes as burdensome, but the Commission deemed the collection of this information critical in light of the increased impact on the pipeline's cost of service as a result of rising gas prices. 19 At the same time, the Commission noted that the need to provide greater transparency with regard to fuel costs had to be balanced with the additional reporting burdens placed on the pipeline, and the Commission approved the new schedules as a fair reflection of this balance. 20 In addition, the Commission stated that some of the information sought by AGA, i.e., certain data broken out by function, is already available on page 520 of Form Nos. 2 and 2-A and the Final Rule added page 520 to Form No. 3-Q as well. While the detail sought by AGA might provide additional clarity with respect to fuel costs, we do not believe its exclusion will preclude the Commission's or customers' ability to assess the justness and reasonableness of pipeline rates.

11. We also deem unnecessary and burdensome AGA's request that pipelines provide information regarding the amount of fuel that a pipeline has waived, discounted or reduced as part of a negotiated rate agreement. AGA argues that some pipelines currently provide information in periodic fuel reports regarding fuel that has been waived, discounted, or reduced as part of a negotiated rate agreement. In support, AGA cites a fuel report filed by Dominion Transmission, Inc. (Dominion Transmission). 21 The report cited by AGA is a 20-page annual fuel report filed by Dominion Transmission pursuant to a rate settlement agreement, and exceeds, in significant detail, the type of financial and rate information the Commission deems appropriate for Forms 2, 2-A and 3-Q. It is unlikely that all pipelines would have this information readily available since many pipelines do not periodically file to adjust fuel rates and may not keep records of this type of information. Further, it is not apparent that the level of fuel associated with these types of transactions is significant enough to warrant additional reporting requirements. Customers of pipelines that use fuel tracking mechanisms and file periodic true-up reports may explore these issues in the context of the pipeline's periodic fuel filings. For these reasons, we deny AGA's request for rehearing.

12. The KCC's request for rehearing argues that the Final Rule did not address its proposal to reinstate a periodic rate-refiling requirement as a condition to issuance of a blanket certificate for open access transportation service under Part 284 of the Commission's regulations. 22 The KCC states that the Commission has the ability to impose conditions under section 7(c) of the Natural Gas Act (NGA) and that conditioning blanket certificate authority on periodic filing of general section 4 rate cases would be within the Commission's authority. 23 Further, the KCC argues that imposing such a condition would not violate the distinction between sections 4 and 5 of the NGA any more than when the Commission imposed a triennial rate filing requirement as a condition to receipt of a purchased gas adjustment (PGA) clause in pipeline tariffs. 24

13. Contrary to KCC's claim, the Final Rule addressed its request that the Commission reinstate a periodic rate-refiling requirement. 25 It is well settled that the Commission may not compromise the limits of section 5 of the NGA on the Commission's power to revise rates. 26 The KCC's proposal is inconsistent with that limitation on the Commission's powers. In PSCNY v. FERC , the court reviewed the Commission's orders in a pipeline's first NGA section 4 rate case after it had received a certificate of public convenience and necessity pursuant to section 7 of the NGA. In those orders, the Commission approved the pipeline's proposed rates. However, because the pipeline's rate base was expected to continue declining, the Commission required that the pipeline file a new section 4 rate case every three years so as to minimize the possibility of the pipeline recovering an excessive return on equity. 27 The court rejected the Commission's decision and held that the Commission's action would destroy the balance struck by the NGA in sections 4 and 5 of the act. 28 The court further admonished the Commission that it had considered earlier efforts by the Commission to “escape the inconveniences of § 5,” citing Panhandle Eastern Pipe Line Co. v. FERC , 613 F.2d 1120 (D.C. Cir. 1979) ( Panhandle ). In Panhandle , the Commission had issued a section 7 certificate and conditioned the certificate on the pipeline's crediting revenues from the new service to customers of other pipeline services. The court labeled the condition as “a de facto reduction in existing rates,” and concluded that “in light of the distinctions between §§ 4 and 5, FERC's proposed tinkering with existing rates would ‘effectively emasculate the role of section 5 in the ratemaking scheme’.”  29

14. Along the same lines, in United Distribution Companies v. FERC , the court affirmed the Commission's refusal in Order No. 636 to impose a three-year rate review on open access pipelines with blanket certificates. 30 The court rejected the claim of those in favor of retaining triennial rate review that the market-based sales authority granted to pipelines in Order No. 636 and Straight Fixed Variable (SFV) transportation rate design required by that order are benefits to which a periodic rate filing requirement may be attached. 31 The court pointed out that pipelines were leaving the sales business, and “whatever the benefits of SFV rate design to pipelines, they are not benefits voluntarily accepted by the pipelines and so cannot be the basis for imposition of periodic rate review.”  32 The court also cited the decision in PSCNY v. FERC “noting that FERC's authority to impose a periodic rate review in the PGA context ‘obviously rests on pipeline consent’ to triennial rate review in exchange for automatic PGA adjustment authority.”  33

15. The relief requested by KCC in this proceeding is the same and must be rejected for the same reasons. As the court has pointed out, the rate refiling requirement that was once imposed in exchange for the pipeline's ability to recover purchased gas costs through a tracker was based upon the voluntary acceptance by the pipeline of a rate refiling condition. In addition, allowing pipelines to track gas costs through a PGA was an exception to the Commission's general ratemaking policy that pipelines may not change individual components of their cost of service without filing a general section 4 rate case. Therefore, if a pipeline chose not to accept the option of PGA recovery of gas costs, its alternative was to adjust its rates for changes in its gas costs in a general section 4 rate case. Because that alternative was consistent with the Commission's general ratemaking policy, it was as consistent with the public interest as the PGA recovery option. KCC's proposal is dissimilar in both respects. In today's natural gas market, open access transportation is so fundamental to the manner in which pipelines conduct business that there is no realistic option for a pipeline not to retain its blanket certificate. The alternative would require a return to the pre-open access past when pipelines provided only individually certificated service requiring abandonment proceedings under section 7 of the NGA and would deprive the pipeline's customers and the public at large of the many benefits of open access transportation service. It is unlikely that a pipeline would “voluntarily” consent to such a condition and, in any event, the pipeline's alternative of discontinuing open access transportation service would not be in the public interest.

16. The revisions to Form Nos. 2, 2-A and 3-Q adopted in the Final Rule were designed to provide a level of information that would enhance the ability of the Commission and pipeline customers to assess the justness and reasonableness of pipeline rates. As we stated in the Final Rule, the Commission cannot compel a pipeline to file a rate case under section 4, nor can it preclude it from filing under section 4 for any reason. 34 The Commission's efforts in this regard reflect its awareness that pipeline customers need additional information to make a reasonable assessment of a pipeline's cost of service, and we believe that the Final Rule accomplishes that goal. Accordingly, we deny the KCC's request for rehearing.

17. Following the issuance of the Final Rule, staff discovered a few inadvertent errors in two of the revised schedules, pages 278 and 299. These revisions are for purposes of clarification and do not affect the level of information requested in the forms.

18. Column (a) on page 278 is revised to reference liabilities rather than assets. The column labeled “Written off During Quarter/Year Account Charged” replaces the word “charged” with “credited.” The column labeled “Debits” is revised to read “Credits.”

19. The instructions to page 299, Monthly Quantity & Revenue Data by Rate Schedule are revised as reflected on the attached schedule.

The requests for clarification and/or rehearing are granted in part and denied in part as discussed in the body of this order.

These temporary regulations are being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the collection of information contained in these regulations has been reviewed and pending receipt and evaluation of public comments, approved by the Office of Management and Budget under control number 1545-2104. Responses to this collection of information are required to obtain a tax benefit.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

For further information concerning this collection of information, and where to submit comments on the collection of information and the accuracy of the estimated burden, and suggestions for reducing this burden, please refer to the preamble to the cross-referencing notice of proposed rulemaking published in the Proposed Rules section in this issue of the Federal Register .

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

This document contains amendments to 26 CFR part 1 providing temporary regulations under section 179B of the Code. Section 179B was added to the Code by section 338(a) of the American Jobs Creation Act of 2004, Public Law 108-357 (118 Stat. 1418), and was modified by section 1324(a) of the Energy Policy Act of 2005, Public Law 109-58 (119 Stat. 594), and the Tax Technical Corrections Act of 2007, Public Law 110-172 (121 Stat. 2473).

In general, the cost of property used in a trade or business or held for the production of income must be capitalized and, in the case of depreciable property, recovered through depreciation. Section 167 allows as a depreciation deduction a reasonable allowance for the exhaustion, wear, and tear of property used in a trade or business or held for the production of income. The depreciation allowable for tangible, depreciable property placed in service after 1986 generally is determined under section 168.

In lieu of deducting depreciation, section 179B(a) allows a small business refiner to deduct as an expense 75 percent of the qualified costs as defined in section 45H(c)(2) that are paid or incurred during the taxable year and are properly chargeable to capital account (“qualified capital cost”). Section 45H(c)(2) defines qualified costs as those costs paid or incurred during the applicable period to comply with the highway diesel fuel sulfur control requirements of the EPA (the “applicable EPA regulations”). The deduction is phased out for refiners whose production in calendar year 2002 exceeded a specified threshold. Section 179B applies to expenses paid or incurred after December 31, 2002, in taxable years ending after December 31, 2002.

In addition, section 45H allows a production credit of five cents per gallon for low sulfur diesel fuel produced by a small business refiner. The aggregate credit claimed by a small business refiner for all taxable years may not exceed 25 percent of the qualified costs paid or incurred by the small business refiner. The aggregate allowable credit is also phased out for refiners whose production in calendar year 2002 exceeded a specified threshold. The credit is not allowed unless Treasury certifies, after consultation with EPA, that the refiner's qualified costs will result in compliance with the applicable EPA regulations. Section 280C(d) provides for the reduction, by the amount of the credit determined under section 45H(a) for the taxable year, in deductions otherwise allowable for the taxable year under subtitle A, Chapter 1 of the Internal Revenue Code (sections 1 through 1400T). Section 45H applies to expenses paid or incurred after December 31, 2002, in taxable years ending after December 31, 2002.

Section 45H(c) provides definitions of terms for purposes of both the section 179B deduction and the section 45H credit. Under section 45H(c)(1), a taxpayer is a small business refiner for a taxable year if (i) the taxpayer is a refiner of crude oil with respect to which not more than 1,500 individuals are engaged in the refinery operations of the business on any day during the taxable year, and (ii) the taxpayer's average daily domestic refinery run or average retained production for all facilities of the taxpayer for the 1-year period ending on December 31, 2002, did not exceed 205,000 barrels. Under section 45H(c)(2), the qualified costs with respect to any facility of a small business refiner are, in general, costs that are paid or incurred by the small business refiner to comply with the applicable EPA regulations with respect to the facility during the period beginning on January 1, 2003, and ending on the earlier of the date that is one year after the date on which the small business refiner must comply with the applicable EPA regulations for that facility, or December 31, 2009.

The applicable EPA regulations are the regulations establishing the highway diesel fuel sulfur control program and apply to, among others, petroleum refiners that produce diesel fuel for heavy-duty highway vehicles. The regulations provide that these vehicles for the 2007 and later model years must be fueled with highway diesel fuel that meets a maximum sulfur standard of 15 parts per million (ppm). The regulations also require refiners to produce this new low sulfur diesel fuel beginning on June 1, 2006, but include several transition rules under which refiners are given additional time to comply with the 15 ppm sulfur standard (for example, the small refiner credit option for a refiner that is granted small refiner status by the EPA).

The temporary regulations provide rules prescribing how a small business refiner must determine the deduction allowable under section 179B(a) for any taxable year. The regulations also provide guidance for making the elections under section 179B.

The deduction under section 179B is allowable with respect to the qualified capital costs paid or incurred by a small business refiner during the taxable year. The temporary regulations make it clear that the deduction is allowable with respect to costs paid or incurred during a taxable year even if the property to which the costs relate is not placed in service until a subsequent taxable year. The temporary regulations also make it clear that the deduction is allowable even if the small business refiner is not eligible for the credit under section 45H because of a failure to obtain the certification required by section 45H(e).

Section 179B provides two elections. The first election is provided under section 179B(a), which allows a small business refiner to elect to deduct an amount equal to 75 percent of the qualified capital costs paid or incurred by the small business refiner during the taxable year. These temporary regulations provide that this election is made for each taxable year in which the taxpayer seeks to deduct qualified capital costs under section 179B. The election for a taxable year applies to all qualified capital costs paid or incurred by the small business refiner during the taxable year. The election for a taxable year must be made by the due date (including extensions) for filing the small business refiner's Federal income tax return for the taxable year.

The second election is provided under section 179B(e). Section 179B(e) provides that if a small business refiner is a cooperative and makes an election under section 179B(a), the small business refiner may elect to allocate part or all of the deduction allowable under section 179B(a) for the taxable year to its owners that are themselves cooperatives. If a cooperative small business refiner makes the section 179B(e) election, the temporary regulations provide that the deduction amount allocated to an owner is equal to the owner's ratable share of the total deduction amount allocated, determined on the basis of ownership interests in the cooperative small business refiner. The temporary regulations provide that in cases in which ownership interests vary during the year, the small business refiner must determine ratable shares under a consistently applied method that reasonably takes into account the varying interests during the taxable year. Further, the temporary regulations clarify that, in computing its taxable income under section 1382, the cooperative small business refiner must reduce its section 179B deduction by the deduction amount allocated to its owners.

The section 179B(e) election for a taxable year is made by the due date (including extensions) for filing the cooperative small business refiner's Federal income tax return for the taxable year. In addition, section 179B(e)(3) requires the electing cooperative small business refiner to notify, in writing, each cooperative owner of the amount of the section 179B(a) deduction that is allocated to that cooperative owner. This written notice must be mailed to the cooperative owner before the due date (including extensions) of the cooperative small business refiner's Federal income tax return.

These temporary regulations apply to taxable years ending on or after June 26, 2008 . However, a taxpayer may apply the temporary regulations to taxable years ending after December 31, 2002, and before June 26, 2008 provided that the taxpayer applies all provisions in these regulations (other than those relating to elections) to the taxable year. A taxpayer applying the regulations to those years may make the election under section 179B(a) for such years under the rules provided in Notice 2006-47 (2006-20 IRB 892). In addition, the taxpayer's election under section 179B(e) for those years will be accepted if made using any reasonable method consistent with the principles of section 179B(e). See § 601.601(d)(2)(ii)( b ) of this chapter.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. For applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), please refer to the Special Analyses section of the preamble to the cross-reference notice of proposed rulemaking published in the Proposed Rules section in this issue of the Federal Register . Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of Small Business Administration for comment on their impact on small business.

The principal author of these regulations is Nicole R. Cimino, Office of Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and the Treasury Department participated in their development.

Regulatory Information

On April 23, 2008, we published a notice of proposed rulemaking (NPRM) entitled Safety Zone; Festival of Sail 2008 Ship's Parade; San Diego Harbor, San Diego, CA in the Federal Register (73 FR 21880). We received no letters commenting on the proposed rule. No public meeting was requested, and none was held.

The Maritime Museum of San Diego is sponsoring the Festival of Sail 2008 Ship's Parade, which will transit through San Diego Bay. The event is a classic naval review consisting of 15 tall ships of various classes, some of which are restricted in their maneuverability. The sponsor will provide 16 enforcement vessels to patrol this event. This temporary safety zone is necessary to provide for the safety of the participants, crew, spectators, sponsor vessels, and other users of the waterway.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation is unnecessary.

This determination is based on the size and location of the safety zone. Commercial vessels will not be hindered by the safety zone. Recreational vessels will not be allowed to transit through the designated safety zone during the specified times.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit or anchor in the San Diego Bay from 10 a.m. to 1 p.m. on August 20, 2008.

This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons. This rule will be in effect for only three hours for a period of one day. Vessel traffic can pass safely around the safety zone. Before the effective period, the Coast Guard will publish a local notice to mariners (LNM) and will issue broadcast notice to mariners (BNM) alerts via marine channel 16 VHF before the safety zone is enforced.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), in the NPRM we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process.

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded, under the Instruction, that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation.

A final environmental analysis checklist and a final categorical exclusion determination are available in the docket where indicated under ADDRESSES .

On April 15, 2008, we published a notice of proposed rulemaking (NPRM) entitled “Safety Zone; Patapsco River, Northwest and Inner Harbors, Baltimore, MD” in the Federal Register (73 FR 20220). We received no letters commenting on the proposed rule. No public meeting was requested, and none was held.

The USS CONSTELLATION Museum is planning to conduct a ceremony in the Port of Baltimore, Maryland, involving the sloop-of-war USS CONSTELLATION on Friday, August 8, 2008. Scheduled events include a four-hour tow of the USS CONSTELLATION beginning at 6 p.m., from its berth at Pier 1 Inner Harbor to the Locust Point Cruise Ship Terminal berth at the South Locust Point Marine Terminal, with an onboard salute with navy pattern cannon while the historic vessel is positioned off Fort McHenry National Monument and Historic Site. A one-hour return tow of the CONSTELLATION is scheduled for Sunday, August 10, 2008. Departure from the Locust Point Cruise Ship Terminal will occur at 7 a.m. and arrival at Pier 1 Inner Harbor at 8 a.m. For both tows, the historic Sloop-of-War USS CONSTELLATION will be towed “dead ship,” which means that the vessel will be underway without the benefit of mechanical or sail propulsion. While berthed at the Locust Point Cruise Ship Terminal, the vessel will participate in the commissioning ceremonies for the U.S. Navy's new Arleigh Burke class Aegis guided missile destroyer USS STERETT, DDG 104. The Coast Guard anticipates a large recreational boating fleet during these events, scheduled on a weekend during the summer in Baltimore, Maryland. Operators should expect significant vessel congestion along the planned route.

The purpose of this rule is to promote maritime safety and protect participants and the boating public in the Port of Baltimore immediately prior to, during, and after the scheduled event. The rule will provide for a clear transit route for the participating vessels, and provide a safety buffer around the participating vessels while they are in transit. The rule will impact the movement of all vessels operating upon certain waters of the Patapsco River, Northwest Harbor and Inner Harbor.

The Coast Guard received no comments in response to the NPRM. No public meeting was requested and none was held. A problem with the number of the rule (.08 versus .05) was discovered and corrected.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. There is little vessel traffic associated with recreational boating and commercial fishing in the area during the effective period.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to operate, remain or anchor within certain waters of the Patapsco River, Northwest Harbor and Inner Harbor, in Baltimore, Maryland, from 5 p.m. through 11 p.m. on August 8, 2008 and from 6 a.m. through 11 a.m. on August 10, 2008. Because the zone is of limited size and duration, it is expected that there will be minimal disruption to the maritime community. Before the effective period, the Coast Guard will issue maritime advisories widely available to users of the river and harbors to allow mariners to make alternative plans for transiting the affected areas. In addition, smaller vessels not constrained by their draft, which are more likely to be small entities, may transit around the safety zone.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), in the NPRM we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process.

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have concluded, under the Instruction, that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g.), of the Instruction, from further environmental documentation. This rule establishes a safety zone.

A final environmental analysis checklist and a final categorical exclusion determination will be available in the docket where indicated under ADDRESSES .

Regulatory Information

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. The permit application was not received in time to publish an NPRM followed by a final rule before the effective date. Under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective fewer than 30 days after publication in the Federal Register . Delaying this rule would be contrary to the public interest of ensuring the safety of spectators and vessels during this event and immediate action is necessary to prevent possible loss of life or property.

This temporary safety zone is necessary to ensure the safety of vessels and spectators from hazards associated with a fireworks display. Based on accidents that have occurred in other Captain of the Port zones, and the explosive hazards of fireworks, the Captain of the Port Buffalo has determined that fireworks launches proximate to watercraft pose a significant risk to public safety and property. The likely combination of large numbers of recreation vessels, congested waterways, darkness punctuated by bright flashes of light, alcohol use, and debris falling into the water could easily result in serious injuries or fatalities. Establishing a safety zone to control vessel movement around the location of the launch platform will help ensure the safety of persons and property at these events and help minimize the associated risks.

A temporary safety zone is necessary to ensure the safety of spectators and vessels during the setup, loading and launching of a fireworks display in conjunction with the Erie Summer festival of the Arts fireworks display. The fireworks display will occur between 10 p.m. and 11 p.m. on June 28, 2008.

The safety zone for the fireworks will encompass all waters of Lake Erie, Presque Isle Bay, Erie, PA, within a 420 ft radius of position 42°07′45″ N, 080°06′20″ W.

All persons and vessels shall comply with the instructions of the Coast Guard Captain of the Port or the on-scene representative. Entry into, transiting, or anchoring within the safety zone is prohibited unless authorized by the Captain of the Port Buffalo or his on-scene representative. The Captain of the Port or his on-scene representative may be contacted via VHF Channel 16.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

This determination is based on the minimal time that vessels will be restricted from the zone and the zone is an area where the Coast Guard expects insignificant adverse impact to mariners from the zones' activation.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: The owners and operators of vessels intending to transit or anchor in a portion of Lake Erie, Presque Isle Bay, Erie, PA, between 10 p.m. and 11 p.m. on June 28, 2008.

This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: This rule will be in effect for only one hour for one event. Vessel traffic can safely pass outside the safety zone during the event. In the event that this temporary safety zone affects shipping, commercial vessels may request permission from the Captain of the Port Buffalo to transit through the safety zone. The Coast Guard will give notice to the public via a Broadcast to Mariners that the regulation is in effect.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

The Coast Guard recognizes the treaty rights of Native American Tribes. Moreover, the Coast Guard is committed to working with Tribal Governments to implement local policies and to mitigate tribal concerns. We have determined that these regulations and fishing rights protection need not be incompatible. We have also determined that this Rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Nevertheless, Indian Tribes that have questions concerning the provisions of this Rule or options for compliance are encouraged to contact the point of contact listed under FOR FURTHER INFORMATION CONTACT .

We have analyzed this rule under Executive order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedure; and related management system practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this rule under Commandant Instruction M16475.lD which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. This event establishes a safety zone therefore paragraph (34)(g) of the Instruction applies.

A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES .

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Based on the military function exception set forth in the Administrative Procedure Act, 5 U.S.C. 553(a)(1), notice-and-comment rulemaking and advance publication, pursuant to 5 U.S.C. 553(b) and (d), are not required for this regulation. In addition, even if an NPRM were otherwise required, under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Under 5 U.S.C. 553(d)(3), the Coast Guard also finds that good cause exists for making this regulation effective less than 30 days after publication in the Federal Register . It would be contrary to public interest to delay the effective date of this temporary rule.

The U.S. Military Surface Deployment and Distribution Command notified the Coast Guard concerning military out load operations at the Port of San Diego's Tenth Avenue Marine Terminal for the dates given. This temporary security zone is needed to protect the U.S. Naval vessels and their crews for the duration of the evolution of military out load operations.

The security zone generally consists of the navigable waters surrounding the 10th Avenue Marine Terminal. The limits of this security zone are more specifically defined as the area enclosed by the following points: starting on shore at 32°42′15″ N 117°09′39″ W, then extending southwesterly to 32°42′02″ N 117°09′51″ W, then southeasterly to 32°41′43″ N 117°09′25″ W, northeasterly to shore at 32°41′47″ N 117°09′20″ W and then along the shoreline to starting point.

The security zone will be enforced by Coast Guard patrol craft and San Diego Harbor Police as authorized by the Captain of the Port San Diego (COTP). See 33 CFR 6.04-11, Assistance of other agencies. Persons and vessels are prohibited from entering into or transiting through this security zone unless authorized by the Captain of the Port, or his designated representative.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

Due to National Security interests, the implementation of this security zone is necessary for the protection of the United States and its people. The size of the zone is the minimum necessary to provide adequate protection for the U.S. Naval vessels, their crews, adjoining areas and the public. Most of the entities likely to be affected are pleasure craft engaged in recreational activities and sightseeing. Any hardships experienced by persons or vessels are considered minimal compared to the national interest in protecting U.S. Naval vessels, their crews and the public.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: The owners and operators of vessels intending to transit or anchor in the portion of San Diego Bay south of Harbor Island from 7 a.m. on June 25, 2008, to 7 p.m. on June 28, 2008. However, these security zones will not have a significant economic impact on a substantial number of small entities because these zones are limited in scope and duration. In addition, the Coast Guard will issue broadcast notice to mariners (BNM) alerts via VHF-FM marine channel 16 before the security zone is enforced.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. If your small business or organization is affected by this rule and you have questions concerning its provisions or options for compliance, please contact Chief Petty Officer Eric Carroll, Waterways Management, Sector San Diego at (619) 278-7268.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this rule under Commandant Instruction M16475.lD and Department of Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation because we are establishing a security zone.

A final “Environmental Analysis Checklist” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES .

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B) and 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for not publishing an NPRM and for making this rule effective less than 30 days after publication in the Federal Register . The Coast Guard was not given a start date for this operation and just recently became aware of its progress which did not allow for prior notice. Publishing a NPRM would be contrary to public interest since immediate action is necessary to allow for the safe salvage of the wreckage of the M/V NEW CARISSA which is aground upon a sand bar in the Pacific Ocean 3 NM north of the entrance to Coos Bay, Oregon. If normal notice and comment procedures were followed, this rule would not become effective until after the date of the salvage operation. For this reason, following the normal rulemaking procedures in this case would be impracticable and contrary to the public safety.

The Coast Guard is establishing a temporary safety zone on the waters of the Pacific Ocean encompassed in the 1000 yard radius surrounding the wreckage of the M/V NEW CARISSA located 3 NM north of the entrance to Coos Bay, Oregon. Entry into this safety zone is prohibited unless authorized by the Captain of the Port or his designated representative from 10 a.m. June 5, 2008, to 11:59 p.m. August 31, 2008, unless canceled earlier through broadcast notice to mariners.

The Captain of the Port Portland is taking this action to safeguard individuals and vessels involved in a salvage operation involving the wreck of the M/V NEW CARISSA. This safety zone will be enforced by representatives of the Captain of the Port Portland. The Captain of the Port may be assisted by other federal, state, and local agencies.

This rule, for safety concerns, will control vessels, personnel, and individual movements on the waters of the Pacific Ocean encompassed in the 1000 yard radius surrounding the wreckage of the M/V NEW CARISSA located 3 NM north of the entrance to Coos Bay, Oregon as indicated in section 2 of this Temporary Final Rule. Entry into this safety zone is prohibited unless authorized by the Captain of the Port or his designated representative. Coast Guard Personnel and local law enforcement will enforce this safety zone. The Captain of the Port may be assisted by other federal and local agencies.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. The Coast Guard expects the economic impact of this proposal to be so minimal the full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures unnecessary. This expectation is based on the fact that the regulated areas established by the proposed regulation will involve a small area of the Pacific Ocean along the Oregon Coast that doesn't have much vessel traffic. The removal of the wreckage of the M/V NEW CARISSA in a controlled and deliberate operation ensures the safety of future traffic in that the vessel will not be allowed to deteriorate in a fashion which could cause unknown navigation hazards and/or additional pollution in the area. The removal of the wreck's potential to create these incidents will offset any potential adverse economic impact these restrictions might have.

Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit a small area of the Pacific Ocean along the Oregon Coast encompassed in the 1000 yard radius surrounding the wreckage of the M/V NEW CARISSA located 3 NM north of the entrance to Coos Bay, Oregon. Entry into this safety zone is prohibited unless authorized by the Captain of the Port or his designated representative. This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: The safety zone applies to a tiny portion of the Pacific Ocean, entities wishing to transit in the vicinity of this area may pass outside of the safety zone to continue their transit. We will issue a broadcast notice to mariners on the effected portion of the Pacific Ocean.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they may better evaluate its effects on them and participate in the rulemaking process. If this rule will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded, under the Instruction, that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation because it establishes a safety zone.

A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” will be available in the docket where indicated under ADDRESSES .

NSR Reform Revisions. EPA is taking final action to conditionally approve revisions to the Florida SIP (Florida Administrative Code (F.A.C.) Chapters 62-204, 62-210, and 62-212) as submitted by the Florida Department of Environmental Protection (FDEP) on February 3, 2006, which included changes to Florida's PSD program. As part of the current conditional approval, Florida has agreed to (1) revise the definition of “new emissions unit” to be consistent with the federal definition or revise the definition to define what is meant by “beginning normal operation” and provide an equivalency demonstration supporting the revised definition; (2) revise the definition of “significant emissions rate” to include ozone depleting substances; (3) withdraw the request that EPA include a significant emissions rate for mercury in the Florida SIP, specifically F.A.C. Chapter 62-210.200(243)(a)2; and (4) revise the recordkeeping requirements at F.A.C. section 62-212.300(3)(a)1 to be consistent with federal requirements found at 40 CFR 51.166(r)(6).

Applicability of Florida's SIP-approved PSD permitting program to electric power plants. In addition to and in conjunction with the conditional approval of Florida's PSD SIP revisions, EPA is approving Florida's concurrent February 3, 2006, request to make the State's PSD permitting program applicable to electric power plants subject to the Florida PPSA. This means that Florida's SIP-approved PSD permitting program, including the conditional approval of the State's PSD revisions noted above, will apply to electric power plants in Florida in lieu of the current federally delegated PSD program.

On April 4, 2008 (73 FR 18466), EPA published a notice of proposed rulemaking (NPR) in the Federal Register , proposing to conditionally approve the Florida SIP revisions and proposing to approve Florida's request to make the State's PSD program applicable to electric power plants, which are also subject to the Florida PPSA. The April 4, 2008, NPR provides additional information about the proposed Florida SIP revisions and the rationale for this final action. The public comment period for the proposed action ended on May 5, 2008. No comments were received on EPA's proposed action. EPA is now taking final action to conditionally approve the February 3, 2006, SIP revision from Florida and to approve Florida's request to make the State's PSD permitting program applicable to electric power plants subject to the Florida PPSA.

On December 31, 2002 (67 FR 80186), EPA published final rule changes to 40 Code of Federal Regulations (CFR) parts 51 and 52, regarding the Clean Air Act (“CAA” or “Act”) PSD and nonattainment new source review (NNSR) programs. On November 7, 2003 (68 FR 63021), EPA published a notice of final action on its reconsideration of the December 31, 2002, final rule changes. In that November 7, 2003, final action, EPA added the definition of “replacement unit,” and clarified an issue regarding plant-wide applicability limitations. Collectively, these EPA final actions are referred to as the “2002 NSR Reform Rules.” On June 13, 2007 (72 FR 32526), EPA took final action to revise the 2002 NSR Reform Rules to exclude the clean units and PCP provisions that were vacated by the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit Court) on June 24, 2005. Further, on December 21, 2007, EPA took final action on the portion of the 2002 NSR Reform Rules remanded by the D.C. Circuit Court, regarding the reasonable possibility in recordkeeping provision. The “reasonable possibility” provision identifies, for sources and reviewing authorities, the circumstances under which a major stationary source undergoing a modification that does not trigger major NSR must keep records. On December 21, 2007, EPA established that a “reasonable possibility” exists where source emissions equal or exceed 50 percent of the CAA NSR significance levels for any pollutant (72 FR 72607). These changes became effective on January 22, 2008, and the final action on that provision explains the process that states should follow if a SIP revision is necessary. 1

The Florida SIP revisions being approved today revise Florida's PSD program consistent with the federal program. In so doing, Florida not only provided substantive revisions to its rules, but also reorganized the rules to better follow the outline of the corresponding federal rules. This reorganization does not have any substantive impact on the PSD program as a whole, or its relationship with Florida's operating permits program (CAA title V program). Florida's PSD program continues to work in concert with its title V operating permit program to ensure that applicable requirements, including any applicable PSD requirements, are a part of lawful operation of a source under Florida's title V program.

The February 3, 2006, SIP submittal consists of revisions to the following FDEP rules: F.A.C. Chapter 62-204, “Air Pollution Control—General Provisions;” F.A.C. Chapter 62-210, “Stationary Sources—General Provisions;” and F.A.C. Chapter 62-212, “Stationary Sources—Preconstruction Review.” The revisions were made to update the Florida PSD program to make it consistent with the December 31, 2002, changes to the federal NSR program. EPA is conditionally approving the February 3, 2006, SIP submittal consistent with section 110(k)(4) of the CAA. As part of the conditional approval, Florida will have twelve months from the date of EPA's final conditional approval of the SIP revisions in which to further revise its PSD rules, as described herein, to be consistent with existing federal law.

Pursuant to section 110(k)(4) of the CAA, EPA may conditionally approve a portion of a SIP revision based on a commitment from the state to adopt specific, enforceable measures no later than twelve months from the date of final conditional approval. If the state fails to make the changes within the twelve month period, EPA will issue a finding of disapproval. EPA is not required to propose the finding of disapproval. The necessary revisions to the Florida SIP will materially alter the existing SIP-approved rule. As a result, Florida must also provide a new SIP submittal to EPA for approval that includes the rule changes. As with any SIP revision, Florida must provide an opportunity for public notice and comment, and allow for a public hearing (and any other procedures required by State law) on the proposed rule changes. If Florida timely revises its rules and submits the revised SIP submittal, EPA will process that SIP revision consistent with the CAA.

With regard to the conditional approval of the PSD program, Florida must: (1) Revise the definition of “new emissions unit” to be consistent with the federal definition or revise the definition to define what is meant by “beginning normal operation” and provide an equivalency demonstration supporting the revised definition; (2) revise the definition of “significant emissions rate” to include ozone depleting substances; (3) withdraw the request that EPA include a significant emissions rate for mercury in the Florida SIP, specifically F.A.C. 62-210.200(243)(a)2; and (4) revise the recordkeeping requirements at F.A.C. 62-212.300(3)(a)1 to require a record of the amount of emissions excluded pursuant to the projected actual emissions requirements, an explanation as to why these emissions were excluded, and any netting calculations if applicable, consistent with the federal recordkeeping requirements at 40 CFR 51.166(r)(6).

The April 4, 2008, NPR and the docket for this action provide more details about the SIP revisions being approved and the rationale for EPA's final action. For additional information on EPA's 2002 NSR Reform Rules, see 67 FR 80186 (December 31, 2002), and http://www.epa.gov/nsr.

Electric power plants subject to the Florida PPSA have historically been permitted by FDEP (through a federal delegation of authority from EPA) under the federal PSD program rather than the Florida SIP-approved PSD permitting program. The Florida PSD program was initially approved by EPA into the Florida SIP on December 22, 1983 (48 FR 52713). The approval transferred to FDEP the legal authority to process and issue PSD permits to sources in Florida that are required to obtain PSD permits.

One category of sources not covered by EPA's 1983 approval of Florida's PSD program was electric power plants. This was because, at the time, a separate Florida law known as the Florida PPSA, Florida Statutes Section 403.501 et seq. , required permits for electric power plants to be issued solely by the Power Plant Site Certification Board under the PPSA, rather than by FDEP under Florida's PSD regulations. Such a conflict between the PPSA and Florida's PSD program created impediments to implementation and enforcement of the State's PSD program by FDEP for such power plants and precluded EPA's SIP-approval of Florida's PSD program as to these sources. As a result, for electric power plants subject to the PPSA, FDEP has been operating under either a partial or full delegation of authority to implement the federal PSD program since 1983, while various attempts to amend the PPSA to correct the conflict were made. Currently, FDEP is operating under a full delegation of authority to implement the federal PSD program for electric power plants, following further amendments to the PPSA in 1993. The 1993 PPSA amendment made clear that FDEP is the final permitting authority for PSD and new source review permits and can act in a manner different from the PPSA Siting Board if Florida's PSD or new source review regulations require such different action. The statutory amendment to the PPSA made by the Florida Legislature in 1993 forms the basis of the State's 2006 request for EPA approval to make Florida's SIP-approved State PSD program, rather than the federal PSD program, applicable to sources subject to the PPSA. In addition, during EPA's review of this request, the PPSA was again amended (on June 19, 2006), to among other things, further extricate Florida's PSD permitting process from its PPSA process. See, Florida Public Health Code 403.0872.

Following EPA review of both the 1993 and June 19, 2006, amendments to the PPSA, the Agency published a direct final rule on May 25, 2007, finding that the PPSA amendments provided FDEP the authority to fully implement and enforce Florida's PSD program for electric power plants located within the State, and we granted it full approval to implement the State's PSD program for electric power plants subject to the PPSA. 72 FR 29287 (May 25, 2007). However, because adverse comments on the direct final rule were received, EPA withdrew the rule on June 28, 2007 (72 FR 35355) and indicated that the rule would not take effect.

As is described in greater detail in the April 4, 2008, proposal, the 1993 and June 2006 Florida legislative amendments to the State's PPSA rectified past concerns that the Florida PPSA infringed on FDEP's authority to issue State PSD permits to sources subject to both the State's PSD regulations and the Florida PPSA in such a manner that SIP-approval of the State's PSD program for those sources was precluded. By proposing this SIP-approval through this new rulemaking process, and in conjunction with our proposed action on the Florida PSD program SIP revisions, we have addressed the main concerns raised by commenters in response to our May 25, 2007, direct final rule. For additional information on the concerns raised by commenters, see the April 4, 2008, proposal.

EPA is now approving Florida's February 3, 2006, request that EPA grant Florida SIP-approval to implement the State's PSD program for electric power plants subject to the PPSA. EPA is approving this specific request under section 110 of the Act because there is no longer a conflict between the State's PSD regulations and the PPSA and because FDEP now has adequate and effective procedures for full implementation of the State's PSD program for electric power plants. The April 4, 2008, NPR and the docket for this action provide more details about the approval of Florida's PSD program for electric power plants and the rationale for EPA's final action.

EPA is taking final action to conditionally approve changes to the Florida Administrative Code Chapter 62-204 entitled “Air Pollution Control—General Provisions”; Chapter 62-210 entitled “Stationary Sources—General Provisions”; and Chapter 62-212 entitled “Stationary Sources—Preconstruction Review,” as submitted by the State of Florida on February 3, 2006, as revisions to the Florida SIP.

In addition to and in conjunction with the conditional approval of Florida's PSD SIP revisions, EPA is taking final action to approve Florida's concurrent February 3, 2006, request to make the State's PSD permitting program applicable to electric power plants subject to the Florida PPSA. As a result of this final action, EPA's October 26, 1993, federal delegation of PSD authority to FDEP will be withdrawn effective July 28, 2008. This final approval means that Florida's SIP-approved PSD permitting program, including the final conditional approval of the State's PSD revisions noted above, applies to electric power plants in Florida in lieu of the current federally delegated PSD program.

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

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

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

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

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

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

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

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

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

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

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the State, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 26, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

1. Submitting CBI. Do not submit this information to EPA through RME, regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 Code of Federal Regulations (CFR) part 2.

2. Tips for Preparing Your Comments. When submitting comments, remember to:

i. Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).

ii. Follow directions—The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

iii. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

iv. Describe any assumptions and provide any technical information and/or data that you used.

v. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

vi. Provide specific examples to illustrate your concerns, and suggest alternatives.

vii. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

viii. Make sure to submit your comments by the comment period deadline identified.

EPA is taking direct final action to approve the Second 10-year CO Maintenance Plan for the Vancouver, Washington Air Quality Maintenance Area. Vancouver attained the CO national ambient air quality standards (NAAQS) in 1996 and has not violated the standard since 1990. The second 10-year CO maintenance plan submitted by the state of Washington is designed to keep the Vancouver area in attainment for the CO standard for a second ten-year period beyond redesignation.

Under section 107(d)(1)(C) of the Act, any area designated before the date of enactment of the Clean Air Act Amendments of 1990 (CAAA) was to be designated upon enactment by operation of law. Under section 107(d)(1)(A) of the Act, States were required by 120 days after enactment of the CAAA, to submit lists designating all areas of the State as attainment, unclassifiable, or nonattainment.

Accordingly, on March 15, 1991, letters were submitted by the governors of Washington and Oregon to the EPA Region 10 Administrator recommending the Vancouver and Portland areas, respectively, be designated as nonattainment for CO. On November 6, 1991 (56 FR 56694) the areas were designated by EPA as nonattainment for CO and classified as “moderate” with design values less than or equal to 12.7 parts per million (ppm) under the provisions outlined in sections 186 and 187 of the Act. On September 29, 1995 (60 FR 50423) EPA divided the Portland-Vancouver area into separate nonattainment areas for each state.

The State of Washington, following the requirements of the Act, prepared and submitted revisions to the Washington SIP that first included an attainment plan, and then developed a plan to demonstrate maintenance of the standard for a 10-year period beyond the statutory attainment date. EPA published approval of a redesignation request to attainment and the first 10-year maintenance plan on October 21, 1996 (61 FR 54560). The first 10-year CO maintenance plan included a commitment for periodic review of the plan and submission of the second 10-year maintenance plan. The State of Washington submitted a second 10-year maintenance plan to EPA on April 25, 2007.

The national 8-hour CO ambient standard is attained when the daily average 8-hour CO concentration of 9.0 ppm is not exceeded more than once a year. Since the redesignation of the Vancouver area to attainment for CO on October 21, 1996, the second highest concentration in any calendar year measured by the approved monitoring network was 6.7 ppm, which is less than 9.0 ppm. Therefore the area is attaining the CO NAAQS.

In addition, areas that can demonstrate design values at or below 7.65 ppm (85 percent of exceedance levels of the CO NAAQS) for 8 consecutive quarters may use a Limited Maintenance Plan option. The current 8-hour CO design value for the Vancouver area is 4.8 ppm based on 2004-2005 data. The State of Washington has opted to develop a Limited Maintenance Plan to fulfill the Vancouver Area second 10-year maintenance period required by the Act.

Section 110(a)(2) of the Act requires that each SIP revision be adopted after reasonable notice and public hearing. This must occur prior to the revision being submitted by a State to us. The state of Washington held a public hearing on March 1, 2007 in Vancouver, Washington. A notice of public hearing was published in The Columbian on January 29, 2007. A notice was also published in the Washington State Register on February 7, 2007. This SIP revision became State effective on April 9, 2007, and was submitted by the Governor's designee to us on April 25, 2007. EPA has evaluated the State's submittal and determined that the State met the requirements for reasonable notice and public hearing under section 110(a)(2) of the Act.

EPA has reviewed the State's revised CO maintenance plan for the Vancouver air quality maintenance. This revision provides the second 10-year update to the maintenance plan for the area, as required by section 175A(b) of the Act. The following is a summary of the requirements and EPA's evaluation of how each requirement is met.

The plan must contain an attainment year emissions inventory to identify a level of emissions in the area which is sufficient to attain the CO NAAQS. The Vancouver CO second 10-year maintenance plan contains an emissions inventory for the base year 2002 that is consistent with EPA's most recent guidance on maintenance plan emission inventories. The emissions inventory is a list, by source, of the air contaminants directly emitted into the Vancouver CO area. The data in the emissions inventory is based on calculations and is developed using emission factors, which is a method for converting source activity levels into an estimate of emissions contributions for those sources. Because violations of the CO NAAQS are most like to occur on winter weekdays, the inventory prepared is in a “typical winter day” format. The table below shows the pounds of CO emitted per winter day in 2002 by source category.

The maintenance plan demonstration requirement is considered to be satisfied for areas using the Limited Maintenance Plan option, which are required to demonstrate design values at or below 7.65 ppm (85 percent of exceedance levels of the CO NAAQS) for 8 consecutive quarters. The State of Washington has opted to develop a Limited Maintenance Plan to fulfill the Vancouver Area second 10-year maintenance period required by the Act.

With the Limited Maintenance Plan option, there is no requirement to project emissions of air quality over the maintenance period. EPA believes that if the area begins the maintenance period at, or below, 85 percent of the level of the CO 8-hour NAAQS, the applicability of prevention of significant deterioration requirements, the control measures already in the SIP, and Federal measures, should provide adequate assurance of maintenance over the 10-year maintenance period. The last monitored violation of the CO NAAQS in Vancouver occurred in 1990 and monitored CO levels have been steadily in decline ever since. The current 8-hour CO design value for the Vancouver CO area is 4.8 ppm based on 2004-2005 data, which is below the limited maintenance plan requirement of 7.65 ppm. Therefore, the Vancouver area has adequately demonstrated that it will maintain the CO NAAQS into the future.

To verify the attainment status of the area over the maintenance period, the maintenance plan should contain provisions for continued operation of an appropriate, EPA-approved monitoring network in accordance with 50 CFR part 58. The State of Washington has an approved monitoring network that includes the Vancouver area. The monitoring network was most recently approved by EPA on November 16, 2007. In 2006, the Southwest Clean Air Agency requested permission to remove the CO monitor at the Atlas and Cox site in Vancouver and EPA concurred that monitoring could be discontinued at the site. The State is continuing to verify attainment by conducting a triennial review of CO emissions from the countywide emissions inventory.

Section 175A(d) of the Act requires that a maintenance plan include contingency provisions. The Vancouver Area CO Maintenance Plan contains a tiered level of response should the triennial emission inventory show that annual county-wide on road mobile emissions have increased over 2005 levels. The contingency plan calls for analysis of appropriate emission reduction measures and their implementation.

Transportation conformity is required by section 176(c) of the Clean Air Act. EPA's conformity rule requires that transportation plans, programs, and projects that are funded under 23 U.S.C. or the Federal Transit Act conform to SIPs. Conformity to a SIP means that transportation activities will not produce new air quality violations, worsen existing violations, or delay timely attainment of the NAAQS.

The transportation conformity rule (40 CFR parts 51 and 93) and the general conformity rule (40 CFR parts 51 and 93) apply to nonattainment areas and maintenance areas covered by an approved maintenance plan. Under either conformity rule, an acceptable method of demonstrating that a Federal action conforms to the applicable SIP is to demonstrate that expected emissions from the planned action are consistent with the emissions budget for the area.

While EPA's Limited Maintenance Plan option does not exempt an area from the need to affirm conformity, it explains that the area may demonstrate conformity without submitting an emissions budget. Under the Limited Maintenance Plan option, emissions budgets are treated as essentially not constraining for the length of the maintenance period because it is unreasonable to expect that the qualifying areas would experience so much growth in that period that a violation of the CO NAAQS would result. Similarly, Federal actions subject to the general conformity rule could be considered to satisfy the “budget test” specified in section 93.158(a)(5)(i)(A) for the same reasons that the budgets are essentially considered to be unlimited.

While areas with maintenance plans approved under the Limited Maintenance Plan option are not subject to the budget test, the areas remain subject to other transportation conformity requirements of 40 CFR part 93, subpart A. Thus, the metropolitan planning organization (MPO) in the area or the State must document and ensure that:

a. Transportation plans and projects provide for timely implementation of SIP transportation control measures in accordance with 40 CFR 93.113;

b. Transportation plans and projects comply with the fiscal constraint element per 40 CFR 93.108;

c. The MPO's interagency consultation procedures meet applicable requirements of 40 CFR 93.105;

d. Conformity of transportation plans is determined no less frequently than every four years, and conformity of plan amendments and transportation projects is demonstrated in accordance with the timing requirements specified in 40 CFR 93.104;

e. The latest planning assumptions and emissions model are used as set forth in 40 CFR 93.110 and 40 CFR 93.111;

f. Projects do not cause or contribute to any new localized carbon monoxide or particulate matter violations, in accordance with procedures specified in 40 CFR 93.123; and

g. Project sponsors and/or operators provide written commitments as specified in 40 CFR 93.125.

EPA meets at least annually with the Washington Department of Ecology, the Southwest Clean Air Agency, the Federal Highway Administration, the Southwest Washington Regional Transportation Council, and the Washington Department of Transportation to review documentation and the Transportation Improvement Plan for the Vancouver area and determine if the area is meeting the transportation conformity requirements under 40 CFR part 93. Vancouver is currently meeting the requirements under 40 CFR part 93, subpart A.

On November 19, 2007, EPA posted a notice finding the Vancouver CO second 10-year maintenance plan adequate for transportation conformity purposes. (See 72 FR 65019.)

In accordance with the requirements of the Federal Clean Air Act (the Act), EPA is approving this revision to the State Implementation Plan (SIP) because the State adequately demonstrates that the Vancouver Air Quality Maintenance Area will maintain air quality standards for CO through the year 2016. EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should adverse comments be filed. This rule will be effective August 26, 2008 without further notice unless the Agency receives adverse comments by July 28, 2008.

If EPA receives such comments, then EPA will publish a timely withdrawal of the direct final rule informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on this rule. Any parties interested in commenting on this rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on August 26, 2008 and no further action will be taken on the proposed rule.

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

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

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

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

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

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

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

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

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

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

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 26, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Medicare overpayments are Medicare funds an individual, provider, or supplier has received that exceed amounts due and payable under the Medicare statute and regulations (plus any applicable interest and penalties assessed on the overpayment). Section 400.202 defines a “supplier” as “a physician or other practitioner, or an entity other than a provider, that furnishes health care services under Medicare.”

Generally, overpayments result when payment is made by Medicare for items or services that are not covered, exceeds the amount allowed by Medicare for an item or service, or is made for items or services that should have been paid by another insurer (for example, Medicare secondary payer obligations). Once a determination and any necessary adjustments in the amount of the overpayment have been made, the remaining amount is a debt owed to the United States Government.

Section 1870 of the Social Security Act (the Act) provides a framework within which liability for such Medicare overpayments is determined and recoupment of overpayments is pursued. This framework prescribes a decision making process that the agency follows when pursuing the recoupment of Medicare overpayments.

The regulation governing the liability for Medicare overpayments is located at 42 CFR part 401 (subpart F).

The Federal Claims Collection Act of 1966 (Pub. L. 89-508) (FCCA), 80 Stat. 308 (amended by the Debt Collection Improvement Act of 1996 (Pub. L. 104-134) (DCIA) (codified at 31 U.S.C. 3711)) is the Federal government's basic statutory authority for debt management practices. The Congress intended the FCCA to reduce the amount of litigation previously required to collect claims and to reduce the volume of private relief legislation in the Congress. The FCCA was intended to be independent of the other authorities we use to collect debt and added to, rather than supplanted, our other authorities, including common law authority.

The FCCA authorized the head of an agency to collect claims in any amount. This statute also provided that the head of an agency may, under certain conditions, compromise a claim, or suspend or terminate collection action on a claim. Uncollectible claims in excess of $100,000, exclusive of interest, must be referred to the Department of Justice for compromise. The FCCA was amended in 1996 and is now referred to as the Debt Collection Improvement Act of 1996 (Pub. L. 104-134) (DCIA), 110 Stat. 1321, 1358 (April 26, 1996) (codified at 31 U.S.C. 3711).

In the November 2, 1977 Federal Register (42 FR 57351), the Secretary of the Department of Health and Human Services (the Secretary) published a rule to delegate authority to the Department Claims Officer generally, and the Administrator of the Centers for Medicare & Medicaid Services (the Administrator) for necessary claims collection actions under our programs. The authority delegated to the Administrator covers all of our activities in the Medicare program (Title XVIII) and pertains to claims up to $20,000. (This amount has been increased to $100,000; see 31 U.S.C. 3711.)

In the August 29, 1983 Federal Register (48 FR 39060), we published the “Federal Claims Collection Act; Claims Collection and Compromise” final rule with comment period in accordance with the FCCA. In that final rule with comment period, we adopted the applicable debt collection tools made available to us under the FCCA including the ability to collect or compromise claims, or suspend or terminate collection action, as appropriate. The final rule with comment period also set forth the requirements we use to evaluate debtors' requests for extended repayment agreements specified in § 401.607.

As part of the Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191) (HIPAA), the Congress added section 1893 to the Act establishing the Medicare integrity program (MIP) to carry out Medicare program integrity activities that are funded from the Medicare Trust Funds. Section 1893 of the Act expands our contracting authority to allow us to contract with eligible entities to perform MIP activities. These activities include review of provider and supplier activities including medical, fraud, and utilization review; cost report audits; Medicare secondary payer determinations; education of providers, suppliers, beneficiaries, and other persons regarding payment integrity and benefit quality assurance issues; and developing and updating a list of durable medical equipment items that are subject to prior authorization (42 U.S.C. 1395ddd). These MIP contractors assist us in the identification and collection of Medicare provider and supplier overpayments.

The current policy that CMS and its contractors use for the evaluation of extended repayment schedules (ERSs) is based on the existing regulations at § 401.607(c)(2) and guidance in the Medicare Financial Management Manual, Pub. 100-6 (Chapter 4, Section 50). Under our current policy, we determine the frequency and amount of the installment payments based on the factors set forth at the current § 401.607(c)(2) which include the following: (1) The amount of the claim; (2) the debtor's ability to pay; and (3) the cost to CMS of administering an installment agreement.

Under the current ERS review process, we primarily focus on the second factor, the debtor's ability to repay the overpayment, by conducting a review of the debtor's financial status, similar to how banks assess applicants for a loan. In almost all cases, we try to work with the provider or supplier to recover the overpayment. In general, it has been our experience that it is in both CMS and the debtor's best interests to work out a reasonable repayment schedule to recoup an overpayment rather than demand immediate collection of the debt within 30 days, which could place a provider or supplier at financial risk or bring the provider or supplier a step closer to bankruptcy.

Under our existing procedures we review financial documentation submitted by the provider or supplier to assess the provider's or supplier's ability to repay the Medicare overpayment. This documentation must include, at a minimum, a statement of financial position (for example, a balance sheet), a statement of financial performance (for example, an income statement), and a statement of future viability (for example, a projected statement of cash flow). In addition, the provider must include a letter from a financial institution proving that it cannot obtain financing from an alternative source.

On December 8, 2003, the Congress enacted the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173) (MMA). This legislation contained provisions affecting the recovery of provider and supplier overpayments under the Medicare program. Section 935(a) of the MMA amended title XVIII of the Act by adding a new section 1893(f)(1) to the Act to require us to use certain statutory criteria in evaluating whether a provider or supplier should be granted a repayment schedule of at least 6 months and up to 5 years.

The following is an overview of the provisions we proposed in the Use of Repayment Plans proposed rule published in the November 27, 2006 Federal Register (71 FR 68519).

Under section 1893(f)(1) of the Act, we may grant a provider or a supplier upon request, a repayment schedule of at least 6 months, if repaying an overpayment within 30 days would constitute a “hardship” on the provider or supplier, provided that certain criteria are met.

The new statute at section 1893(f)(1)(B)(i) of the Act defines “hardship” based on the relationship between the amount of the Medicare overpayment(s) not covered under an existing ERS owed by a provider or supplier and the total amount of Medicare payments made to that provider or supplier over the most recently submitted cost report or for the previous calendar year.

Under section 1893(f)(1)(B) of the Act, a provider or supplier's repayment of an overpayment within 30 days is deemed to be a “hardship” when the total amount of all outstanding overpayments not included in an approved existing repayment schedule is 10 percent or greater than the total Medicare payments made for the cost reporting period covered by the most recently submitted cost report (for a provider filing a cost report), or the previous calendar year (for a supplier or non cost report provider). We proposed to interpret “outstanding overpayments” to include both principal and accrued interest. We read the newly added section 1893(f)(1)(B)(iii) of the Act to exclude overpayments already being repaid under an approved ERS.

We proposed to interpret the new “hardship” test under section 935(a) of the MMA as not to supersede our ERS regulations currently at § 401.607(c)(2), (which we proposed to redesignate as § 401.607(c)(3)). Since our existing regulations governing ERSs are issued under the FCCA, we do not plan to eliminate the criteria and procedures currently used to grant providers and suppliers ERSs. Instead, we proposed to add an initial “hardship” test to existing regulations and procedures for determining a debtor's ERS.

We proposed that all requests for an ERS first be evaluated under the new “hardship” test. Under section 935(a) of the MMA, if “hardship” is determined and no statutory exception applies under § 401.607(c)(2)(iv), then the statute requires that the Secretary grant a provider or supplier a repayment period of at least 6 months but not longer than 3 years.

Section 935(a) of the MMA requires that the Secretary establish rules for cases when a provider or a supplier was not paid during the previous year or paid for only a portion of that year. For these cases, we proposed to use the last 12 months of Medicare payments made to the provider or supplier. In cases where there is less than a 12-month payment history, we proposed that the number of months available be annualized to equal an approximate yearly Medicare payment level for the provider or supplier. (For detailed examples on how to apply the new “hardship” test provided in section 1893(f)(1) of the Act, please see the November 27, 2006 proposed rule, “Use of Repayment Plans” (71 FR 68521).)

Section 935(a) of the MMA sets out exceptions to granting a provider or supplier an extended repayment schedule even if the provider or supplier meets the “hardship” test. These exceptions occur when there is reason to suspect the provider or supplier may file for bankruptcy, cease to do business, discontinue participation in the program, or when there is an indication of fraud or abuse committed against the program. (We proposed that contractors continue to use existing procedures and definitions applicable to bankruptcy and fraud or abuse.) In such cases, CMS or its contractors are prohibited from granting an ERS.

Under the provisions of § 401.607(c)(2)(vi) of this final rule, the Secretary may grant a provider or a supplier a repayment schedule of 36 months and up to 60 months if repaying an overpayment would constitute an “extreme hardship” unless a statutory exception applies under § 401.607(c)(2)(iv). Since the Congress left the definition of “extreme hardship” to our discretion, we considered different approaches for defining “extreme hardship” and sought public comment on this section.

We considered proposing a new financial threshold to determine if a provider or supplier was in extreme financial hardship, such as using a 15 percent threshold. We rejected this approach because it could result in discriminating against providers and suppliers who may be similarly financially situated but may attribute more of their total revenue to Medicare income. This could occur for example with a home health agency (HHA) which may attribute 100 percent of its revenue to Medicare business and a skilled nursing facility (SNF) which may only attribute 20 percent of its business to Medicare.

We proposed to define “extreme hardship” when a provider or supplier qualifies under the “hardship” provision defined above and the provider's or supplier's request for an ERS is approved under newly redesignated § 401.607(c)(3). If we determine the request meets the criteria in the redesignated § 401.607(c)(3) and meets the CMS manual guidance set forth in the Medicare Financial Management Manual, Pub. 100-6, Chapter 4, Section 50, we proposed that the provider or supplier may be granted an ERS between 36 and 60 months. We also proposed that contractors apply the statutory exceptions to “extreme hardship” cases in a similar manner as they do to “hardship” cases. We solicited comments on other alternative approaches to define “extreme hardship” that could distinguish between the most extreme cases requiring ERSs between 36 and 60 months.

We proposed to initially handle ERS requests differently than we have under our current regulations. We proposed to allow providers or suppliers that meet the “hardship” test and request only a 6-month ERS period, the opportunity to pay back the Medicare debt in 6 months without having to submit financial documentation to the contractor in accordance with the existing instructions in the Medicare Financial Management Manual, CMS, Pub. 100-6, Chapter 4, Section 50. We believe that by waiving the requirement to submit financial documentation (such as financial statements or a bank denial letter) for a 6-month ERS, we allow a provider or supplier time to generate or secure the necessary capital to liquidate the debt without having to file extensive documentation in order to secure a repayment schedule.

We therefore proposed that a provider or supplier that requests a 6-month ERS, meets the “hardship” test, does not fall within an exception, and elects not to submit financial documentation would be approved for a 6-month ERS. Any provider or supplier qualifying for the 6-month ERS under the “hardship” provision has the choice to turn down the 6-month ERS and either pay off the debt within 30 days of the date of determination or request a longer than 6-month ERS. In addition, we proposed not to prohibit any provider or supplier under the 6-month “hardship” provision ERS from applying for a longer ERS if it later desires to do so under § 401.607(c)(3).

For all ERS requests greater than 6 months, we proposed to rely on current regulations and procedures that require the provider or supplier to submit financial documentation in accordance with the Medicare Financial Management Manual, CMS Pub. 100-6, Chapter 4, Section 50. A provider or supplier must continue to submit a written request that refers to the specific overpayment for which an ERS is being requested, the number of months requested in the ERS, and include the first payment with its request. The contractor would determine the duration of the ERS based on its review of the provider or supplier's documentation in accordance with CMS manual guidance.

If a provider or supplier misses one installment payment in any ERS granted under section 935(a) of the MMA, the statute permits us to immediately collect the entire overpayment. However, we proposed to impose this penalty only on the “automatic” 6-month ERS. With all other ERSs, we proposed to continue to use the existing procedures that define a default of an ERS as missing two consecutive installment payments.

We proposed to revise § 401.601(a) to read as follows: “This subpart implements the following provisions: (1) For CMS the Debt Collection Improvement Act of 1996 (Pub. L. 104-134) (DCIA), 110 Stat. 1321, 1358 (April 26, 1996) (codified at 31 U.S.C. 3711), and conforms to the regulations (31 CFR parts 900-904) issued jointly by the Department of the Treasury and the Department of Justice that generally prescribe claims collection standards and procedures under the DCIA for the Federal government; (2) section 1893(f)(1) of the Act regarding the use of repayment plans.”

In addition, in § 401.603 we proposed to add a definition for an “extended repayment schedule.”

We proposed to redesignate § 401.607(c)(2) as § 401.607(c)(3). In addition, we proposed a new § 401.607(c)(2), Extended repayment schedule, in accordance with section 1893(f)(1) of the Act. We proposed to implement the provisions of section 1893(f)(1) of the Act, as amended by section 935(a) of the MMA, in new § 401.607(c)(2), Extended repayment schedule.

We received 6 public comments on the November 27, 2006 proposed rule. The following is a summary of the major issues and our responses.

Comment: One commenter believed that the provisions of the proposed rule were not equitable between provider types because 10 percent of total Medicare reimbursement for a provider with a 50 percent Medicare fee-for-service revenue is a greater threshold to reach than a provider with a 5 percent Medicare fee-for-service revenue.

Response: We agree with the comment that the proposed rule may not in all cases treat different provider types similarly. However, the statute was written to define hardship as a ratio of Medicare overpayments to total Medicare payments/reimbursement in a given time period. The statute does not allow CMS to take into account the percentage of patient revenue from other sources when defining “hardship.” For all other ERS requests, we proposed to rely on current regulations and procedures that require the provider or supplier to submit financial documentation in accordance with the Medicare Financial Management Manual, CMS Pub. 100-6, Chapter 4, Section 50.

Comment: Some commenters believed it would be more consistent and more fair to providers if we would use the definition of default for all ERSs as missing two consecutive installment payments.

Response: While the statute permits us to immediately collect on an entire overpayment if a provider or supplier misses one installment payment in any ERS granted under section 935(a) of the MMA, we have decided to impose the 1-month missed payment rule only for the 6-month “hardship-based” ERS. We chose not to apply the two missed payment rule to 6-month ERSs because we do not want a provider or supplier to be too far in arrears if they miss payments in such a short ERS. A provider or supplier that is behind two payments in a 6-month ERS has a greater amount of its payments in arrears than a provider or supplier that is behind two payments in a 36-month or 60-month ERS. For example, two missed payments on the amortization of an overpayment covered under a 6-month ERS (2 divided by 6) is equal to approximately 33.3 percent of the total overpayment whereas 2 missed payments under a 36-month ERS (2 divided by 36) is equal to a much lower 5.5 percent of the total overpayment. On a 60-month ERS, two missed payments would only equal 3.3 percent of the total overpayment (2 divided by 60).

Comment: Some commenters were concerned that we may be inadvertently legally binding providers to the “automatic” 6-month ERS and not offering providers a future opportunity to request a second ERS under § 401.607(c).

Response: In the proposed rule, we stated that any provider or supplier qualifying for the 6-month ERS under the “hardship” provision has the choice to turn down the 6-month ERS and either pay off the debt within 30 days of the date of determination or request a longer ERS under newly redesignated § 401.607(c)(3). In addition, we will not prohibit any provider or supplier under the 6-month “hardship” provision ERS from applying for a longer ERS if it later desires to do so under § 401.607(c)(3).

Comment: One commenter believed that there is no practical reason for why we have not adopted a parallel numerical threshold approach to extreme hardship by using some percentage above the numerical 10 percent threshold for hardship.

Response: The 10 percent used in this final rule to define hardship is required by statute. As stated in the proposed rule, we considered proposing a new financial threshold to determine if a provider or supplier was in extreme financial hardship, such as using a 15 percent threshold. However, we rejected this approach because it could result in discriminating against providers and suppliers who may be similarly financially situated but may attribute more of their total revenue to Medicare income. This could occur for example with a home health agency (HHA) which may attribute 100 percent of its revenue to Medicare business and a skilled nursing facility (SNF) which may only attribute 20 percent of its business to Medicare. In addition, the ERS review process is a multivariable financial analysis and it would not be practical or equitable to either the provider/supplier or the Medicare program to reduce the ERS process down to a single variable. We believe keeping the definition of extreme hardship broader than a single variable is in the best interests of the provider and supplier community and is the most effective way to ensure that overpayments will be collected and returned to the Medicare Trust Fund.

Comment: One commenter stated that there is confusion as to why the burden of producing financial documentation can be removed for the “automatic” 6-month ERS but not for ERS plans longer than 6 months.

Response: We removed the financial documentation requirement for 6-month ERSs because the contractor already has the requisite information needed to determine if a provider or supplier meets the statutory hardship test. However, in order to grant an ERS longer than 6 months, we continue to need financial documentation to determine a provider or supplier's ability to make future ERS payments. We also need financial data to determine the length of the ERS or payback period that should be granted to the provider or supplier. While a short ERS may cause a provider or supplier to go out of business, the longer the ERS period the greater the delay in the overpayment recovery and the greater the financial risk to the Medicare program. We believe the increased risk associated with a longer repayment or amortization period requires that we give an ERS request greater financial scrutiny.

Comment: We received comments that were outside the scope of the proposed rule (for example, regarding the effects on State Medicaid programs).

Response: We are not responding in this final rule to comments that are outside of the scope of the proposed rule.

As a result of our review of the public comments, we do not find any cause to alter the provisions of the proposed rule. Therefore, we are finalizing the provisions as proposed.

This final rule does not impose any new information collection or recordkeeping requirements. The information collection requirements discussed in the preamble pertain to the extension of repayment schedules. The requirements and associated paperwork burden are approved under Office of Management and Budget (OMB) control number 0938-0270, with a current expiration date of January 31, 2011.

We plan to submit a revised information collection request (ICR) to OMB to address the reduction of burden associated with the “hardship test” and 6-month ERS period. As discussed in Section I. of the preamble, providers or suppliers that meet the “hardship” test and request only a 6-month ERS period, will have the opportunity to pay back the Medicare debt in 6 months without having to submit financial documentation to the contractor. This new requirement reduces the information collection burden placed on providers and suppliers. We will announce the revisions to 0938-0270 under separate notice and comment periods prior to submitting the revisions for OMB approval.

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), Executive Order 13132 on Federalism, and the Congressional Review Act (5 U.S.C. 804(2)).

Executive Order 12866 (as amended by Executive Order 13258 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 final rule will not reach the economic threshold and thus is not considered a major rule. There will be no additional costs or documented savings resulting from the implementation of this final rule.

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. For purposes of the RFA, approximately 95 percent of the health care industry is 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. Because there are no additional costs or documented savings resulting from the implementation of this rule, the Secretary has determined that this final rule will not have a significant economic impact on a substantial number of small entities.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. Because there are no additional costs or documented savings resulting from the implementation of this final rule, this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act 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 $127 million. This final rule will not impose spending costs on State, local, or tribal governments in the aggregate, or by the private sector, of $127 million.

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

This final rule could affect all Medicare provider and supplier types with a Medicare overpayment. This final rule will allow Medicare providers or suppliers falling within these provisions a 6 month period to pay back debt owed to Medicare without being required to file extensive financial documentation. We believe that this short repayment time period could provide a provider or supplier time to generate or secure the necessary capital to liquidate the debt without having to file the financial documentation required to secure a longer repayment schedule.

There will be no effect on other providers.

There will be no additional costs or documented savings resulting from the implementation of this final rule. There may be savings due to a possible reduction in paperwork.

We considered adopting mathematically precise distinctions between “hardship” and “extreme hardship,” but rejected this approach. To select any type of numerical threshold, for example, defining “extreme hardship” as 15 percent of total overpayments in an effort to distinguish it from the test for “hardship,” will result in inequitable outcomes for different providers and suppliers as discussed in the “extreme hardship” section in section II. of this final rule, Provisions of the Proposed Regulations.

In implementing section 935(a) of the MMA, we want to assure providers and suppliers that we will be looking closely at the financial picture each of them has that has prompted them to seek an ERS. Analyzing these financial profiles is a complex undertaking that does not lend itself to overly simplified numerical cutoffs that may qualify some for longer repayment periods but deny them to others that ought to be just as eligible. We solicited comments on other alternative ways to distinguish between “hardship” and “extreme hardship” in an effort to establish a standardized approach to applying the two definitions.

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

A Medicare beneficiary may obtain covered Medicare items or services from any person, or institution that is enrolled in the Medicare program and is qualified to furnish those services. Various provisions of the statute and regulations establish conditions of participation or standards that a healthcare provider or supplier must meet in order to receive Medicare payment. These standards differ depending on the type of provider or supplier involved and whether the services are furnished under Parts A or B of the Medicare statute. There are also differences in qualifications between providers and suppliers of services, and differences among the various types of suppliers, in how they are enrolled in the Medicare program. For some classifications of providers and suppliers, an on-site survey is required. For other individuals or entities, a determination can be made based largely on the information provided by the applicant.

The Medicare regulations in 42 CFR part 498 provide appeal rights for providers and suppliers that have been found to not meet certain conditions of participation or established standards. For the purposes of part 498, these suppliers include, but are not limited to, independent laboratories; suppliers of portable x-ray services; rural health clinics; federally qualified health centers; ambulatory surgical centers; entities approved by CMS to furnish outpatient diabetes self-management training or end-stage renal disease treatment facilities. For the purposes of part 498, the term “provider” refers to a hospital, critical access hospital (CAH), skilled nursing facility, comprehensive outpatient rehabilitation facility (CORF), home health agency or hospice (HHA), religious nonmedical health care institutions (RNHCIs) that has in effect an agreement to participate in Medicare; or a clinic, rehabilitation agency, or public health agency that has in effect a similar agreement but only to furnish outpatient physical therapy or speech pathology services.

In addition, § 405.874 provides an appeals process for suppliers of DMEPOS that wish to contest a denial of an application for billing privileges or the revocation of existing billing privileges. It also affords DMEPOS suppliers the right to a carrier or Medicare Administrative Contractor (MAC) hearing before an official who was not involved in the original determination, and the right to seek a review before a CMS official designated by the CMS Administrator.

In December 1998, we issued CMS Ruling 98-1, which outlined the appeals process that Medicare carriers must provide to physicians, nonphysician practitioners, and to certain entities that receive reassigned benefits from physicians and nonphysician practitioners. CMS Rulings are decisions of the Administrator that serve as precedent for final opinions and orders and statements of policy and interpretation. They provide clarification and interpretation of complex or ambiguous provisions of statute or regulations relating to Medicare, Medicaid, Utilization and Quality Control Peer Review, private health insurance, and related matters. CMS Rulings are binding on all our components, Medicare contractors, the Provider Reimbursement Review Board, the Medicare Geographic Classification Review Board, and ALJs who hear Medicare appeals. These Rulings promote consistency in interpretation of policy and adjudication of disputes. This final rule is different from the clarification of appeals procedures found in CMS Ruling 98-1, because it adds provisions in order to comply with the MMA. Whereas the ruling followed the procedures in § 405.874, this final rule would grant suppliers the right, after denial or revocation of a supplier's Medicare billing privileges, to a hearing by an ALJ after an adverse decision at the reconsideration level, as well as judicial review.

In the October 25, 1999 Federal Register (64 FR 57431), we published a proposed rule Appeals of Carrier Terminations that a Supplier Fails to Meet the Requirements for Medicare Billing Privileges that would revise § 405.874 by extending appeal rights to all suppliers whose enrollment applications for Medicare billing privileges are disallowed by a carrier or whose Medicare billing privileges are revoked, except for those suppliers covered under existing appeals provisions of our regulations.

Since we did not publish our earlier rulemaking effort within 3 years as required by section 902 of the MMA, we published a new proposed rule on March 2, 2007. This proposed rule included changes mandated by section 936(a) and (b) of the MMA.

In the March 2, 2007 Federal Register (72 FR 9479), we published a proposed rule that set forth standard provider and supplier appeal procedures as established in section 936 of the MMA and proposed certain other provisions associated with Medicare's provider and supplier enrollment process. We proposed to maintain § 405.874, which specifies provisions that would apply to certain suppliers as defined in § 405.802. In § 405.802, we proposed to define prospective supplier and suppliers by specifying the provisions of § 405.874 that would apply. In § 405.874(a), we proposed that if a CMS contractor (that is, a carrier, fiscal intermediary or Medicare administrative contractor (MAC)) denies a supplier's enrollment application, the CMS contractor must notify the supplier by certified mail. The notice must include the following: (1) The reason for the denial in sufficient detail to allow the supplier to understand the nature of its deficiencies; (2) the right to appeal in accordance with part 498; and (3) the address to which the written appeal must be mailed.

In § 405.874(b)(1), we proposed to clarify that if a carrier revokes a supplier's Medicare billing privileges that the carrier must notify the supplier by certified mail and that the notice must include—(1) The reason for the revocation in sufficient detail for the supplier to understand the nature of its deficiencies; (2) the right to appeal in accordance with part 498 of this chapter; (3) the address to which the written appeal must be mailed.

In § 405.874(b)(2), we proposed to separate the procedures in existing § 405.874(a) and § 405.874(b). In § 405.874(b)(2), we proposed clarifying that a revocation of a supplier billing privileges that is based on a Federal exclusion or debarment is effective with the effective date of the exclusion or debarment, regardless of the date of the notice from the carrier that the billing privileges are revoked. Moreover, if CMS, or one of its designated contractors revokes Medicare billing privileges, we would not revoke an individual or organization's National Provider Identifier (NPI).

In § 405.874(b)(3), we proposed clarifying that suppliers are not paid for items or services furnished during a period in which a supplier does not have billing privileges or its billing privileges have been revoked. Concerning DMEPOS suppliers, section 1834(j)(1) of the Social Security Act (the Act) states that, with the exception of medical equipment and supplies furnished incident to a physician's service, no payment may be made by Medicare for items and supplies unless the supplier has active Medicare billing privileges. We further proposed that claims submitted to CMS contractors for items or services furnished during a period of supplier ineligibility are to be rejected by the CMS contractor, not denied.

In § 405.874(c)(1), we proposed that a supplier's appeal rights would follow the processes detailed in part 498. In § 405.874(d), we proposed to revise this section to reflect that claims for services furnished to Medicare beneficiaries during a period in which the supplier's billing privileges were not effective are rejected and not denied. If a provider or supplier is determined not to have qualified for billing privileges in one period but qualified in another, contractors process claims for services furnished to beneficiaries during the period for which the provider or supplier was Medicare-qualified. Subpart C of this part sets forth the requirements for recovery of overpayments. The appeals process for denied claims should not apply if a provider or supplier does not have billing privileges.

In § 405.874(d)(3), we proposed if a revocation of a provider's or supplier's billing privileges is reversed upon appeal, the provider's or supplier's billing privileges are reinstated back to the date that the revocation became effective.

In § 405.874(d)(4), we proposed that if a denial of a provider's or supplier's billing privileges is reversed upon appeal, then the appeal decision establishes the date that the provider's or supplier's billing privileges will become effective.

In § 405.874(e), we proposed that if a provider or supplier completes a corrective action plan and provides sufficient evidence to the CMS contractor that it has complied fully with Medicare requirements, the CMS contractor may reinstate the supplier's billing privileges.

In § 405.874(f), we proposed revising the effective date for DMEPOS supplier's billing privileges. If a carrier, carrier hearing officer, or ALJ determines that a DMEPOS supplier's denied enrollment application meets the standards in § 424.57 of this chapter and any other requirements that may apply (for example, reinstatement after an OIG exclusion), the determination establishes the effective date of the billing privileges as not earlier than the date the CMS contractor made the determination to deny the supplier's enrollment application. Claims are rejected for services furnished before that effective date.

In § 405.874(g), we proposed that a provider or supplier succeeding in having its enrollment application denial or billing privileges revocation reversed, or in having its billing privileges reinstated, may submit claims to the CMS contractor for services furnished during periods of Medicare qualification, subject to the limitations in § 424.44 of this chapter, regarding the timely filing of claims.

In § 405.874(h), we proposed establishing deadlines for the adjudication of provider enrollment actions. We proposed that contractors adjudicate initial determinations and revalidations within 180 days of receipt and carriers adjudicate change-of-information and reassignment of payment request within 90 days of receipt. In addition, we proposed to establish timeframes for each administrative level of appeal. The following table identifies who makes the determinations and the associated timeframes in which each determination is made.

In § 424.510(d)(2)(iv), we proposed that at the time of enrollment, an enrollment change request or revalidation, providers and suppliers shall submit the CMS-588 form to receive payments via electronic funds transfer.

In § 424.545(a), we proposed the following:

• Redesignating the first sentence of current paragraph (a) as the introductory text and revising that text to remove the reference to part 405 subpart H.

• Redesignating the second sentence of current paragraph (a) as paragraph (a)(1)(i).

• Adding paragraph (a)(1)(ii) to clarify that if a provider appeals both of these sanctions, then both matters will be resolved using a single appeals process.

• Redesignating the last sentence of current paragraph (a) as paragraph (a)(2).

In § 424.525(a)(1) and (a)(2), we proposed potential reasons for rejecting enrollment applications by reducing the amount of time that a provider or supplier must furnish complete information requested by a contractor from 60 to 30 days. Additionally, we proposed a reduction from 60 to 30 days for the period allowed to furnish all supporting documentation for submitting their enrollment application.

We proposed rejecting an application that is submitted by a provider or supplier if it is incomplete or if it fails to include all required supporting documentation on the enrollment application within 30 days of receipt.

In § 424.535(a)(8), we proposed allowing Medicare FFS contractors, under the direction of CMS, to revoke Medicare billing privileges when a provider or supplier submits a claim or claims for services that could not have been furnished to a beneficiary.

In § 424.535(b)(2), we proposed a timeframe to wait for reapplication to the Medicare program when a provider or supplier is revoked. Specifically, we proposed that when a provider or supplier, including all authorized officials, delegating officials and practitioners, is revoked for any of the reasons listed at § 424.535 that the provider, supplier, delegated official or authorizing official be prohibited from enrolling for 3 years.

In § 498.1(g), we proposed to establish an ALJ hearing, and judicial review for any provider or supplier whose application for enrollment or reenrollment in Medicare has been denied.

In § 498.2, we proposed revising the definition of a “supplier” to—(1) Include a supplier of DMEPOS; ambulance service provider; independent diagnostic testing facility; physician; and other practitioner such as physician assistant; and (2) remove the reference to “prospective supplier.”

In § 498.2, we proposed adding a new definition for “prospective supplier.”

We also proposed removing the definition of the “Office of Hearings and Appeals (OHA)” because the function of this office has been moved from the Social Security Administration to the DHHS. We also proposed to revise the definition of “affected party” to specify that it includes CMS or a CMS contractor.

In § 498.5, we proposed revising this section by adding a new paragraph (l) that would be used to clarify the administrative process that a prospective provider, existing provider, prospective supplier or existing supplier dissatisfied with an initial determination or revised initial determination related to the denial or revocation of Medicare billing privileges.

We proposed revising § 498.5(f)(2) to be consistent with the change in § 498.1(g). This would implement the mandate of section 936(a)(2) of the MMA regarding judicial review. We proposed these standards because the FFS contractors need sufficient time to adjudicate the facts and make a reasoned decision. Moreover, while we are establishing an outside limit for processing these applications, the vast majority of these decisions are made within 120 days.

We proposed revising § 498.22(a) to add that we have delegated authority to our contractors to reconsider an initial determination. We also proposed revising § 498.22(b)(1) to state that a reconsideration request is to be filed with CMS or with the State survey agency, or, in the case of prospective suppliers, the entity specified in the notice of initial determination.

We proposed revising § 498.44 to remove the term Associate Commissioner for Hearings and Appeals, and we replaced it with the Secretary, because this function is no longer under the Social Security Administration; it is now under the Department of Health and Human Services.

In § 405.874(c)(2), we proposed clarifying that a provider or supplier is required to prove that it is in compliance with all Medicare requirements for billing privileges, and that the Medicare FFS contractor incorrectly denied or revoked the supplier's billing privileges. In § 498.56, we proposed adding a new paragraph (e) that specifies the “good cause” exception to the admission of new evidence at the ALJ and DAB appeal levels. Accordingly, we proposed revising § 498.56 and § 498.86 to prohibit providers and suppliers from submitting new provider enrollment issues or evidence at the ALJ and DAB levels of review.

In § 498.78(a), we proposed to delete the provision that an affected party concur in writing or on the record with a CMS or Department of Health and Human Services Office of Inspector General (OIG) request for remand. We believe that the appeals process can be enhanced by allowing an ALJ to remand a provider enrollment case to the Medicare FFS contractor when CMS requests a remand. Further, we believe that a remand request could result in either a favorable decision to the appellant or an administrative record that is complete.

In § 498.79, we proposed that an ALJ must issue a decision, dismissal order or remand to CMS, as appropriate, no later than 180 days after the initial request for a hearing.

Finally, in § 498.88(g), we proposed that the Board must issue a decision, dismissal order or remand to the ALJ, as appropriate, no later than 180 days after the appeal was received by the Board.

We received approximately 30 comments in response to the March 2, 2007 proposed rule. The following is a summary of the comments received and our responses.

Comment: Several commenters recommended that we clarify whether the provisions of the proposed rule apply to all providers and suppliers.

Response: The provisions of the proposed and this final rule apply to all the providers and suppliers described in the § 405.802 or § 498.2. Therefore, in response to comments received, we are adding definitions for “prospective supplier” and “prospective provider” to § 405.802 and § 498.2. Since applicants (prospective provider and suppliers) who are not enrolled in the Medicare program still are afforded appeal rights based on an enrollment denial, we maintain that it is important to clarify that any prospective applicant (provider or supplier) is afforded appeal rights through this process.

Comment: One commenter recommended that we separately define “prospective provider” and modify the definition of provider accordingly.

Response: We agree with the commenter's recommendations and have included a definition of “prospective provider” in § 405.802 and 498.2 and have revised the definition of “provider” at § 405.802 and § 498.2.

Comment: One commenter suggested that we change the definition of supplier to include occupational therapists in private practice.

Response: This comment falls outside the scope of the proposed rule. Therefore, we believe it would be inappropriate for us to address this comment in this final rule.

Comment: Several commenters recommended that we clarify whether a provider or supplier who uses a corrective action plan (CAP) is precluded from also appealing the contractor, carrier, MAC, or FI decision.

Response: A CAP is the plan that allows a provider or supplier an opportunity to correct deficiencies (if possible) that resulted in a denial or revocation of billing privileges. The CAP should provide evidence that the provider or supplier is in compliance with Medicare enrollment requirements. A provider or supplier that uses a CAP is not precluded from also appealing the FFS contractor's (that is in a MAC, FI, or carrier) decision. The Medicare FFS contractor, including the National Supplier Clearinghouse (NSC), will accept the submission of a corrective action plan for revoked billing privileges if the corrective action plan is submitted within 15 days from the date of the notice for DMEPOS suppliers or within 30 days from the date of the notice for all other providers and suppliers.

Comment: Several commenters recommended that we clarify that an independent contractor hearing officer will conduct the reconsideration of an adverse enrollment decision.

Response: For the purpose of this final rule, the term an independent contractor hearing officer means that a reconsideration will be handled by a hearing officer not involved in the initial determination. We believe this will ensure that the appellant receives a fair and impartial reconsideration. It is also important to note that while the claims appeals process uses a “qualified independent contractor” to conduct reviews, the provider enrollment appeals process does not use a “qualified independent contractor.”

Comment: Several commenters recommended that we clarify when a provider or supplier may resubmit a new initial enrollment application after an enrollment denial.

Response: Since the denial of enrollment application conveys appeal rights, a provider or supplier cannot resubmit a new initial enrollment application until after the 60 day appeal period has ended. This will ensure that the Medicare contractor is not processing an initial application during the timely filing period of an appeal. In addition, if a provider or supplier submits a new initial enrollment application during the timely appeals filing period, the Medicare contractor will return the application to the applicant.

Comment: One commenter recommended that we change our proposed language concerning a remand by an ALJ to specify that CMS does not have authority to request a remand when the Agency is also a party to an ALJ proceeding.

Response: We believe that we should have all the rights afforded to an appellant. Further, by allowing CMS to request a remand, we believe that the designated contractor or CMS Regional Office will be able to review or re-examine the administrative record to update or provide documentation to establish a complete administrative record. By doing so, we believe higher levels of appeal will have the information needed to effectuate a timely decision. Therefore, we do not agree with the commenter's recommendation to revise the language to prohibit our authority to request a remand.

Comment: One commenter recommended that we adopt a 45-day time period for adjudication of ALJ and DAB decisions.

Response: We believe that a 45-day time period is not practical. While we understand the desire to establish an efficient appeals process, we are adopting similar time frames as had been established for deciding a claims appeal before an ALJ or DAB (see § 405.1016(c)). As stated previously, the early presentation of evidence will allow the contractor hearing officer or the CMS Regional Office to make decisions using all relevant facts as applied to the appeal. In doing so, the hearing officer or regional office will issue their findings to establish a complete administrative record for the future appeal levels. We believe that a complete administrative record will help facilitate decision making at higher levels of appeal.

Comment: Several commenters stated that a reconsideration is an unnecessary delay in the appeals process, and that applicants should be able to appeal directly to an ALJ.

Response: We determined that the most effective way to implement the requirements of section 936(j)(2) of the MMA was to amend the existing appeals procedures in part 498. The appeals procedures under part 498 include reconsideration as a level of review before an appeal is made to an ALJ. We believe that the reconsideration level provides an additional opportunity for the matter to be resolved prior to the filing of an appeal to an ALJ.

Comment: One commenter requested clarification of § 405.874(c)(2), which discussed the reconsideration of a determination to deny or revoke a provider or supplier's Medicare billing privileges.

Response: The reconsideration of a determination to deny or revoke a provider or supplier's Medicare billing privileges will be handled by a carrier hearing officer not involved in the initial determination or a CMS Regional Office for a Part A determination.

There are distinct appeals provisions for claims processing and provider enrollment. While the claims process uses claims determination and qualified independent contractors (QICs) as part of the appeals process, the provider enrollment process does not. The first level of appeal of adverse actions is to either a contractor hearing officer for noncertified suppliers or to the CMS Regional Office for certified providers or suppliers. Subsequently, appellants may appeal adverse provider enrollment determinations by a hearing officer or regional office to an ALJ, then the DAB, and then to Federal District Court.

Comment: One commenter recommended that § 498.86(a) concerning evidence admissible on review by the DAB, adopt and follow the good cause exception set forth in proposed § 498.56(e) for ALJ proceedings.

Response: By the time the DAB hears the provider enrollment appeal, the applicant has been afforded ample opportunity to submit any evidence germane to the adverse determination. Accordingly, we do not believe it is efficient or administratively effective to establish a “good cause” provision within the language at § 498.86(a).

Comment: While we received a number of comments supporting our proposal to prohibit providers and suppliers from submitting new evidence during the ALJ and DAB levels of appeal, several commenters stated they were opposed to this proposal.

Response: Consistent with the provisions of our April 21, 2006 final rule titled “Requirements for Establishing and Maintaining Medicare Billing Privileges and Provider Enrollment Process” (71 FR 20754), we believe all providers and suppliers must meet and maintain all Federal and State requirements for their provider or supplier type to enroll or maintain their enrollment in the Medicare Program.

When a Medicare contractor makes an adverse enrollment determination (for example, enrollment denial or revocation of billing privileges), providers and suppliers are afforded appeal rights. However, these appeal rights are limited to provider or supplier eligibility at the time the Medicare contractor made the adverse determination. Thus, if a Medicare contractor determines that a provider or supplier does not meet State licensure requirements on June 1, 2007, it is the provider's responsibility to demonstrate during the appeals process that State licensure requirements were met on June 1, 2007. Conversely, if a provider only can demonstrate that State licensure requirements were met on a later date; such as, August 16, 2007, we believe that the contractor made the correct determination, and that the provider or supplier may reapply for Medicare billing privileges. Accordingly, a provider or supplier is required to furnish the evidence that demonstrates that the Medicare contractor made an error at the time an adverse determination was made, not that the provider or supplier is now in compliance. Thus, we believe that it is essential that providers and suppliers submit documentation that supports their eligibility to participate in the Medicare program during the reconsideration step of the provider enrollment appeals process. This will allow a hearing officer to review and make a decision using all applicable facts. Moreover, the early presentation of evidence will help to ensure an efficient and effective administrative appeals process.

Finally, in order to expedite the provider enrollment appeals process, we believe that applicants must present all relevant facts and supporting documentation prior to or during the first level of appeal (that is, reconsideration). This will enable a contractor hearing officer or the CMS Regional Office personnel to review and make a determination based on all available facts. Moreover, the early presentation of facts and supporting documentation can be used to build the administrative record and help facilitate timely decisions at higher levels of appeals.

Comment: One commenter suggested that we continue to follow the existing ALJ and DAB procedures in part 498 to allow for consideration and for submission of additional evidence related to a provider or supplier enrollment appeal after the initial information is submitted.

Response: As stated previously in this final rule, in order to expedite the provider enrollment appeals process, we believe that applicants must present all relevant facts and supporting documentation prior to or during the first level of appeal (that is, reconsideration). This will enable a contractor hearing officer or the CMS Regional Office personnel to review and make a determination based on all available facts. Moreover, the early presentation of facts and supporting documentation can be used to build the administrative record and help facilitate timely decisions at higher levels of appeals.

Comment: Several commenters stated that we used the terms “billing number” and “billing privileges” interchangeably in the proposed rule and that caused confusion.

Response: We appreciate these comments and will revise the final rule to use the term “billing privileges” throughout. With the implementation of the National Provider Identifier on May 23, 2008, Medicare will no longer issue a billing number to providers and suppliers, but will, in fact, convey billing privileges to a provider or supplier if they meet and maintain all Federal and/or State requirements to enroll or remain enrolled in the Medicare program.

Comment: Several commenters recommended that physicians be allowed to appeal rejected claims once Medicare billing privileges are granted.

Response: Physicians, as well as providers and other suppliers, are required to enroll in the Medicare program before submitting a Medicare claim. Accordingly, if a claim is rejected because the physician is not enrolled, a physician must resubmit the claims after he or she is enrolled in the Medicare program in compliance with Medicare's provision for timely filing (§ 424.44).

Comment: One commenter recommended that we not require the submission of the Electronic Funds Transfer Authorization Agreement (EFT) form (CMS-588) if a provider or supplier is already receiving payments electronically.

Response: We agree with this commenter. We believe an enrolled provider or supplier who is already receiving Medicare payments electronically is not required to submit the CMS-588 with a change in enrollment unless the provider or supplier is seeking to change its depository information.

Comment: Several commenters recommended that we address concerns regarding operational issues associated with the requirement to obtain payments electronically. Specifically, these commenters recommended that we address in this final rule the practice of reversing entry procedures where we may overpay the provider or supplier and then later reclaim that overpayment.

Response: We appreciate this comment and understand this concern; however, this issue is outside the scope of the proposed rule.

Comment: Several commenters stated that the provisions of this rule eliminated a physician's right to retroactively bill for services as is the current practice for some physicians.

Response: This rule did not propose a change in the current provisions regarding retroactive billing; therefore, we believe this comment is outside the scope of the proposed rule.

Comment: Several commenters supported our proposal to reduce from 60 to 30 days for information required to process an enrollment application, and they wanted to know if they could retroactively apply the provision to pending inventories.

Response: We appreciate the support for our proposal to reduce the time allotted to produce the necessary documentation to process enrollment applications from 60 days to 30 days before allowing a contractor to reject an enrollment application. However, we will prohibit our contractors from retroactively applying this change to pending inventories. Accordingly, any applications received after the effective date of this final rule will be subject to its provisions.

Comment: Several commenters recommended that we not reduce the amount of time providers or suppliers have to respond to a request from Medicare FFS contractor, (that is, carrier, FI, or MAC) for additional information from 60 days to 30 days as proposed in § 425.525(a)(2).

Response: We continue to believe that it is essential that providers and suppliers submit a complete application, including all supporting documentation, at the time of filing or at a minimum, respond to a contractor's request for information in a timely manner. Accordingly, absent the submission of a complete application, we believe that it is appropriate that providers and suppliers respond to a contractor's request for additional information in a timely manner. We believe that allowing a provider or supplier 30 days is more than enough time to obtain and submit the requested information or documentation. Finally, we believe that this change will lead to processing efficiencies for not only the Medicare program but also for those providers and suppliers who seek to enroll or make a change in their existing Medicare enrollment information.

Comment: One commenter requested that we clarify our requirement for furnishing requested enrollment documentation with respect to the 30-day timeframe before the rejection of an enrollment application.

Response: We believe that a contractor may reject the provider or supplier's enrollment application if the provider or supplier fails to respond to a request for information in a complete and timely manner (that is, within 30 days of the contractor request for additional information.)

For example, assume that an applicant submits an enrollment application on May 1, 2008. While processing the enrollment application the contractor determines that the applicant did not complete section 3 of the application and did not submit the required supporting documentation to receive payments electronically. On May 16, 2008, the contractor notifies the applicant about the missing documentation. Assuming that the applicant does not submit all requested information by June 15, 2008 (that is, 30 days from the contractor request), the contractor may reject the application.

Comment: Several commenters stated that the proposed enrollment application processing timeframes stated in proposed § 405.874(h) were too long and would inhibit suppliers from enrolling or re-enrolling in the Medicare Program.

Response: We are also concerned about delays associated with the enrollment process. However, we recognize that many of the delays are the result of providers and suppliers not submitting a complete application at the time of filing or failing to submit complete and timely responses to a contractor's request for information.

In addition, we believe that it is appropriate to establish meaningful Medicare contractor processing timeliness standards and, as necessary, update or revise processing standards through the manual instructions and through contracts with Medicare contractors. Finally, while this final rule establishes an outer boundary for processing enrollment application, we fully expect that most enrollment applications will be processed in accordance with CMS processing requirements found in Publication 100-8, Chapter 10 of the Program Integrity Manual (PIM). The PIM establishes processing standards for initial applications, changes of information, and reassignments that all Medicare contractors must follow. Specifically, we currently require Medicare contractors to process 80 percent of initial applications within 60 days, 90 percent of initial applications within 120 days, and 99 percent of initial applications within 180 days. We also require Medicare contractors to process 80 percent of changes of information and reassignments within 45 days, 90 percent of changes of information and reassignments within 60 days and 99 percent of such applications within 90 calendar days of receipt.

With the implementation of the Provider Enrollment, Chain and Ownership System (PECOS) Web, an Internet version of the Medicare enrollment process, in FY 2008, we have established more stringent contractor processing timeliness standards for applications for enrollment submitted via PECOS Web. On January 4, 2008, we revised the processing requirements in Publication 100-8, Section 2, Chapter 10 of the PIM to establish the following processing requirements for PECOS Web applications:

Specifically, we will require Medicare contractors to process 90 percent of initial applications within 45 days, 95 percent of initial applications within 60 days, and 99 percent of initial applications within 90 days. We also require Medicare contractors to process 80 percent of changes of information and reassignments within 45 days, 90 percent of changes of information and reassignments within 60 days and 99 percent of such applications within 90 calendar days of receipt.

Since PECOS Web will improve the accuracy of applications submitted to contractors and reduce the time necessary to receive, verify and make a final determination regarding an enrollment action, we believe that the public should benefit from these processing efficiencies. Accordingly, we maintain that establishing a separate processing time standard for applications submitted via PECOS Web is appropriate.

Comment: Several commenters raised concerns as to whether we will be changing the processing standards to non-tiered percentages for processing initial applications (including revalidations), as well as with regard to changes of information (including reassignments not submitted in conjunction with an initial enrollment package).

Response: While we will maintain a tiered system we are establishing an outer boundary for the number of days for processing Medicare enrollment applications in this final rule, we will maintain more specific processing standards in Chapter 10 of the PIM.

Comment: One commenter asked if the proposed regulation will change the processing standard found in Section 2 of Chapter 10 of the PIM.

Response: This final rule does not change the provider enrollment processing standards found in Section 2 of Chapter 10 of the PIM.

Comment: One commenter agreed with the 30-day timeframe for submitting supporting information as long as our contractors are required to follow this same timeframe for processing enrollment applications.

Response: While we are proposing an outside limit of 180 days for processing applications, we have established shorter processing timeframes in manual guidance which must be adhered to by CMS contractors. However, we believe that 30 days does not provide contractors with sufficient time to process all enrollment applications. While we believe in holding contractors responsible for meeting our defined processing standards, it is essential that providers and suppliers submit a complete application at the time of filing in order to lessen processing timeframes.

Comment: One commenter asked for clarifications as to whether the 90-day timeframe requirement for change of information and reassignment of payment requests submitted applies to both fiscal intermediaries, as well as carriers.

Response: The 90-day processing standard applies to changes in information submitted to a fiscal intermediary/MAC or a change of information or reassignment submitted to a carrier/MAC. Therefore, § 405.874(h)(3) applies to both providers and suppliers. We note that DMEPOS suppliers are required to submit changes in information to the NSC within 30 days of the changes as specified in § 424.57(c)(2).

Comment: One commenter recommended that we allow academic medical centers to submit enrollment applications at least 6 months in advance of a physician's start date.

Response: By submitting a complete enrollment application and all supporting documentation at the time of filing, a physician can efficiently enroll in the Medicare program. Additionally, with the implementation of PECOS Web, we believe that physicians will be able to enroll in a more efficient manner. Finally, since we require our contractors to verify the information provided in the enrollment application, and this cannot be accomplished if the physician is not yet working at the academic medical center, we are not able to adopt this recommendation.

Comment: One commenter suggested that the 180-day processing time for enrollment decisions was not workable for providers undergoing a change of ownership (CHOW) as specified in § 489.18.

Response: Since Medicare contractors can only process applications that are complete at the time of filing and have the necessary supporting documentation, it is essential that CHOWs are complete when submitted. When completed applications are submitted, Medicare contractors will encounter fewer obstacles in processing an application. While we are establishing an outside processing timeframe in this rule, we have established more stringent processing requirements in the manual. We recognize the importance of processing CHOWs in a timely manner and will continue to establish processing standards in the manual which seek to ensure continuity of payment.

Comment: While several commenters offered support for our proposal in § 424.535 to preclude provider or supplier billing for a period of 3 years after Medicare billing privileges are revoked, several commenters stated that a 3-year ban is too long.

Response: We agree that Medicare contractors should consider the reason associated with revocation before determining whether the contractor should establish a re-enrollment bar for a provider or supplier. The goal of the re-enrollment bar is to ensure that Medicare billing privileges are given to trustworthy providers and suppliers. Consequently, if a Medicare contractor determines that a provider's or supplier's Medicare billing privileges should be revoked, then we believe that establishing an enrollment bar is appropriate. We will provide contractors with guidance on the establishment of an enrollment bar via manual instructions. With this guidance, we believe that the contractor has discretion to establish a re-enrollment bar from 1 to 3 years depending on the severity of the basis for revocation. For example, failure to respond to revalidation request may warrant a 1-year ban whereas failure to report an adverse legal action that could preclude payment would warrant a 3-year ban.

In addition, if a contractor makes a decision to revoke Medicare billing privileges, we believe that the duration of the re-enrollment bar should not be less than 1 year. Finally, while we believe that providers and suppliers can appeal the revocation determination, we do not believe that providers and suppliers can appeal the duration of the re-enrollment bar for Medicare billing privilege. We also believe that providers and suppliers have an obligation to maintain their billing privileges and to report changes that would preclude enrollment or continued enrollment in accordance with § 410.33(g), § 424.57(c)(2), and § 424.520(b). In addition, we believe that establishing a re-enrollment bar for Medicare billing privileges that have been revoked will help protect the Medicare Trust Funds, and beneficiaries from potentially unqualified providers and suppliers.

Comment: One commenter stated that the 3-year waiting period in proposed § 424.502 was a punitive action and is not within our legal authority, and that only the OIG has been granted legal authority to exclude individuals and entities from the Medicare program.

Response: We believe that we have the obligation to protect the Medicare Trust Funds when billing privileges are revoked. We believe providers and suppliers whose billing privileges are revoked should be prevented from immediately re-entering the program. Accordingly, we believe that establishing a re-enrollment bar is appropriate and within our authority. Unlike OIG exclusions which apply government-wide and which generally last for 5 years or longer, the re-enrollment bar only applies to those billing the Medicare program.

Comment: Several commenters recommended that we do not revoke a physician's billing privileges for 3 years because the physician did not respond to a revalidation request.

Response: In the April 21, 2006 final rule, providers and suppliers learned about our intent to begin a revalidation process. Specifically, § 424.515 states that a provider or supplier (other than a DMEPOS supplier), must resubmit and recertify the accuracy of its enrollment information every 5 years. Therefore, providers and suppliers that enrolled in the Medicare program prior to 2003, but who have not completed a Medicare enrollment application since then, have had more than 2 years to come into voluntary compliance with our enrollment criteria by submitting a complete enrollment application. With this final rule, we are again notifying physicians, providers, and suppliers that they may voluntarily complete and submit a Medicare enrollment application and the necessary supporting documentation prior to our formal request for revalidation. Accordingly, providers and suppliers who choose not to come into voluntary compliance or fail to respond to a revalidation request in a complete and timely manner fail to satisfy our enrollment criteria and may be subject to revocation of their billing privileges.

Comment: Several commenters recommended that we allow providers and suppliers to participate in the Medicare program if their revocation is successfully overturned at a higher level of appeal.

Response: Section 405.874(d)(3) states a provider or supplier's billing privileges will be reinstated back to the date that their revocation became effective if it was reversed at a higher level of appeal.

Comment: Several commenters recommended that we clarify that the period of provider or supplier ineligibility be linked to the date on which the supplier had provided a service to a beneficiary and not the date that a claim would be received or processed by a carrier.

Response: We are clarifying that this is our intent. Revocation actions concerning provider and supplier ineligibility are based upon the date on which the provider or supplier had furnished a service to a beneficiary and not the date that a claim was received or processed by a carrier or MAC.

For example, if a provider submits a claim for services provided on June 22, 2007, and the beneficiary dies on June 23, 2007, but the claim for the June 22, 2007 services was not received until August 1, 2007, if any action is taken regarding this claim, it would be with regard to the June 22, 2007 date.

Comment: One commenter suggested that there are several instances where the date of service being billed could actually be the day after the date of death and that an honest billing of the service could be perceived as fraud, and therefore cause a provider or supplier to be incorrectly revoked.

Response: We understand that there are certain situations when the date of service may legitimately be the day after the date of death of the beneficiary. Accordingly, Medicare contractors and CMS will review the specific details associated with each claim before taking any revocation action.

Comment: We received several comments regarding implementation of the proposed changes to be set forth at § 424.535(a)(8) which allows Medicare contractors to revoke Medicare billing privileges when a provider or supplier submits a claim or claims for services that could not have been furnished to a beneficiary, where the commenter believed there was not enough guidance given to the contractors to filter these claims which could cause overburdened contractors to implement this policy too widely.

Response: CMS, not a Medicare contractor, will make the determination for revocation under the authority at § 424.535(a)(8). We will direct contractors to use this basis of revocation after identifying providers or suppliers that have these billing issues. We have found numerous examples of situations where a physician claims to have furnished a service to a beneficiary more than a month after their recorded death, or when the provider or supplier was out of State when the supposed services had been furnished. In these instances, the provider has billed the Medicare program for services which were not provided and has submitted Medicare claims for service to a beneficiary who could not have received the service which was billed. This revocation authority is not intended to be used for isolated occurrences or accidental billing errors. Rather, this basis for revocation is directed at providers and suppliers who are engaging in a pattern of improper billing.

In making a revocation determination under § 424.535(a)(8), we will make the revocation determination based upon information presented by a Medicare contractor, a CMS Regional Office, or one of our Program Integrity field offices. We believe that it is both appropriate and necessary that we have the ability to revoke billing privileges when services could not have been furnished by a provider or supplier. We recognize the impact that this revocation has, and a revocation will not be issued unless sufficient evidence demonstrates abusive billing patterns. Accordingly, we will not revoke billing privileges under § 424.535(a)(8) unless there are multiple instances, at least three, where abusive billing practices have taken place. Furthermore, providers and suppliers may appeal a contractor revocation using the process outlined in part 498 if they believe that they were unduly revoked. In conclusion, we believe that providers and suppliers are responsible for the claims they submit or the claims submitted on their behalf. We believe that it is essential that providers and suppliers take the necessary steps to ensure they are billing appropriately for services furnished to Medicare beneficiaries.

Comment: Several commenters believed that contractors would be issuing revocations based upon the submission of claims for services that could not be delivered.

Response: As stated above, we will instruct Medicare contractors to issue a revocation under § 424.535(a)(8).

Comment: One commenter suggested several procedural changes regarding the processing of enrollment applications; such as, withdrawing an application and reopening a closed enrollment decision, be included in this regulation as opposed to our original procedural proposals.

Response: As outlined in § 424.510, the current enrollment application procedures allow providers and suppliers a clear means to complete and submit enrollment applications with the necessary documentation to participate in the Medicare program. Prospective providers or suppliers are responsible for obtaining the necessary documentation that demonstrates that they meet the program requirements for their provider or supplier type. If a provider or supplier cannot supply the necessary documentation at the time of filing or in response to a contractor request, then the contractor is required to reject their application and the prospective provider or supplier must begin the enrollment process anew. Finally, a prospective provider or supplier may withdraw their Medicare enrollment application at any time by informing the designated contractor in writing of the withdrawal of the application. A withdrawal request must be made by the applicant or the Authorized Official as defined in § 424.502 and in the Medicare enrollment application (CMS-855).

Unlike the claims appeals process where minor errors and omissions can be resolved though the reopening process in an effective and efficient manner, the issues involved in Provider Enrollment denials and revocations do not readily lend themselves to the reopening process. Accordingly, we have not adopted a reopening procedure in this final rule.

Comment: One commenter recommended that we revise our 2002 “Do Not Forward” policy because of the change in processing timeframes for enrollment applications.

Response: We believe this issue is outside the scope of the proposed rule and can not be addressed in this final rule.

Comment: One commenter recommended that if we make a change in the Medicare enrollment application that we use the processing guidelines in effect at the time of the postmark date so that the application will be treated as submitted prior to the implementation date.

Response: If we make a change in the Medicare enrollment application in the future, we will establish a transition period between the use of the prior version of the application and the new version of the application.

Comment: One commenter stated that electronic funds transfer (EFT) should be developed in concert with the CMS-855 transaction standard to ensure that there is a clear connection between the two files.

Response: We believe this issue is outside the scope of the proposed rule and can not be addressed in this final rule.

Comment: One commenter urged us to clarify that the reassignment exception still exists with regard to EFT which currently exempts individuals reassigning their benefits to a group practice from the EFT requirement.

Response: Individuals reassigning all of their benefits to a group practice are still exempt from the EFT requirement. We will update its manuals to state that only individuals and organizations receiving payments directly must receive them through EFT.

Comment: One commenter suggested that we consult with hospital-based faculty practices to determine the best way to implement EFT in this particular setting.

Response: We will continue to conduct outreach efforts to ensure that all providers and suppliers are informed about EFT policies.

Comment: One commenter recommended that adequate notification and education be provided to all who have chosen or are required to accept funds via EFT.

Response: We will continue to conduct outreach efforts to ensure that all providers and suppliers are informed about EFT policies. We believe this issue is outside the scope of the proposed rule and can not be addressed in this final rule.

Comment: One commenter recommended that notice of precertification completion be provided to group practices prior to the payment of funds via EFT.

Response: We believe this issue is outside the scope of the proposed rule and can not be addressed in this final rule.

Comment: One commenter stated we should not terminate a provider agreement when billing privileges are revoked.

Response: In the April 21, 2006 final rule, we stated in § 424.545(a) that the termination of both the provider agreement and billing privileges will happen concurrently. Accordingly, we believe that a provider cannot retain a provider agreement if its billing privileges have been revoked.

Comment: One commenter suggested that we amend the definition of supplier because they believed that the term ambulance service provider may not include suppliers of ambulance services.

Response: While we are not adopting this recommendation, we clarify in section IV. of this final rule (Provisions of the Final Regulation) that an ambulance service provider includes all providers and suppliers of ambulance services.

Comment: One commenter recommended that we conduct increased outreach and education efforts for providers, suppliers and contractor enrollment staff.

Response: We will undertake the necessary steps to ensure that our contractors understand these new provisions and apply them consistently. In addition to publishing this final rule, we will issue operational guidance to our Medicare contractors.

Based on public comments, we are adopting the provisions of the proposed rule as final with the following changes: We are amending the provisions of this final rule to apply to all providers and suppliers, including DMEPOS suppliers.

In § 405.802, we have added a definition of prospective provider.

In § 405.874(a), we amended the proposed language and adopted the provision that if a carrier, fiscal intermediary, National Supplier Clearinghouse (NSC) or MAC denies a provider's or supplier's enrollment application, then the carrier, fiscal intermediary, NSC or MAC must notify the provider or supplier by mail. The notice must include the following: (1) The reason for denial in sufficient detail to allow the provider or supplier to understand the nature of its deficiencies; (2) the right to appeal in accordance with part 498; and (3) the address to which the written appeal must be mailed.

In § 405.874(b)(1), we adopted the provision which clarified that if CMS or a CMS contractor, (that is, a carrier, fiscal intermediary, NSC or MAC) revokes a provider's or supplier's Medicare billing privileges, then CMS or its contractor must notify the provider or supplier by mail and that the notice must include—(1) The reason for the revocation in sufficient detail for the provider or supplier to understand the nature of its deficiencies; (2) the right to appeal in accordance with part 498 of this chapter; (3) the address to which the written appeal must be mailed.

In § 405.874(b)(2), we adopted the provision to separate the procedures in existing § 405.874(a) and § 405.874(b). In addition, we adopted the provision clarifying that a revocation of provider's or supplier's billing privileges that is based on a Federal exclusion or debarment is effective with the effective date of the exclusion or debarment. Moreover, if CMS or a CMS contractor revokes Medicare billing privileges, then we would not revoke an individual or organization's National Provider Identifier (NPI).

In § 405.874(b)(3), we modified our proposed provision to clarify that providers and suppliers are not paid for items or services furnished after the effective date of revocation. We removed proposed § 405.874(b)(3)(i) because it was not applicable to revocation of billing privileges. Concerning DMEPOS suppliers, section 1834(j)(1) of the Act states that, with the exception of medical equipment and supplies furnished incident to a physician's service, no payment may be made by Medicare for items and supplies unless the supplier has active Medicare billing privileges. We also adopted the provision that claims submitted to carriers, fiscal intermediaries, NSC or MACs for items or services furnished during a period of provider or supplier ineligibility are to be rejected by the carrier or fiscal intermediary and not denied.

In § 405.874(c)(1), we adopted the provision that a provider's or supplier's appeal rights would follow the processes detailed in part 498. Generally denials or revocations issued by a fiscal intermediary would be handled by a CMS regional office (RO), and denials and revocations by carriers, including the NSC, would be handled by a carrier hearing officer. In those cases where a MAC issues a denial or revocation, the reconsideration would be handled by the CMS RO or a contractor hearing officer depending upon the provider or supplier type. The CMS RO's will generally be handling the Medicare Part A reconsiderations and the contractor hearing officer will generally be handling the Medicare Part B reconsiderations.

In § 405.874(d), we adopted the revisions to this section to reflect that claims for services furnished to Medicare beneficiaries during a period in which the provider's or supplier's billing privileges were not effective are rejected and not denied. If a provider or supplier is determined not to have qualified for billing privileges in one period but qualified in another, contractors process claims for services furnished to beneficiaries during the period for which the provider or supplier was Medicare-qualified. Subpart C of this part sets forth the requirements for the recovery of overpayments. The appeals process for denied claims should not apply if a provider or supplier does not have billing privileges.

In § 405.874(d)(3), we adopted the provision that when revocation of a provider's or supplier's billing privileges are reversed upon appeal, the provider's or supplier's billing privileges are reinstated back to the date that the revocation became effective.

In § 405.874(d)(4), we adopted the provision that if a denial of a provider's or supplier's billing privileges is reversed upon appeal, then the appeal decision establishes the date that the provider's or supplier's billing privileges will become effective.

In § 405.874(e), we adopted the provision that if a provider or supplier completes a corrective action plan and provides sufficient evidence to the carrier, fiscal intermediary, NSC or MAC that it has complied fully with the Medicare requirements, the carrier, fiscal intermediary or MAC may reinstate the supplier's billing privileges.

In § 405.874(f) we adopted the provision changing the effective date for DMEPOS supplier's billing privileges. If the NSC, NSC hearing officer, or ALJ determines that a DMEPOS supplier's denied enrollment application meets the standards in § 424.57 of this chapter and any other requirements that may apply (for example, reinstatement after an OIG exclusion), the determination establishes the effective date of the billing privileges as not earlier than the date the carrier made the determination to deny the supplier's enrollment application. Claims are rejected for services furnished before that effective date.

In § 405.874(g), we adopted the provision that a provider or supplier succeeding in having its enrollment application denial or billing privileges revocation reversed, or in having its billing privileges reinstated, may submit claims to the CMS contractor for services furnished during periods of Medicare qualification, subject to the limitations in § 424.44 of this chapter, regarding the timely filing of claims.

In § 424.510(d)(2)(iv), we adopted the provision that at the time of enrollment, an enrollment change request or revalidation, including reenrollment of DMEPOS suppliers, providers and suppliers shall submit the CMS-588 form to receive payments via electronic funds transfer (EFT) if they are not already receiving payments via EFT.

Consistent with the authority under 31 U.S.C. 3332(f)(1), all Federal payments, including Medicare payments to providers and suppliers, shall be made by electronic funds transfer (EFT). Further, under 31 U.S.C. 3332(g), each recipient of Federal payments required to be made by electronic funds transfer shall designate 1 or more financial institutions or other authorized agents to which the payments shall be made and provide the information to CMS. While the statutory provisions at 31 CFR part 208 govern the Department of Treasury, they apply to all Federal government agencies.

Consequently, we want to clarify that the EFT requirement applies to providers and suppliers enrolling in the Medicare program or making changes to enrollment. We are requiring EFT payments for the following: (1) Providers and suppliers initially enrolling in the Medicare program; (2) providers and suppliers submitting a CMS-855 change request who are not currently receiving payments via EFT; (3) provider and suppliers responding to a revalidation or DMEPOS re-enrollment request; and (4) when CMS changes a Medicare contractor for a State or contracting jurisdiction and the provider or supplier was already receiving payments via EFT. We believe that providers and suppliers already receiving payments via EFT should continue to receive payments via EFT when CMS changes a Medicare contractor for a State or contracting jurisdiction. We believe that requiring providers and suppliers who were already receiving Medicare payments via EFT prior to a change in Medicare contractors is consistent with the provisions of the proposed rule and does not impose a consequential burden on these providers and suppliers. In addition, we believe an enrolled provider or supplier who is already receiving Medicare payments electronically is not required to submit the CMS-588 with a change in enrollment unless the provider or supplier is seeking to change its depository information. Finally, we will continue to encourage all providers and suppliers to switch to EFT payments voluntarily.

In § 424.545(a), we adopted the following provisions:

• Redesignated the first sentence of current paragraph (a) as the introductory text and revised that text to remove the reference to part 405 subpart H.

• Redesignated the second sentence of current paragraph (a) as paragraph (a)(1)(i).

• Added paragraph (a)(1)(ii) to clarify that if a provider or supplier appeals both of these sanctions, then both matters will be resolved using a single appeals process.

• Redesignated the last sentence of current paragraph (a) as paragraph (a)(2).

In § 405.874(h), we adopted the provision that established deadlines for the processing of provider enrollment actions. We adopted the provision that contractors will process initial determinations and revalidations within 180 days of receipt and that carriers, fiscal intermediaries or MACs process change-of-information and reassignment of payment requests within 90 days of receipt.

In § 424.525(a)(1) and (a)(2), we adopted the provisions that state the reasons for rejecting enrollment applications by reducing the amount of time that a provider or supplier must furnish complete information requested by a contractor from 60 to 30 days. Additionally, we adopted the provision for a reduction from 60 to 30 days for the period allowed to furnish all supporting documentation for submitting their enrollment application. In this final rule, we are also making conforming changes in paragraph (b) of this section (that is, changing 60 days to 30 days).

In § 424.535(a)(8), we adopted the provision that allows Medicare FFS contractors to revoke Medicare billing privileges when instructed to do so by CMS when a provider or supplier submits a claim or claims for services that could not have been furnished to a beneficiary. We have found numerous examples of situations where a physician or other practitioner has billed for services furnished to beneficiaries that are undeliverable, including but not limited to situations where the beneficiary was deceased, the directing physician or beneficiary was not in the State or country when services were furnished, or when the beneficiary was in another setting where these services could not be administered, or the equipment necessary for testing was not present where the testing is said to have occurred.

We believe that this new revocation authority is consistent with the other types of revocations already used by CMS and its contractors under § 424.535. Further, providers and suppliers may appeal a contractor revocation using the process outlined in part 498.

This basis for revocation is essential to the efficient operation of the Medicare program, because it will enable us to take an important step in protecting the expenditure of public monies for service providers whose motive and billing practices are questionable, at best, and at worst, of a sort that might prompt an aggressive response from the law enforcement community. We also want to alert providers and suppliers that we may be proposing other provisions related to revocation of providers and suppliers in the calendar year 2009 physician fee schedule proposed rule.

In § 424.535(b)(2), we adopted the provision to establish a re-enrollment bar of not less than 1 year and not greater than 3 years when a provider or supplier's Medicare billing privileges are revoked. Specifically, we adopted the provision that when a provider or supplier, including all authorized officials, delegated officials and practitioners, is revoked for any of the reasons listed at § 424.535, that the provider, supplier, delegated official or authorizing official be prohibited from enrolling in the Medicare program for a period of not less than 1 year but not greater than 3 years. While we have adopted a provision to establish a re-enrollment bar for 1 year but not greater than 3 years, this enrollment bar does not preclude CMS or its contractor from denying re-enrollment if a provider or supplier was convicted of felony within the preceding 10-year period as described in § 424.530(a)(3) or is not in compliance with any other enrollment criteria.

In § 498.1(g), we adopted the provision for an ALJ hearing, and judicial review for any provider or supplier whose application for enrollment or reenrollment in Medicare has been denied or whose billing privileges have been revoked.

In § 498.2—

• Finalizing our definition of a “supplier” to include the following: (1) A supplier of DMEPOS; ambulance service provider; independent diagnostic testing facility; physician; and other practitioner such as physician assistant; and (2) remove the reference to “prospective supplier.” To further clarify the provisions applicable to providers and suppliers, we have added the definition of provider and prospective provider to § 405.802. We also note that we made technical edits to the definitions of supplier in § 405.802 and § 498.2.

• Revised the definition of provider to (1) remove the reference to prospective provider; and (2) make technical changes. These technical changes include correcting the term “hospital transplant center” to read “hospital, transplant center” and removing the phrase “that has in effect an agreement to participate in Medicare”.

• Added new definitions for “prospective supplier,” “prospective provider,” largely based upon comments received. Since applicants (prospective provider and suppliers) who are not enrolled in the Medicare program, still are afforded appeal rights based on an enrollment denial, we maintain that it is important to clarify that any prospective applicant (provider or supplier) is afforded appeal rights through this process.

We also adopted the provision to remove the definition of the “Office of Hearings and Appeals (OHA)” because the function of this office has been moved from the Social Security Administration to the DHHS. Additionally, we adopted the provision that revised the definition of “affected party” to specify that it includes CMS or a CMS contractor.

In § 498.5, we adopted the provision that revised this section by adding a new paragraph (l) to clarify the administrative process that would be used by a prospective provider, existing provider, prospective supplier or existing supplier dissatisfied with an initial determination or revised initial determination related to the denial or revocation of Medicare billing privileges.

In § 498.5(f)(2), we adopted the provision to be consistent with the change in § 498.1(g). This implements the mandate of section 936(a)(2) of the MMA regarding judicial review. We have adopted these standards because the FFS contractors need sufficient time to adjudicate the facts and make a reasoned Medicare enrollment decision. Moreover, while we established an outside limit for processing these applications, the vast majority of these decisions are made within 120 days.

In § 498.22(a), we adopted the provision to add that we have delegated authority to our contractors to reconsider an initial determination. We also are adopting the provision to revise § 498.22(b)(1) to state that a reconsideration request is to be filed with CMS or with the State survey agency, or, in the case of prospective suppliers, the entity specified in the notice of initial determination. Additionally, we adopted the provision at § 498.44 to remove the term “Associate Commissioner for Hearings and Appeals,” and we have replaced it with the term “Secretary,” because this function is no longer under the Social Security Administration; it is now under the DHHS.

In § 405.874(c)(2), we adopted the provision which clarifies that a provider or supplier is required to prove that it is in compliance with all Medicare requirements for billing privileges, and that the Medicare FFS contractor incorrectly denied or revoked the supplier's billing privileges. At § 498.56, we added a new paragraph (e) that specifies the “good cause” exception to the admission of new evidence at the ALJ level of appeal.

In § 498.78(a), we adopted the proposal to delete the provision that an affected party concur in writing or on the record with a CMS or OIG request for remand. We contend that the appeals process is enhanced by allowing an ALJ to remand a provider enrollment case to the Medicare FFS contractor when CMS requests a remand. Further, we believe that a remand request could result in either a favorable decision to the appellant or in the administrative record being complete.

In § 498.79, we adopted the provision that when a request for an ALJ hearing is filed after CMS or a FFS contractor has denied an enrollment application, that an ALJ must issue a decision, dismissal order or remand to CMS, as appropriate, no later than 180 days after the initial request for a hearing.

We revised § 498.86 to prohibit providers and suppliers from submitting new provider enrollment issues or evidence at the DAB level of review.

Finally, in § 498.88(g), we adopted the provision that when a request for a Board review is filed after an ALJ has issued a decision or dismissal order, that the Board must issue a decision, dismissal order or remand to the ALJ, as appropriate, no later than 180 days after the appeal was received by the Board.

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

• Whether the information collection is necessary and useful to carry out the proper functions of the agency;

• The accuracy of the agency's estimate of the information collection burden;

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

• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. However, we believe the information collection activities referenced in § 405.874 are exempt under the terms of the PRA for the following reasons:

• As defined in 5 CFR 1320.4(a)(2), information collections conducted or sponsored during the conduct of criminal or civil action, or during the conduct of an administrative action, investigation, or audit involving an agency against specific individuals or entities are exempt from the PRA.

• As described in 5 CFR 1320.3(h)(9), facts or opinions obtained or solicited through nonstandardized follow-up questions designed to clarify responses to approved collections, are exempt from the PRA; and

• Nonstandardized information collections directed to less than 10 persons do not constitute information collections as outlined in 5 CFR 1320.3(c)(4).

We believe that the collection requirements are part of the administrative process, and collected in a nonstandardized manner. Since each case will be different, based on the reasons for denial or revocation, and evidence presented, they fall under these exceptions.

If you comment on any of these information collection and recordkeeping requirements, please mail copies directly to the following: Centers for Medicare and Medicaid Services, Office of Strategic Operations and Regulatory Affairs, Regulations Development Group, Attn.: William Parham, CMS-6003-F, Room C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850; and Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503. Attn.: Carolyn Lovett, CMS Desk Officer, CMS-6003-F, carolyn_lovett@omb.eop.gov . Fax (202) 395-6974.

We have examined the impact 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 on Federalism, and the Congressional Review Act (U.S.C. 804(s)).

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts; and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This rule does not reach the economic threshold and thus is not considered a major rule.

The RFA requires agencies to analyze options for regulatory relief for small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6.5 to $31.5 million in any one year. Individuals and States are not included in the definition of a small entity. We are not preparing an analysis for the RFA because we have determined that this rule will not have a significant economic impact on a substantial number of small entities.

We maintain that this final rule would not have an adverse impact on small entities; in fact, it would afford small suppliers a measure of protection against adverse actions by us, and extend protection to a larger group of suppliers beyond the DMEPOS suppliers currently covered under § 405.874. Because this final rule would merely clarify, expand, and update our current policy and administrative appeal rights, we anticipate slight, if any, economic impact on small entities.

According to data submitted to us by carriers in calendar year 2003, approximately 166,500 enrollment applications were submitted to the Medicare carriers by suppliers seeking to receive billing privileges. We believe that a vast majority of these applicants were small businesses. Of those applications, approximately 2,000 were denied, and approximately 200 applicants requested a reconsideration. Because we have already granted appeal rights to the affected suppliers via instructions to carriers, we estimate that this regulation would have minimal impact on carrier workloads.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined that this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals. There is no negative impact on the program or on small businesses.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $120 million. This rule does not mandate expenditures by either the governments mentioned or the private sector, therefore no analysis is required.

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 regulation does not impose any costs on State or local governments, the requirements of E.O. 13132 are not applicable.

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

Medicare is a Federal health insurance program that helps millions of Americans pay for health care. Beneficiaries include eligible individuals age 65 or older and certain people younger than age 65 who also qualify to receive Medicare. These individuals include those who have disabilities and those who have permanent kidney failure (end-stage renal disease).

Medicare Parts A and B are the subject of this final rule. Hospital insurance (Part A) helps to pay for inpatient care in hospitals, skilled nursing facilities, as well as home health care and hospice care. Part B or supplementary medical insurance (SMI) helps to pay for physicians' services, outpatient hospital services, durable medical equipment, and a number of other medical services and supplies that are not covered under Part A.

Part A is financed primarily through compulsory payroll taxes under the Federal Insurance Contributions Act (FICA). Individuals age 65 or over who are entitled to receive Social Security or railroad retirement benefits, or who are eligible for Social Security benefits and have filed an application for hospital insurance, are entitled to receive Part A benefits without paying a monthly premium. However, individuals who do not qualify for premium-free Part A, may voluntarily enroll in Part A but are required to pay a monthly premium. These individuals generally include those who have not worked 10 years in Medicare-covered employment or are not the spouse, divorced spouse or widow(er) of an individual who has worked 10 years in Medicare-covered employment. In addition, they must meet the following requirements: (1) Be at least age 65; (2) a resident of the United States; (3) a United States citizen or an alien who has been lawfully admitted for permanent residence and who has resided continuously in the United States for the 5-year period immediately preceding the month of enrollment; (4) not otherwise eligible to receive Part A benefits without having to pay a premium; and (5) entitled to Part B or are eligible and have enrolled.

Enrollment in Part B is open to all persons who are entitled to Part A benefits, as well as to persons who are not entitled to Part A benefits, provided certain requirements are satisfied. Part B is financed primarily through premiums paid by or on behalf of beneficiaries, along with transfers made from the General Fund of the Treasury. Section 1839(a) of the Social Security Act (the Act) requires the Secretary of Health and Human Services to determine the Medicare Part B standard monthly premium amount annually. Currently, the standard monthly premium represents approximately 25 percent of the estimated total Part B program cost for aged enrollees. The remaining 75 percent of the total estimated cost is subsidized by the Federal government through transfers to the Federal SMI Trust Fund from the General Fund of the Treasury.

Individuals who do not enroll in Part B or premium Part A when first eligible or who enroll and later terminate their coverage may only enroll during the general enrollment period, which is January through March of each year, unless an exception applies. The coverage will be effective the following July 1. Under section 1839(b) of the Act, individuals who delay enrolling in premium Part A or Part B for 12 or more months must pay a premium surcharge.

Currently, section 1837(i) of the Act provides a special enrollment period (SEP) for individuals age 65 or over who are working or who are the spouses of working individuals who are covered under a group health plan (GHP). For disabled individuals, who are under age 65, the SEP applies if the individual is covered by a GHP by reason of the current employment status of the individual or the individual's spouse, or if the individual is covered by a large group health plan (LGHP) by reason of the current employment status of the individual or a member of the individual's family. In this type of situation, enrollment in Part B can take place anytime the individual is covered under the GHP or LGHP based on current employment status or during the 8-month period that begins the first full month after the GHP or LGHP coverage ends. Because section 1818(c) of the Act provides that the enrollment provisions in section 1837 (except subsection (f) thereof) apply to persons authorized to enroll in premium Part A, we have extended this SEP to premium Part A enrollments.

Another exception is the transfer enrollment period (TEP) for enrollment in premium Part A. The TEP is for individuals age 65 or older who are otherwise eligible to enroll in premium Part A; are enrolled in a plan with an organization listed in section 1876 of the Act; and whose coverage under the plan is terminated for any reason. Here, an individual may enroll in premium Part A beginning any month that the individual is enrolled in the plan, and ending with the last day of the 8-month period following the last month in which the individual is no longer enrolled in the plan.

Section 5115(a)(2) of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171) amended section 1837 of the Act to add a new subsection (k), which provides a SEP for certain international volunteers. Beginning January 1, 2007, a SEP for Part B is provided to qualifying international volunteers who are eligible to enroll in Part B because they meet the requirements in section 1836(1) or (2) of the Act, but who do not enroll in Part B during the initial enrollment period or who terminate enrollment during a month in which they qualify as an international volunteer. Enrollment can take place during the 6-month period beginning on the first day of the month which includes the date the individual no longer qualifies under this provision. Coverage for an individual who enrolls during a SEP in accordance with this provision begins on the first day of the month following the month in which the individual enrolls.

Under new section 1837(k)(3) of the Act, an individual qualifies as an international volunteer if he or she is serving in a program outside of the United States that covers at least a 12-month period, and that is sponsored by an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 (the Code) and exempt from taxation under section 501(a) of the same Code. The individual must also have health insurance coverage to cover medical services while serving overseas in the program. Specifically, qualifying organizations under section 501(c)(3) of the Code that are exempt from taxation under section 501(a) of the Code are “corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals. * * *” Furthermore, to qualify for this exemption, no part of the net earnings of the organization can inure to the benefit of any private shareholder or individual and no substantial part of the activities can be used for propaganda, or otherwise attempt to influence legislation (except as otherwise provided in section 510(h) of the Code) or participate or intervene (including the publishing or distributing of statements) in political campaigns on behalf of (or in opposition to) any candidate for public office.

Section 811 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) amends section 1839 of the Act and establishes a Medicare Part B premium subsidy reduction referred to as the “Income-Related Monthly Adjustment Amount” (IRMAA). Section 1839(i) of the Act requires that an income-related monthly adjustment amount be added to a beneficiary's Part B premium if his or her modified adjusted gross income exceeds the established threshold amounts. The IRMAA reduces the amount that the beneficiary's premium is subsidized by the Federal government. All beneficiaries will continue to receive some subsidy of their premium.

Section 1839(i) of the Act establishes a sliding scale that will be used to establish four income-related monthly adjustment amounts that will increase a beneficiary's Medicare Part B premium by specific percentages. If a beneficiary's modified adjusted gross income is greater than the statutory threshold amounts, the beneficiary will pay a larger portion of the estimated total cost of Part B coverage. The 2007 income ranges, as set forth in section 1839(i)(3)(C)(i) of the Act, started at $80,000 for a beneficiary filing an individual tax return, and $160,000 for a beneficiary filing a joint income tax return, and are listed in the following table:

In calendar year (CY) 2007, individual tax filers with income less than or equal to $80,000 and joint tax filers with income less than or equal to $160,000 will continue to pay the standard premium which represents roughly 25 percent of the estimated total Part B program costs. As specified in section 1839(i)(5) of the Act, each dollar amount in this table would be adjusted annually based on the Consumer Price Index.

Section 811 of the MMA also provided for a 5-year phase-in of the Medicare Part B premium subsidy reduction. However, section 1839(i) was subsequently amended by section 5111 of the DRA to provide for a 3-year phase-in period. Therefore, the percentages presented in this table reflect the Part B premium percentages that certain beneficiaries will pay once IRMAA is fully phased-in.

The “hold-harmless” provision in section 1839(f) of the Act provides for a reduction to the Part B premium for beneficiaries whose Social Security or Railroad Board (RRB) annuity cost of living adjustments (COLAs) are not sufficient to cover the Part B premium increase. If in a given year, the increase in the Part B premium would cause an individual's Social Security or RRB check to be less than it was the year before, the premium is reduced to ensure that the amount of the individual's Social Security benefit (or RRB annuity) stays the same. To be held harmless, a beneficiary must have had the Part B premium deducted from both the December check of the prior year and the January check of the next year. Under section 1839(f) of the Act, the “hold-harmless” provision does not apply to beneficiaries who are required to pay an IRMAA based on their modified adjusted gross income. These beneficiaries must pay the full Medicare Part B standard monthly premium, plus any applicable penalty for late enrollment or reenrollment, plus the income-related monthly adjustment amount.

Section 702(a)(5) of the Act allows SSA to make the rules and regulations necessary or appropriate to carry out the functions of SSA. Other provisions in section 811 of the MMA provide SSA with additional specific authorization to make rules and regulations to determine which beneficiaries are required to pay the different income-related monthly adjustment amounts.

In the October 27, 2006 Federal Register (71 FR 62923), SSA issued a final rule establishing regulations governing the determination of income-related monthly adjustment amounts. This final rule explains: (1) The statutory requirement to implement an income-related adjustment to the Part B premium subsidy; (2) the information that would be used to determine whether a beneficiary must pay an income-related monthly adjusted amount and the amount of any adjustment; (3) when SSA will consider a major life-changing event that results in a significant reduction in a beneficiary's modified adjusted gross income; and (4) how a beneficiary can appeal SSA's determination about the beneficiary's income-related monthly adjustment amount. For a more detailed discussion see SSA's October 27, 2006 final rule (71 FR 62923).

We received four timely public comments in response to the Special Enrollment Period and Medicare Premium Changes proposed rule published in the September 28, 2007 Federal Register . In this section of the final rule, we address all comments received regarding the provisions of our proposed rule.

We proposed to add a new § 406.25, which would allow certain individuals who are sponsored by prescribed organizations as volunteers outside of the United States and have health care insurance to qualify for a SEP for premium hospital insurance (Part A). We recognize that section 5115 of the DRA, in amending section 1839(b) of the Act, explicitly provides only for a SEP for Part B, which we have provided for in new § 407.21. However, since section 1818(c) of the Act applies all of the provisions of section 1837 of the Act (except subsection (f) thereof) to persons authorized to enroll under section 1818 of the Act, we believe that the SEP provided in section 5115 of the DRA also applies to enrollment in premium Part A.

Comment: Three commenters expressed concern that although § 406.25 of the September 2007 proposed rule tracks the language of section 5115 of the DRA, § 407.21 is not worded exactly the same as § 406.25 and could be interpreted as imposing different standards. Specifically, they believe that the requirements of § 406.25 (“an individual [that] is serving as a volunteer outside the United States through a program that covers at least a 12-month period”) and the requirement of § 407.21 (“if while serving as a volunteer outside of the United States the individual is in a program that covers a 12-month period of service outside of the United States”) are two different standards.

The commenters also note that there is a slight difference between the wordings in the preamble for these two sections. They believe that § 406.25 and § 407.21 should be substantively identical.

Response: To ensure that the SEP standards are interpreted consistently, we are revising the regulation text of § 406.25 and § 407.21.

In § 406.33(a)(3), we proposed to make a technical correction by removing an incorrect phrase “the 7-month special enrollment period under § 406.21(e)” and replacing it with the phrase “the special enrollment period under § 406.24.” We did not receive any public comment on this proposal and are adopting the provision with only a technical change, as discussed further in this section.

In § 406.33(a)(5) and (6), we proposed to exclude from the calculation of the premium surcharge those months the individual qualifies for the SEP described in § 406.25(a). We did not receive any public comment on this proposal and are adopting the provision with technical changes, as discussed further in this section.

We proposed to add a new § 407.21, which implements section 5115 of the DRA by allowing certain individuals who are sponsored by prescribed organizations as volunteers outside of the United States and have health care insurance that covers medical services while serving overseas to qualify for a Medicare Part B SEP.

Comment: Two commenters noted that section 5115 of the DRA requires that volunteers serve in a program that covers at least a 12-month period, as opposed to requiring that their actual service outside the country last for at least 12 months. These commenters stated that, under rare, unforeseeable circumstances, a volunteer in a program that covers at least a 12-month period may be required to return to the United States in less than 12 months. They believe that these volunteers should qualify for the SEP provided by section 5115 of the DRA.

Response: We agree and have revised § 407.21 to clarify that the volunteer has to serve in a program that covers at least a 12-month period.

In § 408.20 (e)(3)(iii), we proposed to implement section 811(b)(1)(C) of the MMA by excluding from the “hold harmless” provision (known as the “nonstandard premium”) individuals who are required to pay the income-related monthly adjustment amount (IRMAA). Such beneficiaries must pay the full Medicare Part B standard monthly premium plus any applicable premium surcharge for late enrollment or re-enrollment, plus the income-related monthly adjustment amount. We did not receive any public comment on this proposal and are adopting the provision as proposed.

In § 408.24(a)(10), we proposed to implement section 5115(a) of the DRA by excluding from the calculation of the premium surcharge those months the individual meets the requirements of proposed § 407.21. We also proposed to make a conforming change in § 408.24 (b)(2)(i) of this section by revising the cross-reference to include the new paragraph § 408.24(a)(10). We did not receive any public comment on these proposals and are adopting the provisions as proposed.

Finally, we proposed to add a new § 408.28 to specify that, beginning January 1, 2007, Medicare beneficiaries will be informed that they may be required to pay an income-related monthly adjustment amount in addition to the standard Part B premium, plus any applicable increase for late enrollment or reenrollment, if their modified adjusted gross income exceeds the threshold limits specified in 20 CFR 418.1115. We did not receive any public comment on this proposal and are adopting the provision as proposed.

After review and analysis of public comment, we are also making the following technical changes in this final rule:

• In § 406.33(a)(3), the cross-reference “§ 406.24 of this part” is revised to read “§ 406.24 of this subpart”.

• In § 406.33(a)(5), the cross-reference “§ 406.25 of this subpart” is revised to read “for a SEP under 406.25(a) of this subpart”.

• In § 406.33(a)(6), the cross-reference “§ 406.25(b) of this part” is revised to read “§ 406.25(b) of this subpart”.

• In § 407.21(b), the cross-reference “paragraph (b) of this section” is revised to read “paragraph (a) of this section”.

Lastly, we are making a technical change to the section heading for § 406.24 to clarify that the special enrollment period relates to coverage under group health plans.

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 (ICRs).

Section 406.25 outlines the requirements that an individual volunteer must meet to qualify for a SEP. A qualifying individual can enroll or reenroll without incurring a surcharge for a late enrollment or reenrollment. Specifically, § 406.25(a)(1) and (2) state that an individual volunteer must demonstrate that his or her volunteer service is through a program that covers at least a 12-month period and is sponsored by an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of the Internal Revenue Code.

The burden associated with this requirement is the time and effort associated with verifying that the volunteer was in a 12-month program and demonstrating the tax-exempt status of the organization sponsoring the individual. The estimated burden associated with this requirement is 15 minutes per individual. We estimate that 1,500 individuals will be subject to this requirement on a yearly basis for a total annual burden of 375 burden hours.

In addition, § 406.25(a)(3) requires that an individual demonstrate that he or she has health insurance that covers medical services received outside of the United States during his or her period of service. The burden associated with this requirement is the time and effort associated with demonstrating possession of health insurance coverage that covers the medical services received outside of the United States. We estimate the burden for verifying coverage to be 15 minutes per individual; we also estimate that 1,500 individuals will be subject to this requirement on a yearly basis. The total estimated burden is 375 annual burden hours.

Section 407.21 addresses the provision of a SEP for an individual who elects not to enroll or to be deemed enrolled in SMI when first eligible and an individual who terminates SMI enrollment. To be eligible for the SEP, the individual must meet the criteria outlined in the regulations text. As stated in § 407.21(a), the individual must: (1) Serve as a volunteer in a program that covers at least a 12-month period of service; (2) be a volunteer in a program sponsored by an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under 501(a) of such Code; and (3) be able to demonstrate that he or she had health insurance coverage that covers medical services received outside of the United States during his or her period of service.

The burden associated with the requirements in § 407.21(a)(1) and (2) is the time and effort associated with verifying that the volunteer was in a 12-month program, and demonstrating the tax-exempt status of the organization sponsoring the individual, and submitting the information to CMS. The burden associated with these requirements is discussed in detail in the explanation of the burden for § 406.25.

The burden associated with the § 407.21(a)(3) is the time and effort associated with an individual demonstrating that he or she has health insurance that covers medical services received outside of the United States during his or her period of service. The burden associated with this requirement is discussed in detail in the explanation of the burden for § 406.25.

We have submitted a copy of this final rule to OMB for its review of the information collection requirements contained in this section. In addition, we are seeking OMB approval for the aforementioned information collection requirements under a separate notice and comment process. These requirements are not final until they are approved by OMB.

We have examined the impact 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 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). We do not anticipate that there will be more than 1,500 beneficiaries (international volunteers) at any one time who will qualify for a SEP. To qualify under this SEP, the Medicare beneficiary must have elected not to enroll in Part B or premium Part A during the initial enrollment period, or terminated enrollment, because the individual was serving as a volunteer outside the United States. In addition, the individual must have served as a volunteer outside of the United States in a program that covers at least a 12-month period, and that is sponsored by an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of that Code, and must have health care insurance coverage that covers medical services while serving overseas in the program. It is for this reason that we anticipate that the overall expenditure for this provision of the Medicare program projected over a 5-year period would be negligible. In addition, this rule only codifies the income-related monthly adjustment amount provision of MMA. It is for these reasons that this rule does not reach the economic threshold and thus is not considered a major rule.

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 million to $29 million in any 1 year. Individuals and States are not included in the definition of a small entity. We are not preparing an analysis for the RFA because we have determined that this rule will not have a significant economic impact on a substantial number of small entities.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act, because we have determined that this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act 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. This rule will have no consequential effect on State, local, or tribal governments or on the private sector.

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

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

In accordance with section 1861(e) of the Social Security Act (the Act), hospitals must meet certain conditions in order to participate in the Medicare program. These conditions are intended to protect patient health and safety and ensure that high-quality care is provided. Hospitals receiving payment under Medicaid must meet the Medicare conditions of participation (CoPs).

The CoPs for hospital laboratory services currently specifies the steps hospitals must take when they become aware they have administered potentially human immunodeficiency virus infectious blood or blood components to a patient. All laboratories must be CLIA-certified to participate in Medicare and Medicaid. The Centers for Medicare & Medicaid Services (CMS) and Federal agencies that comprise the Public Health Services, including the Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC), and the National Institutes of Health (NIH), are responsible for ensuring the safety of blood and blood components.

Hepatitis C virus (HCV) was first discovered and established as a causative agent of transfusion-associated hepatitis in the late 1980s. In October 1989, FDA's Blood Products Advisory Committee (BPAC) first discussed steps to identify and quarantine potentially HCV infectious blood and blood components remaining in storage and notify recipients that they may possibly have received infectious blood or blood products. These steps are known as a “lookback.” BPAC advised that there was insufficient information available concerning HCV infection to propose either product quarantine or notification of recipients transfused with blood and blood components prepared from prior collections from donors later determined to be at increased risk for transmitting HCV.

On November 16, 2000, we published in the Federal Register a proposed rule (65 FR 69416). In that proposed rule, we discussed in detail the steps that had been taken since the late 1980's to avoid the transmission of HCV infection and to create opportunities for disease prevention that, in most cases, can occur many years after recipient exposure to a donor.

On August 24, 2007, we published an interim final rule with comment period in the Federal Register (72 FR 48562). The interim final rule with comment period incorporated the provisions of the November 16, 2000 proposed rule, responses to public comments, and changes to further conform our regulation to FDA's final rule that was also published on August 24, 2007. For a detailed discussion of this information, we refer the reader to the August 24, 2007 interim final rule (72 FR 48562 through 48565).

In order to have consistent industry standards for potentially infectious blood and blood components, on August 24, 2007, we published in the Federal Register an interim final rule with comment period (72 FR 48562) entitled, “Medicare and Medicaid Programs; Hospital Conditions of Participation: Laboratory Services”. The provisions of the interim final rule were effective on February 20, 2008. The interim final rule with comment period addressed the comments CMS received regarding the proposed rule that was published on November 16, 2000 (65 FR 69416). Since our proposed rule was published in conjunction with the FDA's rule, we coordinated our responses with the FDA's responses in its “lookback” rule (72 FR 48766) entitled, “Current Good Manufacturing Practice for Blood and Blood Components; Notification of Consignees and Transfusion Recipients Receiving Blood and Blood Components at Increased Risk of Transmitting HCV Infection” (“lookback”). In the interim final rule with comment period, we implemented the following provisions—

• Changed the reference of “blood establishments” to “blood collecting establishments” (BCE). Under this requirement, a BCE must notify a hospital if it supplies such hospital with potentially HCV infectious blood.

• Amended the hospital conditions of participation to require hospitals to develop agreements with outside BCEs under which the BCE would notify the hospital if it supplied the hospital with potentially HCV infectious blood and blood components.

• Required hospitals, when notified by BCEs, to quarantine prior collections from a donor who later tested repeatedly reactive for evidence of HCV infection, and to notify transfusion recipients of the prior collections, based on further testing of the donor, as appropriate.

• Required blood banks to notify a hospital of potentially infected blood within 3 calendar days after testing. We also require hospitals to make at least three attempts to notify the patient, or to notify the attending physician who ordered the blood or blood components.

• Required hospitals to destroy and re-label previous collection of blood or blood components held in quarantine if the results of the testing were indeterminate.

• Required hospitals to maintain adequate records of the source and disposition of all units of blood and blood components for at least 10 years after the date of disposition.

We did not receive any public comments on the August 24, 2007 interim final rule with comment period. Therefore, the provisions of this final rule are identical to the provisions of the August 24, 2007 interim final rule with comment period (72 FR 48562).

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

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

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

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

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

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

Section 482.27(b)(3) requires a hospital that regularly uses the services of an outside BCE to establish and maintain a written agreement with the BCE that governs the procurement, transfer, and availability of blood and blood components. This section also requires the BCE to notify the hospital within 3 calendar days after the date on which the donor tested reactive for evidence of HCV infection or after the date on which the blood establishment was made aware of other test results indicating evidence of HCV infection, as outlined in (b)(3)(i) through (iii).

Section 482.27(b)(5) requires a hospital to maintain, in a manner that permits prompt retrieval, adequate records of the source and disposition of all units of blood and blood components for at least 10 years from the date of disposition. In addition, this section requires a hospital to maintain a fully funded and documented plan that will allow the hospital to transfer these records to another hospital or other entity if such hospital ceases operation for any reason.

Section 482.27(b)(6) requires a hospital that has administered potentially HIV or HCV infectious blood or blood components (either directly through its own BCE or under an agreement), or released the blood or blood components to another entity or individual, to make reasonable attempts to notify the patient, or to notify the attending physician or the physician who ordered the blood or blood component and ask the physician to notify the patient, that potentially HIV or HCV infectious blood or blood components were transfused to the patient. Time frame and notification requirements are outlined in § 482.27(b)(6), (b)(7), and (b)(8).

Section 482.27(b)(9) requires a hospital to maintain policies and procedures for notification and documentation that conform to Federal, State, and local laws, including requirements for the confidentiality of medical records.

Section 482.27(b)(10) requires a physician or hospital, if the patient has been adjudged incompetent by a State court, to notify a legal representative designated in accordance with State law. If the patient is competent, but State law permits a legal representative or relative to receive the information on the patient's behalf, the physician or hospital must notify the patient or his or her legal representative or relative. If the patient is deceased, the physician or hospital must continue the notification process for HIV infection and inform the deceased patient's legal representative or relative. If the patient is a minor, the legal guardian must be notified.

While all of the aforementioned information collection requirements referenced are subject to the Paperwork Reduction Act, the associated burden is captured and discussed in the Food and Drug Administration's (FDA) final regulation titled “Current Good Manufacturing Practice for Blood and Blood Components: Notification of Consignees and Transfusion Recipients Receiving Blood and Blood Components at Increased Risk of Transmitting HCV Infection” (72 FR 48766).

The FDA's rule assigns a one-time burden of 16 hours for hospitals to develop procedures to conduct lookback activities. We also require hospitals that currently receive blood from an outside BCE to have an agreement with the BCE that governs the procurement, transfer, and availability of blood and blood components for HIV. Our rule requires hospitals to modify their current agreements to include HCV. Although the FDA does not require hospitals to have an agreement with a BCE, we believe that the time necessary to perform this task will be minimal and is already captured in the 16 hours allotted in the FDA rule.

In the interim final rule with comment period, we assigned 1 token hour of burden to these requirements; however, we are no longer assessing 1 token burden hour for the information collection requirements because, as stated earlier, the burden associated with the information collection requirements contained in this final rule was addressed in the FDA's final rule (72 FR 48766). The burden associated with the FDA's final rule was approved under OMB control number 0910-0610 with an October 31, 2010, expiration date.

We have submitted a copy of this final rule to OMB for its review of the information collection requirements. These requirements are not effective until they have been approved by OMB.

We have examined the impacts of this final rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on Federalism and the Congressional Review Act (5 U.S.C. 804(2)).

In the August 24, 2007 interim final rule with comment period, we presented a full regulatory impact analysis that discussed the costs and benefits of the rule. The provisions of the interim final rule with comment period became effective on February 20, 2008. For a full description of the regulatory impact analysis, we refer the reader to the August 24, 2007 interim final rule (see 72 FR 48570 through 48574). We did not receive any comments on the August 24, 2007 interim final rule with comment period; and therefore, we have not made any changes to the regulatory impact analysis in this final rule. This rule merely finalizes, without change, the interim final rule, which is already in effect. Therefore, we have determined that this final rule has no economic impact.

Executive Order 12866 (as amended) 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 must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). The August 24, 2007 interim final rule with comment period estimated a one-time cost of $41.6 million and an annual cost of $1.7 million. Because the estimated cost falls below the threshold for a major rule, we have determined that this final rule is not a major rule.

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 less than $31.5 million in any 1 year. For purposes of the RFA, a majority of hospitals are considered small entities due to their non-profit status. The agency has examined the impact on small entities and the Secretary has determined that this final rule will not have a significant economic impact on a substantial number of small entities. 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 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area (superseded by “core-based statistical areas”) and has fewer than 100 beds. As stated above, the Secretary has determined that this final rule will not have a significant impact on a substantial number of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates impose spending costs on State, local, or tribal governments in the aggregate, or by private sector in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold level is currently approximately $130 million. We believe this final rule will not be an economically significant rule as described in the Executive Order, or a significant action as defined in the Unfunded Mandates Reform Act. Aggregate impacts and expenditures imposed by this final rule, will not reach $130 million for State, local, or tribal governments in the aggregate, or by the private sector.

We did not receive any comments on the August 24, 2007 interim final rule with comment period, and as previously stated above, we have not made any changes to the impact analysis in this final rule. As summarized, the impacts in the interim rule with comment period presented an overall one-time cost of $41.6 million and an annual cost of $1.7 million. The one-time cost of $41.6 million consists of $2.7 million for the development of HCV lookback procedures and $38.9 million for the historical record review (retrospective lookback effort). The annual cost of $1.7 million consists of $1.4 million for record retention (retain records for 10 years) and $0.3 million for prospective reviews.

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. We have determined that the rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we have concluded that the rule does not contain policies that have Federalism implications as defined in the Executive Order 13132 and, consequently, a Federalism summary impact statement is not required.

In addition to the prospective HIV lookback that hospitals are currently required to perform, hospitals are also required to conduct a lookback of transfusion recipients of potentially HCV-infected blood. This final rule also requires hospitals to have in their agreements with BCEs, that BCEs notify hospitals after performing their own FDA-mandated lookback.

In accordance with the provisions of Executive Order 12866, this final rule was not reviewed by the Office of Management and Budget.

On March 26, 2008, FEMA issued a letter to the District of Columbia (“the District”) finalizing that community's flood elevation determinations. The final flood elevation information was published in the Federal Register on April 17, 2008, at 73 FR 20810, 20814-20815. The March 26, 2008 letter also established September 26, 2008 as the anticipated effective date for the Flood Insurance Study (FIS) and Flood Insurance Rate Map (FIRM) for the District. Pending further consideration, the finalization of the above FIS and FIRM has been postponed. It is therefore necessary at this time to rescind the final flood elevation determinations issued to the District on March 26, 2008. Until FEMA determines that the District's FIRM can be processed, the community's final flood elevation determinations are hereby withdrawn in accordance with section 110 of the Flood Disaster Protection Act of 1973, codified at 42 U.S.C. 4104.

National Environmental Policy Act . This rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. No environmental impact assessment has been prepared.

Regulatory Flexibility Act . As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification . This final rule is not a significant regulatory action under the criteria of Section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism . This rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform . This rule meets the applicable standards of Executive Order 12988.