Rules and Regulations. Final rule

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BILLING CODE 4910-13-P DEPARTMENT OF COMMERCE Bureau of Industry and Security 15 CFR Part 740 [Docket No. 051219342-5342-01] RIN: 0694-AD23 Cuba: Revisions of Personal Baggage Rules AGENCY: Bureau of Industry and Security, Commerce. ACTION: Final rule. SUMMARY: This final rule amends the Export Administration Regulations

(EAR)to clarify that certain personal articles are exempt from the 44-pound weight limit on personal baggage authorized for export to Cuba under License Exception Baggage (BAG). DATES: This rule is effective May 26, 2006. FOR FURTHER INFORMATION CONTACT: Rebecca Joyce, Foreign Policy Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, Department of Commerce, Telephone:

(202)482-4252, or e-mail: *Rjoyce@bis.doc.gov.* SUPPLEMENTARY INFORMATION: On June 22, 2004 the Bureau of Industry and Security published a rule in the **Federal Register** implementing certain recommendations of the Commission for Assistance to a Free Cuba. ( *See* 69 FR 34565, June 22, 2004). That rule placed a limit of 44 pounds on personal baggage eligible for License Exception Baggage (“BAG,” § 740.14 of the EAR) for most travelers to Cuba by adding a new paragraph

(g)to License Exception BAG . This rule clarifies that restriction by adding a statement to paragraph

(g)of License Exception BAG that wearing apparel and articles of personal adornment worn by the traveler while traveling to Cuba, and personal safety and medical commodities for use by the traveler, including wheelchairs, walkers, canes, crutches, portable medical devices ( *e.g.* , oxygen tanks), and child safety seats and strollers for use by a child traveler are not included in that 44-pound limit. This rule does not make any changes to License Exception BAG other than those described in the preceding paragraph. Two such unchanged provisions of License Exception BAG merit particular mention. First, this rule does not in any way remove or relax the provisions of License Exception BAG found in § 740.14(a) of the EAR that require “[i]ndividuals leaving the United States temporarily ( *i.e.* , traveling) * * * [to] bring back items exported and reexported under this License Exception unless they consume the items abroad or are otherwise authorized to dispose of them under the EAR.” Second, this rule also does not in any way remove or relax the requirement of § 740.14(a)(1) of the EAR that personal effects exported under license exception BAG be of “[u]sual and reasonable kinds and quantities for personal use.” Although the Export Administration Act of 1979 (EAA), as amended, expired on August 20, 2001, Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp., p. 783 (2002)) as extended by the Notice of August 2, 2005, (70 FR 45273, August 5, 2005), continues the EAR in effect under the International Emergency Economic Powers Act (IEEPA). Rulemaking Requirements 1. This rule has been determined to be not significant for the purposes of Executive Order 12866. 2. Notwithstanding any other provision of law, no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget

(OMB)Control Number. This regulation involves collections previously approved by the OMB under control numbers 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 58 minutes to prepare and submit form BIS-748. Miscellaneous and recordkeeping activities account for 12 minutes per submission. Burden hours associated with the Paperwork Reduction Act and Office and Management and Budget control number 0694-0088 are not impacted by this regulation. Send comments regarding these burden estimates or any other aspect of these collections of information, including suggestions for reducing the burden, to David Rostker, OMB Desk Officer, by e-mail at *david_rostker@omb.eop.gov* or by fax to

(202)395-7285; and to the Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044. 3. This rule does not contain policies with Federalism implications as this term is defined in Executive Order 13132. 4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military or foreign affairs function of the United States ( *See* 5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 *et seq.* , are not applicable. List of Subjects in 15 CFR Part 740 Administrative practice and procedure, Exports, Foreign trade, Reporting and recordkeeping requirements. Accordingly, part 740 of the Export Administration Regulations (15 CFR parts 730-799) is amended as follows: PART 740—[AMENDED] 1. The authority citation for part 740 is revised to read as follows: Authority: 50 U.S.C. app. 2401 *et seq.* ; 50 U.S.C. 1701 *et seq.* ; Sec. 901-911, Pub. L. 106-387; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 2, 2005, 70 FR 45273 (August 5, 2005). 2. In § 740.14, add a sentence to the end of paragraph (g), before the note, to read as follows: § 740.14 Baggage (BAG).

(g)Special provision: Cuba. * * * In calculating the 44 pound limit, the following commodities shall be excluded: wearing apparel and articles of personal adornment worn by the traveler while traveling to Cuba, personal safety and medical commodities for use by the traveler including wheelchairs, walkers, canes, crutches, portable medical devices ( *e.g.* , oxygen tanks), and child safety seats and strollers for use by a child traveler. Dated: May 22, 2006. Matthew S. Borman, Deputy Assistant Secretary for Export Administration. [FR Doc. E6-8092 Filed 5-25-06; 8:45 am] BILLING CODE 3510-33-P DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Parts 35 and 284 [Docket No. RM06-14-000; Order No. 677] Revisions To Record Retention Requirements for Unbundled Sales Service, Persons Holding Blanket Marketing Certificates, and Public Utility Market-Based Rate Authorization Holders Issued May 19, 2006. AGENCY: Federal Energy Regulatory Commission, DOE. ACTION: Final rule. SUMMARY: The Federal Energy Regulatory Commission (Commission) is amending its regulations to extend from three to five years the record retention requirement applicable to transactions pursuant to blanket certificates for unbundled natural gas sales services held by interstate natural gas pipelines, blanket marketing certificates held by persons making sales for resale of natural gas at negotiated rates in interstate commerce, and market-based rate authorizations held by certain sellers of electricity and related products. DATES: *Effective Date:* This Final Rule will become effective June 26, 2006. FOR FURTHER INFORMATION CONTACT: Mark Higgins, Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426.

(202)502-8273. *Mark.Higgins@ferc.gov.* Tina Ham, Office of General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426.

(202)502-6224. *Tina.Ham@ferc.gov.* Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead Brownell, and Suedeen G. Kelly; Revisions to Record Retention Requirements for Unbundled Sales Service, Persons Holding Blanket Marketing Certificates, and Public Utility Market-Based Rate Authorization Holders; Final Rule I. Introduction 1. On February 16, 2006, the Commission issued a Notice of Proposed Rulemaking

(NOPR)in which we proposed to revise §§ 284.288(b) and 284.403(b) of our regulations, 1 as promulgated by Order No. 644. 2 Sections 284.288(b) and 284.403(b) of the regulations require sellers to retain for a period of three years all data and information upon which they billed the prices charged for natural gas sales or prices they reported for use in price indices. Similarly, the Commission proposed revising new § 35.37(d) of the Commission's regulations under the Federal Power Act. Section 35.37(d) is the codification of former Market Behavior Rule 5. 3 Section 35.37(d) requires that sellers retain for a period of three years all data and information upon which they billed the prices charged for electricity and related products in sales made under their market-based rate tariffs and authorizations or prices they reported for use in price indices. 4 1 18 CFR 284.288(b) and 284.403(b) (effective March 29, 2006). Prior to March 29, 2006, the record retention rules were contained in 18 CFR 284.288(c) and 284.403(c), but were re-designated at paragraphs

(b)of those sections in *Amendments to Codes of Conduct for Unbundled Sales Service and for Persons Holding Blanket Marketing Certificates* , Order No. 673, 71 FR 9709 (Feb. 27, 2006), FERC Stats. & Regs. ¶ 31,207 (2006). 2 *Amendments to Blanket Sales Certificates* , Order No. 644, 68 FR 66323 (Nov. 26, 2003), FERC Stats. & Regs. ¶ 61,153 (2003), *reh'g denied* 107 FERC ¶ 61,174

(2004)(Order No. 644). 3 The Commission recently codified certain Market Behavior Rules, including Market Behavior Rule 5, which was formerly a tariff condition for market-based rate sellers of electricity and related products. *Conditions for Public Utility Market-Based Rate Authorization Holders* , 114 FERC ¶ 61,163 (2006). The Commission in that order also rescinded Market Behavior Rules 2 and 6. *Id.* The Commission had promulgated former Market Behavior Rule 5 along with the other Market Behavior Rules in *Investigation of Terms and Conditions of Public Utility Market-Based Rate Authorizations* , “Order Amending Market-Based Rate Tariffs and Authorizations,” 105 FERC ¶ 61,218 (2003), *reh'g denied* , 107 FERC ¶ 61,175

(2004)(Market Behavior Rules Order). 4 18 CFR 35.37(d) (effective February 27, 2006). II. Background 2. In the NOPR, the Commission stated that subsequent to the issuance of Order No. 644 and the Market Behavior Rules Order, Congress provided the Commission with specific anti-manipulation authority in sections 315 and 1283 of the Energy Policy Act of 2005 (EPAct 2005). 5 To implement this new authority, the Commission issued Order No. 670, where we said we would adhere to the generally applicable five-year statute of limitations where we seek civil penalties for violations of the new anti-manipulation rules. 6 In the NOPR we pointed out that it would be inconsistent to allow complaints or enforcement actions seeking civil penalties for alleged violations to our anti-manipulation authority to be commenced more than three years after the transactions giving rise to such actions were carried out, but not to require that the data and information related to such transactions be retained for at least that long. Accordingly, the NOPR proposed to extend the record retention requirements of §§ 284.288(b) and 284.403(b) regarding natural gas records, and § 35.37(d) regarding electric records, from three to five years, in order to be consistent with the recently issued Order No. 670. 7 5 Energy Policy Act of 2005, Public Law 109-58, 119 Stat. 594 (2005), sections 315 and 1283. 6 *Prohibition of Energy Market Manipulation* , Order No. 670, 71 FR 4244 (Jan. 26, 2006), FERC Stats. & Regs. ¶ 31,202, p. 30,069 at P 63

(2006)(Order No. 670). In Order No. 670, the Commission did not adopt a specific statute of limitations on complaints or enforcement actions that may be brought pursuant to the Commission's anti-manipulation authority, but we did note that, when a statutory provision under which civil penalties may be imposed lacks its own statute of limitations (as is the case with respect to the Commission's anti-manipulation authority), a five-year limitation period applies. *Id. citing* 28 U.S.C. 2462 (2000). 7 NOPR at P 7. III. Discussion 3. Two parties, the Edison Electric Institute and its Alliance of Energy Suppliers (together, EEI) and the American Public Gas Association (APGA), filed comments. 8 EEI and APGA seek clarification regarding certain implementation issues involving the Commission's proposal to extend the record retention requirement from three to five years, but do not object to the proposed five-year retention period. 8 Another party, Edison Mission Energy, Edison Mission Market and Trading, Inc., and Midwest Generation EME, LLC (Edison Mission), filed a motion to intervene pursuant to the Commission's Rules of Practice and Procedure, 18 CFR 385.212 and 385.214. A. Comments 4. EEI states that under the current rule, a party is no longer required to maintain records created on March 1, 2002 after March 1, 2005. 9 EEI points out that if the proposed rule were finalized on May 1, 2006, then parties who no longer have records from March 2002 would technically be out of compliance with the Commission's rules because the March 2002 records were not maintained for five years. 10 Therefore, EEI requests that the Commission specify in the Final Rule that all new records must be maintained for five years and any existing records must be maintained for five years, but that removal of records three or more years old prior to issuance of the Final Rule will not be a rule violation. 11 9 EEI at 2. 10 *Id.* 11 *Id.* 5. APGA supports the Commission's proposal to extend the record retention requirement provided in §§ 284.288 and 284.403 of the Commission's regulations from three to five years. 12 APGA, however, requests the Commission clarify that the five-year period is a minimum period, subject to extension if at the end of a five-year period private parties or the Commission have initiated an investigation or formal litigation (whether regulatory or judicial) against a jurisdictional entity. 13 Accordingly, APGA urges the Commission to make clear that destruction of records at the end of the five-year period (or thereafter) is not permitted so long as an investigation or formal litigation involving the affected entity is ongoing. 14 12 APGA at 2. 13 *Id.* 14 *Id.* B. Commission Determination 6. The Commission adopts the Final Rule as proposed in the NOPR and revises §§ 284.288(b) and 284.403(b) of our regulations to require applicable sellers to retain for a period of five years all data and information upon which they bill the prices charged for natural gas sales or prices they report for use in price indices. Similarly, we revise § 35.37(d) of the Commission's regulations to require applicable sellers to retain for a period of five years all data and information upon which they bill the prices charged for electricity and related products in sales made under their market-based rate tariffs and authorizations or prices they report for use in price indices. These revisions reflect a two-year increase in the record retention requirement applicable to transactions pursuant to blanket certificates for unbundled natural gas sales services held by interstate natural gas pipelines, blanket marketing certificates held by persons making sales for resale of natural gas at negotiated rates in interstate commerce, and market-based rate authorizations held by certain sellers of electricity and related products. The extension of the record retention requirement we adopt here is necessary to ensure consistency with the new rule prohibiting market manipulation adopted in Order No. 670 and the generally applicable five-year statute of limitations where we seek civil penalties for violations of the new anti-manipulation rules or other rules, regulations, or orders as to which the price data may be relevant. 7. In response to EEI's comments, the Final Rule does not apply retroactively to records that were not retained because they were three or more years old. The Final Rule requires that all new records must be retained for five years and any existing records, including those more than three years old, must be retained for five years. However, the failure to retain records more than three years old, prior to the effective date of the Final Rule, will not be a violation of the Final Rule. 8. In response to APGA's comments, the Commission notes that upon the commencement of an investigation, whether formal or informal, the entity being investigated is routinely directed to preserve and retain all existing and future records relevant to the subject matter of the investigation. Moreover, we note that §§ 125.2( *l* ) and 225.2( *l* ) of our regulations require that entities involved in litigation are to retain all relevant records. 15 15 18 CFR 125.2( *l* ) and 225.2( *l* ) (2005). IV. Information Collection Statement 9. As discussed herein, the Commission is extending the record retention period of §§ 284.288(b), 284.403(b) and 35.37(d) of the Commission's regulations from three years to five years consistent with the statute of limitations that applies to actions seeking civil penalties for violations of the Commission's new anti-manipulation rule or other rules, regulations, or orders as to which price data and information may be relevant. The increased duration of information retention contained in this Final Rule has been submitted to the Office of Management and Budget

(OMB)for review under the section 3507(d) of the Paperwork Reduction Act of 1995. 16 OMB's regulations require OMB to approve certain information collection requirements imposed by agency rule. 17 16 44 U.S.C. 3507(d) (2000). 17 5 CFR 1320.11 (2005). 10. The Commission's regulations in §§ 284.288(b), 284.403(b) and 35.37(d) specify the mandatory record retention requirements applicable to certain sellers of natural gas and electricity. The information provided to the Commission under part 284 for record retention purposes remains identified as FERC-549. The Commission identifies the information provided for under part 35 as FERC-516. As discussed above, the Commission is extending the mandatory record retention requirements in Parts 35 and 284 of its regulations for an additional two years. 11. Comments were solicited in the NOPR on the need for the increased record retention period, whether it will have practical utility, the accuracy of burden estimates in the NOPR, and for suggested methods of minimizing respondents' burdens. No comments were received on the need for, or burden or costs, of the increased records retention period. The burden for complying with this Final Rule is estimated as follows: Data collection FERC-516 & FERC-549 Number of respondents Number of responses Hours per response Total annual hours Records Retention: FERC-516 1,150 1 2 2,300 FERC-549 222 1 2 444 Totals 1,372 1 2 2,744 *Total Annual hours for Record Retention:* Recordkeeping, 2,744 hours. *Information Retention Costs:* The Commission projects an annualized average cost of all respondents as 2,744 hours @ $17 an hour = $46,648 (staffing) + $2,538,200 (1,372 entities @ $925 per year × 2 (storage)). This cost is based on 120 cubic feet (20 four-drawer file cabinets transferred off site to a storage facility). The costs include cubic feet of storage plus the cost of floor space plus the costs for records storage cartons. The Commission is requiring that entities retain records for an additional two years. Total costs = $2,584,848. Greater savings can be accomplished if documents are stored electronically, *i.e.* , one file cabinet (four-drawer) (10,000 pages on average) = 500 MegaBytes (MByte) = one CD ROM. *Title:* FERC-549, Gas Pipeline Rates: Natural Gas Policy Act, Section 311; FERC-516, Electric Rate Schedule Filings. *Action:* Proposed Collection. *OMB Control No:* 1902-0086 and 1902-0096. *Respondents:* Businesses or other for profit. *Frequency of Responses:* Records of market-based rate transactions shall be retained for five years instead of three. *Necessity of the Information:* It would be very difficult (if possible at all) for the Commission to monitor and prosecute violations of pipeline and blanket certificate sales of natural gas and market-based rate sales of electricity unless the underlying data and information supporting the prices charged for sales were retained. This data retention requirement is consistent with the information and data retention requirements applicable to sellers having cost-based rates. 18 Requiring pipeline and blanket certificate sellers of natural gas, and market-based rate sellers of electricity, to retain records is also consistent with the Commission's past practices as set forth in §§ 284.288(b), 284.403(b) and 35.37(d) of the Commission's regulations and, although the Commission adopts a retention period of five years (as opposed to the previous three-year requirement), such longer period is now required to ensure the information and data will remain available to support complaints and enforcement actions involving civil penalties for violations that occurred more than three years earlier. 18 *See* 18 CFR parts 125 and 225 (2005). V. Environmental Analysis 12. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment. 19 The Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment. Included in the exclusion are rules that are clarifying, corrective, or procedural or that do not substantially change the effect of the regulations being amended. 20 This Final Rule does not substantially change the regulations being amended, but merely extends for an additional period of time the existing retention requirements of the regulations and, therefore, falls under this exception; consequently, no environmental assessment is necessary. 19 *Regulations Implementing the National Environmental Policy Act* , Order No. 486, 52 FR 47897 (1987), FERC Stats. & Regs. ¶ 30,783 (1987). 20 18 CFR 380.4(a)(2)(ii) (2005). VI. Regulatory Flexibility Act Certification 13. The Regulatory Flexibility Act of 1980 21 generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities. 22 The Commission is not required to make such analyses if a rule would not have such an effect. The Final Rule merely extends an already existing record retention requirement from three to five years. Therefore, the Commission certifies that the Final Rule will not have a significant economic impact on a substantial number of small entities. 21 15 U.S.C. 601-612 (2000). 22 The RFA definition of “small entity” refers to the definition provided in the Small Business Act, which defines a “small business concern” as a business which is independently owned and operated and which is not dominant in its field of operation. 15 U.S.C. 632 (2000). The Small Business Size Standards component of the North American Industry Classification System defines a small electric utility as one that, including its affiliates, is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and whose total electric output for the preceding fiscal years did not exceed 4 million MWh. 13 CFR 121.201 (Section 22, Utilities, North American Industry Classification System, NAICS) (2004). VII. Document Availability 14. In addition to publishing the full text of this document in the **Federal Register** , the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page ( *http://www.ferc.gov* ) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. E.S.T.) at 888 First Street, NE., Room 2A, Washington, DC 20426. 15. From the Commission's Home Page on the Internet, this information is available in the eLibrary. The full text of this document is available on eLibrary both in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field. 16. User assistance is available for eLibrary and the Commission's Web site during normal business hours. For assistance, please contact Online Support at 1-866-208-3676 (toll free) or 202-502-6652 (e-mail at *FERCOnlineSupport@FERC.gov* ), or the Public Reference Room at 202-502-8371, TTY 202-502-8659 (e-mail at *public.referenceroom@ferc.gov* ). VIII. Effective Date and Congressional Notification 17. This Final Rule will be effective June 26, 2006. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule is not a “major rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996. 23 The Commission will submit the Final Rule to both houses of Congress and the Government Accountability Office. 23 *See* 5 U.S.C. 804(2)

(2000)List of Subjects 18 CFR Part 35 Electric power rates, Electric utilities, Reporting and recordkeeping requirements. 18 CFR Part 284 Continental shelf, Natural gas, Reporting and recordkeeping requirements. By the Commission. Magalie R. Salas, Secretary. In consideration of the foregoing, the Commission amends parts 35 and 284 of Chapter I, Title 18, *Code of Federal Regulations* , as follows: PART 35—FILING OF RATE SCHEDULES AND TARIFFS 1. The authority citation for part 35 continues to read as follows: Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352. 2. In § 35.37, paragraph (d), the word “three” is removed and the word “five” is inserted in its place. PART 284—CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES 1. The authority citation for part 284 continues to read as follows: Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7532; 43 U.S.C. 1331-1356. 2. In § 284.288, paragraph (b), the word “three” is removed and the word “five” is inserted in its place. 3. In § 284.403, paragraph (b), the word “three” is removed and the word “five” is inserted in its place. [FR Doc. E6-8098 Filed 5-25-06; 8:45 am] BILLING CODE 6717-01-P POSTAL SERVICE 39 CFR Part 111 New Preparation for Periodicals Flats in Mixed Area Distribution Center Bundles and Sacks AGENCY: Postal Service. ACTION: Final rule. SUMMARY: To improve service for Periodicals mail, the Postal Service provided mailers the option to prepare origin mixed area distribution center

(ADC)bundles and sacks beginning October 27, 2005. This final rule adopts our proposal to make the preparation of origin mixed ADC bundles and sacks required beginning July 6, 2006. DATES: *Effective Date:* July 6, 2006. FOR FURTHER INFORMATION CONTACT: Donald Lagasse, 202-268-7269. SUPPLEMENTARY INFORMATION: Background On October 27, 2005, the Postal Service provided Periodicals mailers an option to separate their residual mail prepared in mixed area distribution center

(ADC)bundles and sacks and to create a new type of mixed ADC bundle and sack. We offered this option because it improves service for some Periodicals without increasing our processing costs. The option allows a significant portion of Periodicals mail prepared in mixed ADC bundles and sacks to be processed with First-Class Mail and travel on the surface transportation network. On March 7, 2006 (71 FR 11366), we proposed to make this preparation mandatory to ensure all Periodicals mailers prepare their mail consistently and in a way that improves service. We did not receive any comments on our proposal. Summary of Changes Under the new preparation, mailers must separate some mixed ADC mail according to the destination ZIP Codes in labeling list L201. Pieces that mailers prepare according to L201 are processed with First-Class Mail by the processing facility serving the entry office. The remaining mixed ADC mail, destined for ZIP Codes farther from the office of entry, is sent to one of the 34 facilities designated in labeling list L009 for consolidated processing. We provide the new standards below. The effective date of these changes is July 6, 2006. We adopt the following amendments to *Mailing Standards of the United States Postal Service,* Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR 111.1. List of Subjects in 39 CFR Part 111 Postal Service. Accordingly, 39 CFR part 111 is amended as follows: PART 111—[AMENDED] 1. The authority citation for 39 CFR part 111 continues to read as follows: Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 414, 416, 3001-3011, 3201-3219, 3403-3406, 3621, 3626, 5001. 2. Amend *Mailing Standards of the United States Postal Service* , Domestic Mail Manual

(DMM)as follows: 705 Advanced Preparation and Special Postage Payment Systems 9.0 Preparation for Cotraying and Cosacking Bundles of Automation and Presorted Flats 9.2 Periodicals 9.2.5 Sack Preparation and Labeling *[Revise the bundle labeling requirements in item f for origin mixed ADC mail.]* f. *Origin mixed ADC.* Required for any remaining pieces for destinations in L201, Column B, corresponding to the origin ZIP Code in Column A. There is no minimum for the number of pieces in the sack, but bundles of fewer than six pieces at 5-digit, 3-digit, and ADC bundle levels are not permitted. 1. Line 1: Use L201, Column C. 2. Line 2: “PER” or “NEWS” as applicable, followed by “FLTS WKG W FCM.” 9.2.6 Optional Tray Preparation—Flat-Size Pieces a. ADC * * * *[Revise item a2 to match the CIN code.]* 2. Line 2: “PER” or “NEWS” as applicable, followed by “FLTS,” followed by “ADC,” followed by “BC/NBC.” c. Mixed ADC * * * *[Revise item c2 to match the CIN code.]* 2. Line 2: “PER” or “NEWS” as applicable, followed by “FLTS,” followed by “BC/NBC WKG.” 10.0 Preparation for Merged Containerization of Bundles of Flats Using City State Product 10.1 Periodicals 10.1.4 Sack Preparation and Labeling *[Revise the preparation requirements in item h for origin mixed ADC mail.]* h. *3-digit through mixed ADC sacks.* Mailers must sack and label the following bundles according to 9.2 for cosacking of automation rate and presorted rate bundles: 1. Any 5-digit scheme and 5-digit bundles remaining after preparing sacks under 10.1.4a through 10.1.4g. 2. All 3-digit scheme, 3-digit, ADC, origin mixed ADC, and mixed ADC bundles. 3. If there are no automation rate pieces in the mailing job, sack and label under 707.22.6. 4. If there are no Presorted rate bundles in the mailing job, sack and label under 707.25.3. 11.0 Preparation of Cobundled Automation Rate and Presorted Rate Flats 11.2 Periodicals 11.2.2 Bundle Preparation *[Revise the bundling requirements in item g for origin mixed ADC mail.]* g. *Origin mixed ADC* , required; no minimum; for any remaining pieces for destinations in L201, Column B, corresponding to the origin ZIP Code in Column A; tan Label X or OEL. 707 Periodicals 22.0 Preparation of Presorted Periodicals 22.2 Bundle Preparation *[Revise the bundle labeling requirements in item e for origin mixed ADC mail.]* e. *Origin mixed ADC* , required; no minimum; for any remaining pieces for destinations in L201, Column B, corresponding to the origin ZIP Code in Column A; tan label X or OEL. 22.6 Sack Preparation—Flat-Size Pieces and Irregular Parcels *[Revise the sacking requirements in item f for origin mixed ADC mail.]* f. *Origin mixed ADC* , required; no minimum; for any remaining bundles for destinations in L201, Column B, corresponding to the origin ZIP Code in Column A. 1. Line 1: Use L201, Column C. 2. Line 2: “PER” or “NEWS” as applicable, followed by “FLTS” or “IRREG” as applicable, followed by “WKG W FCM.” 25.0 Preparation of Flat-Size Automation Periodicals 25.2 Bundling and Labeling *[Revise the bundling and labeling requirements in item f for origin mixed ADC mail.]* f. *Origin mixed ADC* , required; no minimum; for any remaining pieces for destinations in L201, Column B, corresponding to the origin ZIP Code in Column A; tan label X or OEL. 25.3 Sacking and Labeling *[Revise the sacking and labeling requirements in item g for origin mixed ADC mail.]* g. *Origin mixed ADC* , required; no minimum; for any remaining pieces for destinations in L201, Column B, corresponding to the origin ZIP Code in Column A; labeling: 1. Line 1: Use L201, Column C. 2. Line 2: “PER FLTS WKG W FCM” or “NEWS FLTS WKG W FCM,” as applicable. Neva R. Watson, Attorney, Legislative. [FR Doc. E6-8091 Filed 5-25-06; 8:45 am] BILLING CODE 7710-12-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 403 [CMS-4005-F] RIN 0938-AJ67 Medicare Program; State Health Insurance Assistance Program

(SHIP)AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: This rule adopts as final the provisions in the interim final regulation that published June 1, 2000, which explain the terms and conditions that apply to State grants for counseling and assistance to Medicare beneficiaries, and makes several minor technical clarifications. DATES: These regulations are effective June 26, 2006. FOR FURTHER INFORMATION CONTACT: Eric Lang, 410-786-3199. SUPPLEMENTARY INFORMATION: I. Background A. Omnibus Budget Reconciliation Act of 1990 Section 4360 of the Omnibus Budget Reconciliation Act of 1990 (OBRA '90), Public Law 101-508, as amended, requires us to make grants to States for health insurance advisory service programs for Medicare beneficiaries. (By regulation, we have defined the term “State” or “States” to include the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.) Grants are available to provide information, counseling, and assistance relating to Medicare, Medicaid, Medicare supplemental policies, long-term care insurance, and other health insurance benefit information. This funding program is known as the State Health Insurance Assistance Program (SHIP). For a detailed discussion of the regulatory background, please see the preamble section of the interim final rule with comment (65 FR 34983). B. BBA and MMA The preamble to the interim final regulation noted that amendments to the Social Security Act (the Act) provided an additional funding source for SHIP. On August 5, 1997, the Act was amended by the Balanced Budget Act of 1997 (the BBA), which established a new Part C of the Medicare program, sections 1851 through 1859 of the Act. Part C was known at that time as the Medicare+Choice (M+C) program. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“Medicare Modernization Act,” or MMA) changed the name of Part C to the “Medicare Advantage program,” and added a new Part D of the Medicare program, section 1860D-1 through 1860D-42 of the Act, known as the Voluntary Prescription Drug Benefit Program. Section 1851(d)(1) of the Act, “Providing information to promote informed choice,” requires us to provide for activities to broadly disseminate information to Medicare beneficiaries (and prospective Medicare beneficiaries) on available MA coverage options in order to promote an active, informed selection among these options. Section 1857(e)(2)(A) of the Act, “Cost-sharing in enrollment-related costs,” authorizes us to charge and collect an administration or user fee from MA organizations for the purpose of administering this information dissemination program. Section 1860D-1(c) of the Act requires us to conduct similar activities to disseminate information about the Part D prescription drug benefit, in coordination with the activities under the Medicare Advantage program. Section 1860D-12(b)(3)(D) of the Act specifically incorporates section 1857(e)(2), giving us authority to charge user fees to sponsors of prescription drug plans under Part D. Any amounts collected in accordance with section 1857(e)(2) of the Act are available for the purpose of carrying out section 1851 (relating to enrollment and dissemination of Medicare Advantage information), section 1860D-1(c) (Medicare prescription drug coverage), and section 4360 of OBRA '90 (SHIP). II. Provisions of the Interim Final Regulation On June 1, 2000, we published an interim final rule with comment that amended our regulations at 42 CFR part 403 to provide for a two-tiered approach for making grants under SHIP. Section 403.504(a) was revised to provide that for aggregate annual expenditures of up to $10 million, grants would be made according to the existing procedures set forth in § 403.504. That is, each eligible State will receive a fixed as well as variable amount as set forth in § 403.504(b) and § 403.504(c) of that section. We stated that we plan to continue to fund this first tier of grants from our program management budget and through any congressional appropriations made for the purpose of implementing this program. With respect to the second tier, the interim final rule provided that any grants that exceed a total of $10 million annually will be made at our discretion according to criteria that will be communicated to States through the grant solicitation process (see revised § 403.504(a)). For example, in prior periods, second tier grants have been based on criteria such as the number of managed care enrollees or the number of low-income beneficiaries in each State. We decided to notify States of the criteria for awarding the grants rather than publish specific criteria in our regulations to give us the flexibility required by the dynamic nature of the health care industry. The original legislation that created the SHIP, section 4360 of OBRA '90, directed that beneficiaries be informed about their rights and options in regard to Medicare supplemental (Medigap) insurance. After that section was enacted, changes such as Medicare reform, the implementation of Part C of the Medicare Program (known at the time as the “Medicare+Choice” program and since renamed the “Medicare Advantage” program), and ongoing consolidation within the managed care industry had greatly increased beneficiaries' choices. This created a need for sources of accurate and unbiased information to allow beneficiaries to make informed choices. Greater choice for beneficiaries and specific statutory changes required SHIPs to modify, and in many instances expand, the size of their programs and the scope of services they provide. The interim final rule revised § 403.502, Availability of grants, to clarify that we award grants to States subject to fund availability, and if applicable, subject to the satisfactory progress in the State's project during the preceding grant period. We revised § 403.504(a) to specify that, for available grant funds, up to and including $10,000,000, grants will be apportioned to States according to the grant award process currently in place. In addition, we revised § 403.504(b) to highlight the availability of funds as a condition of award. We revised § 403.508(a) to emphasize the fact that States receiving grants under this subpart must use the grant money in accordance with the terms and conditions specified in the notice of grant award. III. Analysis of and Responses to Public Comments We received no public comments on the interim final rule. Therefore, we are adopting the provisions as final without change. IV. Provisions of the Final Regulations This final rule incorporates all of the provisions of the interim final rule. • We revised Secs. 403.502 and 403.504 to change “HCFA” to “CMS.” V. Collection of Information Requirements This final rule does not impose any information collection and recordkeeping requirements that are subject to review by the Office of Management and Budget under the Paperwork Reduction Act of 1995. VI. Regulatory Impact Statement 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). 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 Core-Based 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 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 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. List of Subjects in 42 CFR Part 403 Health insurance, Hospitals, Intergovernmental relations, Medicare, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as set forth below: PART 403—SPECIAL PROGRAMS AND PROJECTS 1. The authority citation for part 403 continues to read as follows: Authority: Section 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). 2. Section 403.502 is revised to read as follows: § 403.502 Availability of grants. CMS awards grants to States subject to availability of funds, and if applicable, subject to the satisfactory progress in the State's project during the preceding grant period. The criteria by which progress is evaluated and the performance standards for determining whether satisfactory progress has been made are specified in the terms and conditions included in the notice of grant award sent to each State. CMS advises each State as to when to make application, what to include in the application, and provides information as to the timing of the grant award and the duration of the grant award. CMS also provides an estimate of the amount of funds that may be available to the State. 3. Section 403.504 is amended by— A. Revising paragraph (a); and B. Revising paragraph

(b)introductory text. The revisions read as follows: § 403.504 Number and size of grants.

(a)*General.* For available grant funds, up to and including $10,000,000, grants will be made to States according to the terms and formula in paragraphs

(b)and

(c)of this section. For any available grant funds in excess of $10,000,000, distribution of grants will be at the discretion of CMS, and will be made according to criteria that CMS will communicate to the States via grant solicitation. CMS will provide information to each State as to what must be included in the application for grant funds. CMS awards the following type of grants:

(1)New program grants.

(2)Existing program enhancement grants.

(b)*Grant award.* Subject to the availability of funds, each eligible State that submits an acceptable application receives a grant that includes a fixed amount (minimum funding level) and a variable amount. 4. Section 403.508(a) is revised to read as follows: § 403.508 Limitations.

(a)*Use of grants.* Except as specified in paragraph

(b)of this section, and in the terms and conditions in the notice of grant award, a State that receives a grant under this subpart may use the grant for any reasonable expenses for planning, developing, implementing, and/or operating the program for which the grant is made as described in the solicitation for application for the grant. (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program) Dated: January 26, 2006. Mark B. McClellan, Administrator, Centers for Medicare & Medicaid Services. Approved: February 16, 2006. Michael O. Leavitt, Secretary. [FR Doc. 06-4816 Filed 5-25-06; 8:45 am]

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