Rules and Regulations. Final rule; closures

37,539 words·~171 min read·/register/2007/03/02/07-870

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 3510-22-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 070213033-7033-01; I.D. 112706A] Fisheries of the Exclusive Economic Zone Off Alaska; Bering Sea and Aleutian Islands; 2007 and 2008 Final Harvest Specifications for Groundfish AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Final rule; closures. SUMMARY: NMFS announces 2007 and 2008 final harvest specifications and prohibited species catch

(PSC)allowances for the groundfish fishery of the Bering Sea and Aleutian Islands management area (BSAI). This action is necessary to establish harvest limits for groundfish during the 2007 and 2008 fishing years and to accomplish the goals and objectives of the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP). The intended effect of this action is to conserve and manage the groundfish resources in the BSAI in accordance with the Magnuson-Stevens Fishery Conservation and Management Act (MSA). DATES: The 2007 and 2008 final harvest specifications and associated apportionment of reserves are effective at 1200 hrs, Alaska local time (A.l.t.), March 2, 2007, through 2400 hrs, A.l.t., December 31, 2008. ADDRESSES: Copies of the Final Alaska Groundfish Harvest Specifications Environmental Impact Statement (EIS), Record of Decision (ROD), and Final Regulatory Flexibility Analysis

(FRFA)prepared for this action are available from Alaska Region, NMFS, P.O. Box 21668, Juneau, AK 99802, Attn: Ellen Sebastian, or from the Alaska Region Web site at *http://www.fakr.noaa.gov* . Copies of the 2006 Stock Assessment and Fishery Evaluation

(SAFE)report for the groundfish resources of the BSAI, dated November 2006, are available from the North Pacific Fishery Management Council, West 4th Avenue, Suite 306, Anchorage, AK 99510-2252, 907-271-2809, or from its Web site at *http://www.fakr.noaa.gov/npfmc* . FOR FURTHER INFORMATION CONTACT: Mary Furuness, 907-586-7228, or e-mail *mary.furuness@noaa.gov* . SUPPLEMENTARY INFORMATION: Federal regulations at 50 CFR part 679 implement the FMP and govern the groundfish fisheries in the BSAI. The North Pacific Fishery Management Council (Council) prepared the FMP, and NMFS approved it under the MSA. General regulations governing U.S. fisheries also appear at 50 CFR part 600. The FMP and its implementing regulations require NMFS, after consultation with the Council, to specify the total allowable catch

(TAC)for each target species and for the “other species” category, the sum must be within the optimum yield

(OY)range of 1.4 million to 2.0 million metric tons

(mt)(see § 679.20(a)(1)(i)). Also specified are apportionments of TACs, and Community Development Quota

(CDQ)reserve amounts, PSC allowances, and prohibited species quota

(PSQ)reserve amounts. The final harvest specifications listed in Tables 1 through 15 of this action satisfy these requirements. For 2007 and 2008, the sum of TACs for each year is 2 million mt. Section 679.20(c)(3) further requires NMFS to consider public comment on the proposed annual TACs and apportionments thereof and the proposed PSC allowances, and to publish final harvest specifications in the **Federal Register** . The 2007 and 2008 proposed harvest specifications and PSC allowances for the groundfish fishery of the BSAI were published in the **Federal Register** on December 15, 2006 (71 FR 75460). Comments were invited and accepted through January 16, 2007. NMFS received 4 letters with several comments on the proposed harvest specifications. These comments are summarized and responded to in the Response to Comments section of this rule. NMFS consulted with the Council during the December 2006 Council meeting in Anchorage, AK. After considering public comments, as well as biological and economic data that were available at the Council's December meeting, NMFS is implementing the 2007 and 2008 final harvest specifications as recommended by the Council. Acceptable Biological Catch

(ABC)and TAC Harvest Specifications The final ABC levels are based on the best available biological and socioeconomic information, including projected biomass trends, information on assumed distribution of stock biomass, and revised technical methods used to calculate stock biomass. In general, the development of ABCs and overfishing levels

(OFLs)involves sophisticated statistical analyses of fish populations and is based on a successive series of six levels, or tiers, of reliable information available to fishery scientists. Tier 1 represents the highest level of data quality and tier 6 the lowest level of data quality available. In December 2006, the Scientific and Statistical Committee (SSC), Advisory Panel (AP), and Council reviewed current biological information about the condition of the BSAI groundfish stocks. The Council's Plan Team compiled and presented this information in the 2006 SAFE report for the BSAI groundfish fisheries, dated November 2006. The SAFE report contains a review of the latest scientific analyses and estimates of each species' biomass and other biological parameters, as well as summaries of the available information on the BSAI ecosystem and the economic condition of groundfish fisheries off Alaska. The SAFE report is available for public review (see ADDRESSES ). From these data and analyses, the Plan Team estimates an OFL and ABC for each species or species category. In December 2006 the SSC, AP, and Council reviewed the Plan Team's recommendations. Except for Bering Sea subarea and Aleutian Islands

(AI)subarea pollock, yellowfin sole, rock sole, and the “other species” category, the SSC, AP, and Council endorsed the Plan Team's ABC recommendations. For 2007 and 2008, the SSC recommended higher pollock OFLs and ABCs than the OFLs and ABCs recommended by the Plan Team. For Bering Sea subarea pollock, the SSC recommended using a procedure that sets the ABCs at the F 40 %% level which results in ABCs lower than the maximum permissible, but higher than the Plan Teams recommendations. For AI subarea pollock, the SSC recommended using tier 3 management which results in maximum permissible ABCs and OFLs higher than the tier 5 management recommended by the Plan Team. For yellowfin sole and rock sole, the SSC recommended using tier 1 management which results in maximum permissible ABCs and OFLs higher than the tier 3 management recommended by the Plan Team. For “other species,” the SSC recommended using tier 6 management for shark and octopus species resulting in lower ABCs than the Plan Team's recommended tier 5 management. The SSC provided 2007 and 2008 ABC and OFL amounts obtained as the sum of the individual species ABCs in the “other species” category since the current FMP specifies management at the group level. For all species, the AP endorsed the ABCs recommended by the SSC, and the Council adopted them. The Plan Team, SSC, AP and Council recommended that total removals of Pacific cod from the BSAI not exceed ABC recommendations. In 2006, the Board of Fisheries for the State of Alaska (State) established a guideline harvest level

(GHL)west of 170 degrees west longitude in the AI subarea equal to 3 percent of the Pacific cod ABC in the BSAI. Accordingly, the Council recommended that the 2007 and 2008 TACs be adjusted downward from the ABCs by amounts equal to the 2007 and 2008 GHLs. The final TAC recommendations were based on the ABCs as adjusted for other biological and socioeconomic considerations, including maintaining the sum of the TACs within the required OY range of 1.4 million to 2.0 million mt. The Council adopted the AP's 2007 and 2008 TAC recommendations. None of the Council's recommended TACs for 2007 or 2008 exceeds the final 2007 or 2008 ABC for any species category. The 2007 and 2008 harvest specifications approved by the Secretary of Commerce (Secretary) are unchanged from those recommended by the Council and are consistent with the preferred harvest strategy alternative in the EIS. The 2007 and 2008 TACs are less than the maximum permissible ABCs recommended by the Council's plan teams and SSC. NMFS finds that the recommended OFLs, ABCs, and TACs are consistent with the biological condition of groundfish stocks as described in the 2006 SAFE report that was approved by the Council. Other Rules Affecting the 2007 and 2008 Harvest Specifications The following paragraphs identify actions that are currently under consideration by the Council and that, if submitted to and approved by the Secretary, could change the 2007 and 2008 final harvest specifications. The existing 2007 harvest specifications will be updated in early 2007 when final harvest specifications for 2007 and new harvest specifications for 2008 are implemented. The 2008 harvest specifications will be updated in early 2008, when new harvest specifications for 2008 and 2009 are implemented. In April 2006, the Council adopted Amendment 85 to the FMP. Amendment 85 would revise the BSAI Pacific cod sector allocations. If approved by the Secretary, final regulations implementing Amendment 85 are anticipated to be effective for the 2008 fishing year. The notice of availability of Amendment 85 to the FMP was published December 7, 2006 (71 FR 70943), and the comment period ended February 5, 2007. In June 2006 the Council adopted Amendment 80 to the FMP. Amendment 80 would provide specific groundfish allocations to the non-American Fisheries Act

(AFA)trawl catcher/processor sector and allow the formation of cooperatives. If approved by the Secretary, final regulations implementing Amendment 80 also are anticipated to be effective for the 2008 fishing year. The Council also adopted Amendment 84 that would modify current regulations for managing incidental catch of Chinook and chum salmon and may change the PSC limits. The Council also is considering two proposals. One would allocate the Pacific cod TAC by Bering Sea subarea and AI subarea instead of a combined BSAI TAC. The other would separate some species from the “other rockfish” or “other species” categories to establish individual OFLs, ABCs, and TACs. Changes From the 2007 and 2008 Proposed Harvest Specifications in the BSAI In October 2006 the Council's recommendations for the 2007 and 2008 proposed harvest specifications (71 FR 75460, December 15, 2006) were based largely on information contained in the 2005 SAFE report for the BSAI groundfish fisheries, dated November 2005. The Council recommended that OFLs and ABCs for stocks in tiers 1 through 3 be based on biomass projections as set forth in the 2005 SAFE report and estimates of groundfish harvests through the 2006 fishing year. For stocks in tiers 4 through 6, for which biomass projections could not be made, the Council recommended that OFLs and ABCs be unchanged from 2006 until the 2006 SAFE report could be completed. The 2006 SAFE report (dated November 2006), which was not available when the Council made its recommendations in October 2006, contains the best and most recent scientific information on the condition of the groundfish stocks. In December 2006, the Council considered the 2006 SAFE report in making its recommendations for the 2007 and 2008 final harvest specifications. Based on the 2006 SAFE report, the sum of the 2007 and 2008 recommended final TACs for the BSAI (2,000,000 mt) is the same as the sum of the 2007 and 2008 proposed TACs. Compared to the 2007 and 2008 proposed harvest specifications, the Council's 2006 final TAC recommendations increase fishing opportunities for fishermen and economic benefits to the nation for species for which the Council had sufficient information to raise TAC levels. These species include BSAI flathead sole, Pacific cod, sablefish, yellowfin sole, “other flatfish,” Pacific ocean perch, northern rockfish, “other rockfish,” and squid. Conversely, the Council reduced TAC levels to provide greater protection for several species including Bering Sea subarea pollock, rock sole, Greenland turbot, shortraker rockfish, rougheye rockfish, and “other species.” The changes recommended by the Council were based on the best scientific information available, consistent with National Standard 2 of the MSA, and within a reasonable range of variation from the proposed TAC recommendations so that the affected public was fairly apprised and could make meaningful comments. Comparison of Final 2007 and 2008 With Proposed 2007 and 2008 Total Allowable Catch in the BSAI Species Area 2007 final TAC 2007 proposed TAC 2007 final minus proposed 2008 final TAC 2008 proposed TAC 2008 final minus proposed Pollock BS 1,394,000 1,419,800 −25,800 1,318,000 1,168,700 149,300 AI 19,000 19,000 0 19,000 19,000 0 Bogoslof 10 10 0 10 10 0 Pacific cod BSAI 170,720 144,045 26,675 127,070 118,049 9,021 Sablefish BS 2,980 2,580 400 2,970 2,240 730 AI 2,810 2,620 190 2,800 2,260 540 Atka mackerel EAI/BS 23,800 16,782 7,018 17,600 24,481 *−6,881 CAI 29,600 38,718 −9,118 22,000 27,728 −5,728 WAI 9,600 7,500 2,100 15,300 12,891 2,409 Yellowfin sole BSAI 136,000 117,100 18,900 150,000 106,400 43,600 Rock sole BSAI 55,000 85,736 −30,736 75,000 111,600 −36,600 Greenland turbot BS 1,680 1,815 −135 1,720 1,815 −95 AI 760 815 −55 770 815 −45 Arrowtooth flounder BSAI 20,000 20,000 0 30,000 144,800 −114,800 Flathead sole BSAI 30,000 22,000 8,000 45,000 52,200 −7,200 Other flatfish BSAI 10,000 5,000 5,000 21,400 18,100 3,300 Alaska plaice BSAI 25,000 32,000 −7,000 60,000 129,637 −69,637 Pacific ocean perch BS 2,160 3,020 −860 4,080 3,020 1,060 EAI 4,970 3,322 1,648 4,900 3,322 1,578 CAI 5,050 3,277 1,773 5,000 3,277 1,723 WAI 7,720 5,481 2,239 7,620 5,481 2,139 Northern rockfish BSAI 8,190 5,000 3,190 8,150 5,000 3,150 Shortraker rockfish BSAI 424 580 −156 424 580 −156 Rougheye rockfish BSAI 202 224 −22 202 224 −22 Other rockfish BS 414 810 −396 414 810 −396 AI 585 590 −5 585 590 −5 Squid BSAI 1,970 1,275 695 1,970 1,970 0 Other species BSAI 37,355 40,900 −3,545 58,015 35,000 23,015 Total 2,000,000 2,000,000 0 2,000,000 2,000,000 0 As mentioned in the 2007 and 2008 proposed harvest specifications, NMFS is apportioning the amounts shown in Table 2 from the non-specified reserve to increase the initial TAC

(ITAC)of several target species. NMFS is revising the BSAI species that will be allocated to the CDQ Program to include Bering Sea pollock, AI pollock, Pacific cod, sablefish from both the fixed gear and trawl gear allocations, Atka mackerel, yellowfin sole, rock sole, Bering Sea Greenland turbot, arrowtooth flounder, flathead sole, and AI Pacific ocean perch. This differs from the suite of species that NMFS proposed to allocate to the CDQ Program, as described in the 2007 and 2008 proposed harvest specifications (71 FR 75460, December 15, 2006). NMFS originally proposed, in addition to the species listed above, allocating AI Greenland turbot, “other flatfish,” and Alaska plaice to the CDQ Program. NMFS also proposed to not allocate sablefish from the trawl allocation to the CDQ Program. Furthermore, NMFS is increasing the 2008 CDQ reserve allocations in Table 1 to 10.7 percent from 7.5 percent, except for pollock and sablefish. The statutory requirements and agency determination for changing the suite of species and percentage allocations made to the CDQ Program are described both in the 2007 and 2008 proposed harvest specifications and in the response to Comment 3 in the Response to Comments section of this action. Catch in the CDQ fisheries of species in TAC categories that are not allocated to the CDQ Program will be managed under the regulations and fishery status that applies to the TAC category in the non-CDQ groundfish fisheries. Retention of species closed to directed fishing will either be limited to maximum retainable amounts or all catch of the species will be required to be discarded. Notices of closures to directed fishing and retention requirements for these species will apply to the CDQ and non-CDQ sectors. The catch of these species in the CDQ fisheries would not constrain the catch of other CDQ species unless catch by all sectors approached an OFL. The 2007 and 2008 final TAC recommendations for the BSAI are within the OY range established for the BSAI and do not exceed ABCs for any single species or complex. Table 1 lists the 2007 and 2008 final OFL, ABC, TAC, ITAC, and CDQ reserve amounts of the BSAI groundfish. The apportionment of TAC amounts among fisheries and seasons is discussed below. TABLE 1.—2007 and 2008 Overfishing Level (OFL), Acceptable Biological Catch (ABC), Total Allowable Catch (TAC), Initial TAC (ITAC), and CDQ Reserve Allocation of Groundfish in the BSAI 1 [Amounts are in metric tons] Species Area 2007 OFL ABC TAC ITAC 2 CDQ 3 2008 OFL ABC TAC ITAC 2 CDQ 3 Pollock 4 BS 2 1,640,000 1,394,000 1,394,000 1,254,600 139,400 1,431,000 1,318,000 1,318,000 1,186,200 131,800 AI 2 54,500 44,500 19,000 17,100 1,900 50,300 41,000 19,000 17,100 1,900 Bogoslof 48,000 5,220 10 10 0 48,000 5,220 10 10 0 Pacific cod 5 BSAI 207,000 176,000 170,720 145,112 12,804 154,000 131,000 127,070 108,010 13,596 Sablefish 6 BS 3,520 2,980 2,980 2,458 410 3,290 2,970 2,970 1,263 111 AI 3,320 2,810 2,810 2,284 474 3,100 2,800 2,800 596 52 Atka mackerel BSAI 86,900 74,000 63,000 53,550 4,725 64,200 54,900 54,900 46,665 5,874 EAI/BS n/a 23,800 23,800 20,230 1,785 n/a 17,600 17,600 14,960 1,883 CAI n/a 29,600 29,600 25,160 2,220 n/a 22,000 22,000 18,700 2,354 WAI n/a 20,600 9,600 8,160 720 n/a 15,300 15,300 13,005 1,637 Yellowfin sole BSAI 240,000 225,000 136,000 115,600 10,200 261,000 245,000 150,000 127,500 16,050 Rock sole BSAI 200,000 198,000 55,000 46,750 4,125 271,000 268,000 75,000 63,750 8,025 Greenland turbot BSAI 15,600 2,440 2,440 2,074 n/a 16,000 2,490 2,490 2,117 n/a BS n/a 1,680 1,680 1,428 126 n/a 1,720 1,720 1,462 184 AI n/a 760 760 646 0 n/a 770 770 655 0 Arrowtooth flounder BSAI 193,000 158,000 20,000 17,000 1,500 208,000 171,000 30,000 25,500 3,210 Flathead sole BSAI 95,300 79,200 30,000 25,500 2,250 92,800 77,200 45,000 38,250 4,815 Other flatfish 7 BSAI 28,500 21,400 10,000 8,500 0 28,500 21,400 21,400 18,190 0 Alaska plaice BSAI 241,000 190,000 25,000 21,250 0 252,000 199,000 60,000 51,000 0 Pacific ocean perch BSAI 26,100 21,900 19,900 16,915 n/a 25,600 21,600 21,600 18,360 n/a BS n/a 4,160 2,160 1,836 0 n/a 4,080 4,080 3,468 0 EAI n/a 4,970 4,970 4,225 373 n/a 4,900 4,900 4,165 524 CAI n/a 5,050 5,050 4,293 379 n/a 5,000 5,000 4,250 535 WAI n/a 7,720 7,720 6,562 579 n/a 7,620 7,620 6,477 815 Northern rockfish BSAI 9,750 8,190 8,190 6,962 0 9,700 8,150 8,150 6,928 0 Shortraker rockfish BSAI 564 424 424 360 0 564 424 424 360 0 Rougheye rockfish BSAI 269 202 202 172 0 269 202 202 172 0 Other rockfish 8 BSAI 1,330 999 999 849 0 1,330 999 999 849 0 BS n/a 414 414 352 0 n/a 414 414 352 0 AI n/a 585 585 497 0 n/a 585 585 497 0 Squid BSAI 2,620 1,970 1,970 1,675 0 2,620 1,970 1,970 1,675 0 Other species 9 BSAI 91,700 68,800 37,355 31,752 0 91,700 68,800 58,015 49,313 0 Total 3,188,973 2,676,035 2,000,000 1,770,474 179,245 3,014,973 2,642,125 2,000,000 1,763,808 187,491 1 These amounts apply to the entire BSAI management area unless otherwise specified. With the exception of pollock, and for the purpose of these harvest specifications, the Bering Sea

(BS)subarea includes the Bogoslof District. 2 Except for pollock and the portion of the sablefish TAC allocated to hook-and-line and pot gear, 15 percent of each TAC is put into a reserve. The ITAC for each species is the remainder of the TAC after the subtraction of these reserves. 3 Except for Aleutian Islands Greenland turbot, “other flatfish,” Alaska plaice, Bering Sea Pacific ocean perch, northern rockfish, shortraker rockfish, rougheye rockfish, “other rockfish,” squid, and “other species,” 7.5 percent in 2007 and 10.7 percent in 2008 of the TAC is designated as a CDQ reserve for use by CDQ participants (see §§ 679.20(b)(1)(iii), 679.31, and section 305(i)(1)(B)(i) and

(ii)of the MSA). 4 Under § 679.20(a)(5)(i)(A)( *1* ), the annual Bering Sea subarea pollock TAC after subtraction for the CDQ directed fishing allowance (10 percent) and the incidental catch allowance (2.8 percent), is further allocated by sector for a directed pollock fishery as follows: inshore—50 percent; catcher/processor—40 percent; and motherships—10 percent. Under § 679.20(a)(5)(iii)(B)( *2* )( *i* ) and ( *ii* ), the annual Aleutian Islands subarea pollock TAC, after subtracting first for the CDQ directed fishing allowance (10 percent) and second for the incidental catch allowance (1,600 mt), is allocated to the Aleut Corporation for a directed pollock fishery. 5 The Pacific cod TAC is reduced by 3 percent from the ABC to account for the State of Alaska's (State) guideline harvest level in State waters of the Aleutian Islands subarea. 6 Twenty percent of the sablefish TAC allocated to hook-and-line gear or pot gear is reserved for use by CDQ participants (see § 679.20(b)(1)(iii)(B)). 7 “Other flatfish” includes all flatfish species, except for halibut (a prohibited species), flathead sole, Greenland turbot, rock sole, yellowfin sole, arrowtooth flounder and Alaska plaice. 8 “Other rockfish” includes all *Sebastes* and *Sebastolobus* species except for Pacific ocean perch, northern, shortraker, and rougheye rockfish. 9 “Other species” includes sculpins, sharks, skates and octopus. Forage fish, as defined at § 679.2, are not included in the “other species” category. Reserves and the Incidental Catch Allowance

(ICA)for Pollock Section 679.20(b)(1)(i) of the CFR requires the placement of 15 percent of the TAC for each target species or species group, except for pollock and the hook-and-line and pot gear allocation of sablefish, in a non-specified reserve. Section 679.20(b)(1)(iii)(A) of the CFR and section 305(i)(1)(B)(i) and

(ii)of the MSA further require the allocation of one-half of each TAC amount that is placed in the non-specified reserve (7.5 percent of the TAC) in 2007 and 10.7 percent in 2008 be allocated to the groundfish CDQ reserve with the exception of Bogoslof pollock, Aleutian Islands Greenland turbot, “other flatfish,” Alaska plaice, Bering Sea Pacific ocean perch, northern rockfish, shortraker rockfish, rougheye rockfish, “other rockfish,” squid, and “other species,” as explained above. Section 679.20(b)(1)(iii)(B) requires 20 percent of the hook-and-line and pot gear allocation of sablefish be allocated to the fixed gear sablefish CDQ reserve. Sections 679.20(a)(5)(i)(A), 679.20(a)(5)(iii)(B)( *2* )( *i* ), and 679.31(a) also require the allocation of 10 percent of the BSAI pollock TACs to the pollock CDQ directed fishing allowance (DFA). The entire Bogoslof District pollock TAC is allocated as an ICA (see § 679.20(a)(5)(ii)). With the exception of the hook-and-line and pot gear sablefish CDQ reserve, the regulations do not further apportion the CDQ reserves by gear. Section 679.21(e)(1)(i) requires withholding of 7.5 percent of each PSC limit, with the exception of herring, as a PSQ reserve for the CDQ fisheries. Sections 679.30 and 679.31 set forth regulations governing the management of the CDQ and PSQ reserves. Pursuant to § 679.20(a)(5)(i)(A)( *1* ), NMFS allocates a pollock ICA of 2.8 percent of the Bering Sea subarea pollock TAC after subtraction of the 10 percent CDQ reserve. This allowance is based on NMFS' examination of the pollock incidental catch, including the incidental catch by CDQ vessels, in target fisheries other than pollock from 1999 through 2006. During this 8-year period, the pollock incidental catch ranged from a low of 2.4 percent in 2006, to a high of 5 percent in 1999, with a 7-year average of 3.5 percent. Pursuant to § 679.20(a)(5)(iii)(B)(2)( *i* ) and ( *ii* ), NMFS recommends pollock ICA of 1,600 mt for AI subarea pollock after subtraction of the 10 percent CDQ DFA. This allowance is based on NMFS' examination of the pollock incidental catch, including the incidental catch by CDQ vessels, in target fisheries other than pollock from 2003 through 2006. During this 4-year period, the incidental catch of pollock ranged from a low of 5 percent in 2006 to a high of 10 percent in 2003, with a 4-year average of 7 percent. The regulations do not designate the remainder of the non-specified reserve by species or species group. Any amount of the reserve may be apportioned to a target species or to the “other species” category during the year, providing that such apportionments do not result in overfishing (see § 679.20(b)(1)(ii)). The Regional Administrator has determined that the ITACs specified for the species listed in Table 2 need to be supplemented from the non-specified reserve because U.S. fishing vessels have demonstrated the capacity to catch the full TAC allocations. Therefore, in accordance with § 679.20(b)(3), NMFS is apportioning the amounts shown in Table 2 from the non-specified reserve to increase the ITAC by 7.5 percent of the TAC in 2007. In 2008, northern rockfish, shortraker rockfish, rougheye rockfish, and Bering Sea “other rockfish” are increased by 7.5 percent of TAC and Atka mackerel, Pacific ocean perch, and Pacific cod by 4.3 percent of the TAC. Table 2.—2007 and 2008 Apportionment of Reserves to ITAC Categories [Amounts are in metric tons] Species—area or subarea 2007 Reserve amount 2007 Final ITAC 2008 Reserve amount 2008 Final ITAC Atka mackerel—Eastern Aleutian District and Bering Sea subarea 1,785 22,015 757 15,717 Atka mackerel—Central Aleutian District 2,220 27,380 946 19,646 Atka mackerel—Western Aleutian District 720 8,880 658 13,663 Pacific ocean perch—Eastern Aleutian District 373 4,598 211 4,376 Pacific ocean perch—Central Aleutian District 379 4,672 215 4,465 Pacific ocean perch—Western Aleutian District 579 7,141 328 6,805 Pacific cod—BSAI 12,804 157,916 5,464 113,474 Shortraker rockfish—BSAI 32 392 32 392 Rougheye rockfish—BSAI 15 187 15 187 Northern rockfish—BSAI 614 7,576 611 7,539 Other rockfish—Bering Sea subarea 31 383 31 383 Total 19,552 241,140 9,268 186,647 Allocation of Pollock TAC Under the American Fisheries Act

(AFA)Section 679.20(a)(5)(i)(A) requires that the pollock TAC apportioned to the Bering Sea subarea, after subtraction of the 10 percent for the CDQ program and the 2.8 percent for the ICA, be allocated as a DFA as follows: 50 percent to the inshore sector, 40 percent to the catcher/processor sector, and 10 percent to the mothership sector. In the Bering Sea subarea, 40 percent of the DFA is allocated to the A season (January 20-June 10) and 60 percent of the DFA is allocated to the B season (June 10-November 1). In October 2006, the State's Board of Fisheries adopted a proposal for a 3,000 mt pollock fishery in State waters of the AI subarea. However, this action by the State does not require a downward adjustment of the Federal AI subarea pollock TAC because the combined TAC and GHL (22,000 mt) are less than the proposed ABC of 44,500 mt. The AI directed pollock fishery allocation to the Aleut Corporation is the amount of pollock remaining in the AI subarea after subtracting 1,900 mt for the CDQ DFA (10 percent) and 1,600 mt for the ICA. In the AI subarea, 40 percent of the ABC is allocated to the A season and the remainder of the directed pollock fishery is allocated to the B season. Table 3 lists these 2007 and 2008 amounts. Section 679.20(a)(5)(i)(A)( *4* ) also includes several specific requirements regarding pollock allocations. First, 8.5 percent of the pollock allocated to the catcher/processor sector will be available for harvest by AFA catcher vessels with catcher/processor sector endorsements, unless the Regional Administrator receives a cooperative contract that provides for the distribution of harvest among AFA catcher/processors and AFA catcher vessels in a manner agreed to by all members. Second, AFA catcher/processors not listed in the AFA are limited to harvesting not more than 0.5 percent of the pollock allocated to the catcher/processor sector. Table 3 lists the 2007 and 2008 allocations of pollock TAC. Tables 10 through 15 list the AFA catcher/processor and catcher vessel harvesting sideboard limits. The tables for the pollock allocations to the Bering Sea subarea inshore pollock cooperatives and open access sector will be posted on the Alaska Region Web site at *http://www.fakr.noaa.gov.* Table 3 also lists seasonal apportionments of pollock and harvest limits within the Steller Sea Lion Conservation Area (SCA). The harvest within the SCA, as defined at § 679.22(a)(7)(vii), is limited to 28 percent of the annual DFA until April 1. The remaining 12 percent of the 40 percent of the annual DFA allocated to the A season may be taken outside the SCA before April 1 or inside the SCA after April 1. If less than 28 percent of the annual DFA is taken inside the SCA before April 1, the remainder will be available to be taken inside the SCA after April 1. The A season pollock SCA harvest limit will be apportioned to each sector in proportion to each sector's allocated percentage of the DFA. Table 3 lists by sector these 2007 and 2008 amounts. Table 3.—2007 and 2008 Allocations of Pollock TACs to the Directed Pollock Fisheries and to the CDQ Directed Fishing Allowances

(DFA)1 [Amounts are in metric tons] Area and sector 2007 Allocations 2007 A season 1 A season DFA SCA harvest limit 2 2007 B season 1 B season DFA 2008 Allocations 2008 A season 1 A season DFA SCA harvest limit 2 2008 B season 1 B season DFA Bering Sea subarea 1,394,000 n/a n/a n/a 1,318,000 n/a n/a n/a CDQ DFA 139,400 55,760 39,032 83,640 131,800 52,720 36,904 79,080 ICA 1 35,129 n/a n/a n/a 33,214 n/a n/a n/a AFA Inshore 609,736 243,894 170,726 365,841 576,493 230,597 161,418 345,896 AFA Catcher/Processors 3 487,788 195,115 136,581 292,673 461,195 184,478 129,134 276,717 Catch by C/Ps 446,326 178,531 n/a 267,796 421,993 168,797 n/a 253,196 Catch by CVs 3 41,462 16,585 n/a 24,877 39,202 15,681 n/a 23,521 Unlisted C/P Limit 4 2,439 976 n/a 1,463 2,306 922 n/a 1,384 AFA Motherships 121,947 48,779 34,145 73,168 115,299 46,119 32,284 69,179 Excessive Harvesting Limit 5 213,407 n/a n/a n/a 201,773 n/a n/a n/a Excessive Processing Limit 6 365,841 n/a n/a n/a 345,896 n/a n/a n/a Total Bering Sea DFA 1,358,871 543,548 380,484 815,322 1,284,787 513,914 359,740 770,872 Aleutian Islands subarea 1 19,000 n/a n/a n/a 19,000 n/a n/a n/a CDQ DFA 1,900 760 n/a 1,140 1,900 760 n/a 1,140 ICA 1,600 800 n/a 800 1,600 800 n/a 800 Aleut Corporation 15,500 15,500 n/a 0 15,500 15,500 n/a 0 Bogoslof District ICA 7 10 n/a n/a n/a 10 n/a n/a n/a 1 Pursuant to § 679.20(a)(5)(i)(A), the Bering Sea subarea pollock, after subtraction for the CDQ DFA (10 percent) and the ICA (2.8 percent), is allocated as a DFA as follows: inshore sector—50 percent, catcher/processor sector—40 percent, and mothership sector—10 percent. In the Bering Sea subarea, 40 percent of the DFA is allocated to the A season (January 20-June 10) and 60 percent of the DFA is allocated to the B season (June 10-November 1). Pursuant to § 679.20(a)(5)(iii)(B)( *2* )( *i* ) and ( *ii* ), the annual AI pollock TAC, after subtracting first for the CDQ directed fishing allowance (10 percent) and second the ICA (1,600 mt), is allocated to the Aleut Corporation for a directed pollock fishery. In the AI subarea, the A season is allocated 40 percent of the ABC and the B season is allocated the remainder of the directed pollock fishery. 2 In the Bering Sea subarea, no more than 28 percent of each sector's annual DFA may be taken from the SCA before April 1. The remaining 12 percent of the annual DFA allocated to the A season may be taken outside of SCA before April 1 or inside the SCA after April 1. If less than 28 percent of the annual DFA is taken inside the SCA before April 1, the remainder will be available to be taken inside the SCA after April 1. 3 Pursuant to § 679.20(a)(5)(i)(A)( *4* ), not less than 8.5 percent of the DFA allocated to listed catcher/processors shall be available for harvest only by eligible catcher vessels delivering to listed catcher/processors. 4 Pursuant to § 679.20(a)(5)(i)(A)( *4* )( *iii* ), the AFA unlisted catcher/processors are limited to harvesting not more than 0.5 percent of the catcher/processors sector's allocation of pollock. 5 Pursuant to § 679.20(a)(5)(i)(A)( *6* ), NMFS establishes an excessive harvesting share limit equal to 17.5 percent of the sum of the pollock DFAs. 6 Pursuant to § 679.20(a)(5)(i)(A)( *7* ), NMFS establishes an excessive processing share limit equal to 30.0 percent of the sum of the pollock DFAs. 7 The Bogoslof District is closed by the final harvest specifications to directed fishing for pollock. The amounts specified are for ICA only, and are not apportioned by season or sector. Allocation of the Atka Mackerel ITAC Pursuant to § 679.20(a)(8)(i), up to 2 percent of the Eastern Aleutian District and the Bering Sea subarea Atka mackerel ITAC may be allocated to jig gear. The amount of this allocation is determined annually by the Council based on several criteria, including the anticipated harvest capacity of the jig gear fleet. The Council recommended, and NMFS approved, a 1 percent allocation of the Atka mackerel ITAC in the Eastern Aleutian District and the Bering Sea subarea to the jig gear in 2007 and 2008. Based on the 2007 ITAC of 22,015 mt, the jig gear allocation would be 220 mt for 2007. Based on the 2008 ITAC of 15,717 mt, the jig gear allocation would be 157 mt for 2008. Section § 679.20(a)(8)(ii)(A) apportions the Atka mackerel ITAC into two equal seasonal allowances. After subtraction of the jig gear allocation, the first seasonal allowance is made available for directed fishing from January 1 (January 20 for trawl gear) to April 15 (A season), and the second seasonal allowance is made available from September 1 to November 1 (B season; Table 4). Pursuant to § 679.20(a)(8)(ii)(C)( *1* ), the Regional Administrator will establish a harvest limit area

(HLA)limit of no more than 60 percent of the seasonal TAC for the Western and Central Aleutian Districts. A lottery system is used for the HLA Atka mackerel directed fisheries to reduce the amount of daily catch in the HLA by about half and to disperse the fishery over two districts (see § 679.20(a)(8)(iii)). Table 4.—2007 and 2008 Seasonal and Spatial Allowances, Gear Shares, and CDQ Reserve of the BSAI ATKA Mackerel TAC 1 [Amounts are in metric tons] Subarea and component 2007 TAC 2007 CDQ reserve 2 2007 CDQ reserve HLA limit 5 2007 ITAC 2007 Seasonal allowances 3 A season 4 Total HLA limit 5 B season 4 Total HLA limit 5 Western AI District 9,600 720 432 8,880 4,440 2,664 4,440 2,664 Central AI District 29,600 2,220 1,332 27,380 13,690 8,214 13,690 8,214 EAI/BS subarea 6 23,800 1,785 n/a 22,015 n/a n/a n/a n/a Jig (1%) 7 n/a n/a n/a 220 n/a n/a n/a n/a Other gear (99%) n/a n/a n/a 21,795 10,897 n/a 10,897 n/a Total 63,000 n/a n/a n/a 29,027 n/a 29,027 n/a Subarea and component 2008 TAC 2008 CDQ reserve 2 2008 CDQ reserve HLA limit 5 2008 ITAC 2008 Seasonal allowances 3 A season 4 Total HLA limit 5 B season 4 Total HLA limit 5 Western AI District 15,300 1,637 982 13,663 6,831 4,099 6,831 4,099 Central AI District 22,000 2,354 1,412 19,646 9,823 5,894 9,823 5,894 EAI/BS subarea 6 17,600 1,883 n/a 15,717 n/a n/a n/a n/a Jig (1%) 7 n/a n/a n/a 157 n/a n/a n/a n/a Other gear (99%) n/a n/a n/a 15,560 7,780 n/a 7,780 n/a Total 54,900 n/a n/a n/a 24,434 n/a 24,434 n/a 1 Regulations at §§ 679.20(a)(8)(ii) and 679.22(a) establish temporal and spatial limitations for the Atka mackerel fishery. 2 The CDQ reserve is 7.5 percent in 2007 and 10.7 percent in 2008 of the TAC for use by CDQ participants (see §§ 679.20(b)(1)(iii), 679.31, and section 305(i)(1)(B)(i) and

(ii)of the MSA). 3 The seasonal allowances of Atka mackerel are 50 percent in the A season and 50 percent in the B season. 4 The A season is January 1 (January 20 for trawl gear) to April 15 and the B season is September 1 to November 1. 5 Harvest Limit Area

(LOA)using hook-and-line or pot gear. Due to concerns about the potential impact of the Pacific cod fishery on Steller sea lions and their critical habitat, the Pacific cod ITAC is apportioned into seasonal allowances to disperse the Pacific cod fisheries over the fishing year (see §§ 679.20(a)(7)(iii)(A) and 679.23(e)(5)). For pot and most hook-and-line gear, the first seasonal allowance of 60 percent of the ITAC is made available for directed fishing from January 1 to June 10, and the second seasonal allowance of 40 percent of the ITAC is made available from June 10 (September 1 for pot gear) to December 31. No seasonal harvest constraints are imposed for the Pacific cod fishery by catcher vessels less than 60 ft (18.3 m) LOA using hook-and-line or pot gear. For trawl gear, the first season is January 20 to April 1 and is allocated 60 percent of the ITAC. The second season, April 1 to June 10, and the third season, June 10 to November 1, are each allocated 20 percent of the ITAC. The trawl catcher vessel allocation is further allocated as 70 percent in the first season, 10 percent in the second season and 20 percent in the third season. The trawl catcher/processor allocation is allocated 50 percent in the first season, 30 percent in the second season, and 20 percent in the third season. For jig gear, the first season and third seasons are each allocated 40 percent of the ITAC and the second season is allocated 20 percent of the ITAC. Table 5 lists the 2007 and 2008 allocations and seasonal apportionments of the Pacific cod ITAC. In accordance with § 679.20(a)(7)(ii)(D) and (a)(7)(iii)(B), any unused portion of a seasonal Pacific cod allowance will become available at the beginning of the next seasonal allowance. Table 5.—2007 and 2008 Gear Shares and Seasonal Allowances of the BSAI Pacific Cod ITAC [Amounts are in metric tons] Gear sector Percent 2007 share of gear sector total 2007 subtotal percentages for gear sectors 2007 share of gear sector total 2007 seasonal apportionment 1 Date Amount 2008 share of gear sector total 2008 subtotal percentages for gear sectors 2008 share of gear sector total 2008 seasonal apportionment 1 Date Amount Total hook-and-line/pot gear 51 80,537 n/a n/a n/a n/a 57,872 n/a n/a n/a n/a Hook-and-line/pot ICA n/a n/a n/a 500 n/a n/a n/a n/a 500 n/a n/a Hook-and-line/pot sub-total n/a 80,037 n/a n/a n/a n/a 57,372 n/a n/a n/a n/a Hook-and-line C/P n/a n/a 80 64,030 Jan 1-Jun 10 38,419 n/a 80 45,897 Jan 1-Jun 10 27,538 Jun 10-Dec 31 25,611 Jun 10-Dec 31 18,359 Hook-and-line CV n/a n/a 0.3 240 Jan 1-Jun 10 144 n/a 0.3 172 Jan 1-Jun 10 103 Jun 10-Dec 31 96 Jun 10-Dec 31 69 Pot C/P n/a n/a 3.3 2,641 Jan 1-Jun 10 1,586 n/a 3.3 1,893 Jan 1-Jun 10 1,136 Sept 1-Dec 31 1,055 Sept 1-Dec 31 757 Pot CV n/a n/a 15 12,006 Jan 1-Jun 10 7,203 n/a 15 8,606 Jan 1-Jun 10 5,163 Sept 1-Dec 31 4,803 Sept 1-Dec 31 3,443 CV < 60 ft LOA using Hook-and-line or Pot gear n/a n/a 1.4 1,121 n/a n/a n/a 1.4 803 n/a n/a Total Trawl Gear 47 74,221 n/a n/a n/a n/a 53,333 n/a n/a n/a n/a Trawl CV 50 37,110 Jan 20-Apr 1 25,977 50 26,666 Jan 20-Apr 1 18,666 n/a Apr 1-Jun 10 3,711 n/a Apr 1-Jun 10 2,667 n/a Jun 10-Nov 1 7,422 n/a Jun 10-Nov 1 5,333 Trawl CP 50 37,110 Jan 20-Apr 1 18,555 50 26,666 Jan 20-Apr 1 13,333 n/a Apr 1-Jun 10 11,133 n/a Apr 1-Jun 10 8,000 n/a Jun 10-Nov 1 7,422 n/a Jun 10-Nov 1 5,333 Jig 2 3,158 n/a n/a Jan 1-Apr 30 1,263 2,269 n/a n/a Jan 1-Apr 30 908 n/a n/a Apr 30-Aug 31 632 n/a n/a Apr 30-Aug 31 453 n/a n/a Aug 31-Dec 31 1,263 n/a n/a Aug 31-Dec 31 908 Total 100 157,916 n/a n/a n/a n/a 113,474 n/a n/a n/a n/a 1 For most non-trawl gear the first season is allocated 60 percent of the ITAC and the second season is allocated 40 percent of the ITAC. For jig gear, the first season and third seasons are each allocated 40 percent of the ITAC and the second season is allocated 20 percent of the ITAC. No seasonal harvest constraints are imposed for the Pacific cod fishery by catcher vessels less than 60 ft (18.3 m) LOA using hook-and-line or pot gear. For trawl gear, the first season is allocated 60 percent of the ITAC and the second and third seasons are each allocated 20 percent of the ITAC. The trawl catcher vessels' allocation is further allocated as 70 percent in the first season, 10 percent in the second season and 20 percent in the third season. The trawl catcher/processors' allocation is allocated 50 percent in the first season, 30 percent in the second season and 20 percent in the third season. Any unused portion of a seasonal Pacific cod allowance will be reapportioned to the next seasonal allowance. Sablefish Gear Allocation Sections 679.20(a)(4)(iii) and

(iv)require the allocation of sablefish TACs for the Bering Sea and AI subareas between trawl and hook-and-line or pot gear. Gear allocations of the TACs for the Bering Sea subarea are 50 percent for trawl gear and 50 percent for hook-and-line or pot gear and for the AI subarea are 25 percent for trawl gear and 75 percent for hook-and-line or pot gear. Section 679.20(b)(1)(iii)(B) requires apportionment of 20 percent of the hook-and-line and pot gear allocation of sablefish to the CDQ reserve. The Council recommended that only trawl sablefish TAC be established biennially. The harvest specifications for the hook-and-line gear and pot gear sablefish Individual Fishing Quota

(IFQ)fisheries will be limited to the 2007 fishing year to ensure those fisheries are conducted concurrent with the halibut IFQ fishery. Concurrent sablefish and halibut IFQ fisheries would reduce the potential for discards of halibut and sablefish in those fisheries. The sablefish IFQ fisheries will remain closed at the beginning of each fishing year until the final specifications for the sablefish IFQ fisheries are in effect. Table 6 lists the 2007 and 2008 gear allocations of the sablefish TAC and CDQ reserve amounts. Table 6.—2007 and 2008 Gear Shares and CDQ Reserve of BSAI Sablefish TACs [Amounts are in metric tons] Subarea and gear Percent of TAC 2007 Share of TAC 2007 ITAC 2007 CDQ reserve 2008 Share of TAC 2008 ITAC 2008 CDQ reserve Bering Sea: Trawl 1 50 1,490 1,266 112 1,485 1,263 111 Hook-and-line/pot gear 2 50 1,490 1,192 298 n/a n/a n/a Total 100 2,980 2,458 410 1,485 1,263 111 Aleutian Islands: Trawl 1 25 702 597 52 700 596 52 Hook-and-line/pot gear 2 75 2,108 1,686 422 n/a n/a n/a Total 100 2,810 2,283 474 2,800 596 52 1 Except for the sablefish hook-and-line or pot gear allocation, 15 percent of TAC is apportioned to the reserve. The ITAC is the remainder of the TAC after the subtraction of these reserves. 2 For the portion of the sablefish TAC allocated to vessels using hook-and-line or pot gear, 20 percent of the allocated TAC is reserved for use by CDQ participants. The Council recommended that specifications for the hook-and-line gear sablefish IFQ fisheries be limited to 1 year. Allocation of PSC Limits for Halibut, Salmon, Crab, and Herring Section 679.21(e) sets forth the BSAI PSC limits. Pursuant to § 679.21(e)(1)(v) and (e)(2)(i), the BSAI halibut mortality limits are 3,675 mt for trawl fisheries and 900 mt for the non-trawl fisheries. Section 679.21(e)(1)(i) allocates 7.5 percent of these halibut mortality limits as the PSQ reserve for use by the groundfish CDQ program. Section 679.21(e)(1)(vii) specifies 29,000 fish as the 2007 and 2008 Chinook salmon PSC limit for the Bering Sea subarea pollock fishery. Section 679.21(e)(1)(i) allocates 7.5 percent, or 2,175 Chinook salmon, as the PSQ reserve for the CDQ program and allocates the remaining 26,825 Chinook salmon to the non-CDQ fisheries. Section 679.21(e)(1)(ix) specifies 700 fish as the 2007 and 2008 Chinook salmon PSC limit for the AI subarea pollock fishery. Section 679.21(e)(1)(i) allocates 7.5 percent, or 53 Chinook salmon, as the AI subarea PSQ for the CDQ program and allocates the remaining 647 Chinook salmon to the non-CDQ fisheries. Section 679.21(e)(1)(viii) specifies 42,000 fish as the 2007 and 2008 non-Chinook salmon PSC limit. Section 679.21(e)(1)(i) allocates 7.5 percent, or 3,150 non-Chinook salmon, as the PSQ for the CDQ program and allocates the remaining 38,850 non-Chinook salmon to the non-CDQ fisheries. PSC limits for crab and herring are specified annually based on abundance and spawning biomass. The red king crab mature female abundance is estimated from the 2006 survey data at 29.7 million red king crabs and the effective spawning biomass is estimated as 157 million pounds (71,215 mt). Based on the criteria set out at § 679.21(e)(1)(ii), the 2007 and 2008 PSC limit of red king crab in Zone 1 for trawl gear is 197,000 animals. This limit results from the mature female abundance being above 8.4 million king crab and the effective spawning biomass estimate being greater than 55 million pounds (24,948 mt). Section 679.21(e)(3)(ii)(B) establishes criteria under which NMFS must specify an annual red king crab bycatch limit for the Red King Crab Savings Subarea (RKCSS). The regulations limit the RKCSS to up to 35 percent of the trawl bycatch allowance specified for the rock sole/flathead sole/“other flatfish” fishery category based on the need to optimize the groundfish harvest relative to red king crab bycatch. The Council recommended, and NMFS approves, a red king crab bycatch limit equal to 35 percent of the trawl bycatch allowance specified for the rock sole/flathead sole/“other flatfish” fishery category within the RKCSS. Based on 2006 survey data, Tanner crab (Chionoecetes bairdi) abundance is estimated as 866 million animals. Given the criteria set out at § 679.21(e)(1)(iii), the 2007 and 2008 C. bairdi crab PSC limit for trawl gear is 980,000 animals in Zone 1 and 2,970,000 animals in Zone 2. These limits result from the C. bairdi crab abundance estimate of over 400 million animals. Pursuant to § 679.21(e)(1)(iv), the PSC limit for snow crab (C. opilio) is based on total abundance as indicated by the NMFS annual bottom trawl survey. The C. opilio crab PSC limit is set at 0.1133 percent of the Bering Sea abundance index. Based on the 2006 survey estimate of 3.25 billion animals, the calculated limit is 4,350,000 animals. Pursuant to § 679.21(e)(1)(i), 7.5 percent of each PSC limit specified for halibut and crab is allocated as a PSQ reserve for use by the groundfish CDQ program. Pursuant to § 679.21(e)(1)(vi), the PSC limit of Pacific herring caught while conducting any trawl operation for BSAI groundfish is 1 percent of the annual eastern Bering Sea herring biomass. The best estimate of 2007 and 2008 herring biomass is 178,652 mt. This amount was derived using 2006 survey data and an age-structured biomass projection model developed by the Alaska Department of Fish and Game. Therefore, the herring PSC limit for 2007 and 2008 is 1,787 mt. Section § 679.21(e)(3) requires the apportionment of each trawl PSC limit into PSC bycatch allowances for seven specified fishery categories. Section 679.21(e)(4)(ii) authorizes the apportionment of the non-trawl halibut PSC limit into PSC bycatch allowances among five fishery categories. Table 7 lists the fishery bycatch allowances for the trawl and non-trawl fisheries. Section 679.21(e)(4)(ii) authorizes the exemption of specified non-trawl fisheries from the halibut PSC limit. As in past years, NMFS, after consultation with the Council, exempts pot gear, jig gear, and the sablefish IFQ hook-and-line gear fishery categories from halibut bycatch restrictions because

(1)The pot gear fisheries have low halibut bycatch mortality,

(2)halibut mortality for the jig gear fleet is assumed to be negligible, and

(3)the sablefish and halibut IFQ fisheries have low halibut bycatch mortality because the IFQ program (subpart D of 50 CFR part 679) requires legal-sized halibut to be retained by vessels using hook-and-line gear if a halibut IFQ permit holder or a hired master is aboard and is holding unused halibut IFQ. In 2006, total groundfish catch for the pot gear fishery in the BSAI was approximately 19,721 mt, with an associated halibut bycatch mortality of about 5 mt. The 2006 jig gear fishery harvested about 84 mt of groundfish. Most vessels in the jig gear fleet are less than 60 ft (18.3 m) LOA and thus are exempt from observer coverage requirements. As a result, observer data are not available on halibut bycatch in the jig gear fishery. However, a negligible amount of halibut bycatch mortality is assumed because of the selective nature of jig gear and the low mortality rate of halibut caught with jig gear and released. Section 679.21(e)(5) authorizes NMFS, after consultation with the Council, to establish seasonal apportionments of PSC amounts in order to maximize the ability of the fleet to harvest the available groundfish TAC and to minimize bycatch. The factors to be considered are

(1)Seasonal distribution of prohibited species,

(2)seasonal distribution of target groundfish species,

(3)PSC bycatch needs on a seasonal basis relevant to prohibited species biomass,

(4)expected variations in bycatch rates throughout the year,

(5)expected start of fishing effort, and

(6)economic effects of seasonal PSC apportionments on industry sectors. The Council recommended and NMFS approves the seasonal PSC apportionments in Table 7 to maximize harvest among gear types, fisheries, and seasons while minimizing bycatch of PSC based on the above criteria. Table 7.—2007 and 2008 Prohibited Species Bycatch Allowances for the BSAI Trawl and Non-Trawl Fisheries Trawl Fisheries Prohibited species and zone Halibut mortality

(mt)BSAI Herring

(mt)BSAI Red King Crab (animals) Zone 1 1 *C. opilio* (animals) COBLZ 1 *C. bairdi* (animals) Zone 1 1 Zone 2 1 Yellowfin sole 936 153 33,843 3,098,288 340,844 1,788,459 January 20-April 1 312 n/a n/a n/a n/a n/a April 1-May 21 195 n/a n/a n/a n/a n/a May 21-July 1 49 n/a n/a n/a n/a n/a July 1-December 31 380 n/a n/a n/a n/a n/a Rock sole/other flat/flathead sole 2 829 27 121,413 643,800 365,320 596,154 January 20-April 1 498 n/a n/a n/a n/a n/a April 1-July 1 164 n/a n/a n/a n/a n/a July 1-December 31 167 n/a n/a n/a n/a n/a Turbot/arrowtooth/sablefish 3 n/a 12 n/a 40,238 n/a n/a Rockfish n/a n/a n/a n/a n/a n/a July 1-December 31 69 10 n/a 40,237 n/a 10,988 Pacific cod 1,334 27 26,563 120,712 183,112 324,176 Midwater trawl pollock n/a 1,364 n/a n/a n/a n/a Pollock/Atka mackerel/other 4 232 194 406 80,475 17,224 27,473 Red King Crab Savings Subarea 5 n/a n/a n/a n/a n/a n/a (non-pelagic trawl) n/a n/a 42,495 n/a n/a n/a Total trawl PSC 3,400 1,787 182,225 4,023,750 906,500 2,747,250 Non-trawl Fisheries Pacific cod—Total 775 January 1-June 10 320 June 10-August 15 0 August 15-December 31 455 Other non-trawl—Total 58 May 1-December 31 58 Groundfish pot and jig exempt Sablefish hook-and-line exempt Total non-trawl PSC 833 PSQ reserve 6 342 n/a 14,775 326,250 73,500 222,750 PSC grand total 4,575 1,787 197,000 4,350,000 980,000 2,970,000 1 Refer to § 679.2 for definitions of areas. 2 “Other flatfish” for PSC monitoring includes all flatfish species, except for halibut (a prohibited species), Greenland turbot, rock sole, yellowfin sole and arrowtooth flounder. 3 Greenland turbot, arrowtooth flounder, and sablefish fishery category. 4 Pollock other than pelagic trawl pollock, Atka mackerel, and “other species” fishery category. 5 In December 2006, the Council recommended that red king crab bycatch for trawl fisheries within the RKCSS be limited to 35 percent of the total allocation to the rock sole/flathead sole/”other flatfish” fishery category (see § 679.21(e)(3)(ii)(B)). 6 With the exception of herring, 7.5 percent of each PSC limit is allocated to the CDQ program as PSQ reserve. The PSQ reserve is not allocated by fishery, gear or season. Halibut Discard Mortality Rates To monitor halibut bycatch mortality allowances and apportionments, the Regional Administrator uses observed halibut bycatch rates, discard mortality rates (DMR), and estimates of groundfish catch to project when a fishery's halibut bycatch mortality allowance or seasonal apportionment is reached. The DMRs are based on the best information available, including information contained in the annual SAFE report. The Council recommended, and NMFS approves, the halibut DMRs developed and recommended by staff of the International Pacific Halibut Commission

(IPHC)for the 2007 and 2008 BSAI groundfish fisheries. These DMRs will be used for monitoring the 2007 and 2008 halibut bycatch allowances (see Table 8). The IPHC developed these DMRs using the 10-year mean DMRs for the BSAI non-CDQ groundfish fisheries. The IPHC will analyze observer data annually and recommend changes to the DMR where a fishery DMR shows large variation from the mean. The IPHC has been calculating the DMRs for the CDQ fisheries since 1998, and a 10-year mean is not yet available. Until 10 years of data from CDQ fishing has been collected, recommendations will be based on averaging all available data. The justification for the DMRs is discussed in Appendix A of the 2006 SAFE report dated November 2006 and is available from the Council (see ADDRESSES ). Table 8.—2007 and 2008 Assumed Pacific Halibut Discard Mortality Rates for the BSAI Gear Fishery Halibut mortality (percent) Hook-and-line Greenland turbot 13 Other species 11 Pacific cod 11 Rockfish 17 Trawl Arrowtooth flounder 75 Atka mackerel 76 Flathead sole 70 Greenland turbot 70 Non-pelagic pollock 74 Pelagic pollock 88 Other flatfish 74 Other species 70 Pacific cod 70 Rockfish 76 Rock sole 80 Sablefish 75 Yellowfin sole 80 Pot Other species 7 Pacific cod 7 CDQ trawl Atka mackerel 86 Flathead sole 70 Non-pelagic pollock 85 Pelagic pollock 90 Rockfish 76 Yellowfin sole 86 CDQ hook-and-line Greenland turbot 13 Pacific cod 10 CDQ pot Pacific cod 7 Sablefish 34 Directed Fishing Closures In accordance with § 679.20(d)(1)(i), the Regional Administrator may establish a DFA for a species or species group, if the Regional Administrator determines that any allocation or apportionment of a target species or “other species” category has been or will be reached. If the Regional Administrator establishes a DFA, and that allowance is or will be reached before the end of the fishing year, NMFS will prohibit directed fishing for that species or species group in the specified subarea or district (see § 697.20(d)(1)(iii)). Similarly, pursuant to § 679.21(e), if the Regional Administrator determines that a fishery category's bycatch allowance of halibut, red king crab, C. bairdi crab or C. opilio crab for a specified area has been reached, the Regional Administrator will prohibit directed fishing for each species in that category in the specified area. The Regional Administrator has determined that the remaining allocation amounts in Table 9 will be necessary as incidental catch to support other anticipated groundfish fisheries for the 2007 and 2008 fishing years. Table 9.—2007 and 2008 Directed Fishing Closures 1 [Amounts are in metric tons] Area Species 2007 Incidental catch allowance 2008 Incidental catch allowance Bogoslof District Pollock 10 10 Aleutian Islands subarea ICA Pollock 1,600 1,600 “Other rockfish” 497 497 Bering Sea subarea Pacific ocean perch 1,836 3,468 “Other rockfish” 383 383 ICA Pollock 35,129 33,214 Bering Sea and Aleutian Islands Northern rockfish 7,576 7,539 Shortraker rockfish 392 392 Rougheye rockfish 187 187 “Other species” 31,752 49,313 1 Maximum retainable amounts may be found in Table 11 to 50 CFR part 679. Consequently, in accordance with § 679.20(d)(1)(i), the Regional Administrator establishes the DFA for the above species or species groups as zero. Therefore, in accordance with § 679.20(d)(1)(iii), NMFS is prohibiting directed fishing for these species in the specified areas effective at 1200 hrs, A.l.t., March 2, 2007, through 2400 hrs, A.l.t., December 31, 2008. In addition, the BSAI Zone 1 annual red king crab allowance specified for the trawl rockfish fishery (see § 679.21(e)(3)(iv)(D)) is 0 mt and the BSAI first seasonal halibut bycatch allowance specified for the trawl rockfish fishery is 0 mt. Also, the BSAI annual halibut bycatch allowance specified for the trawl Greenland turbot/arrowtooth flounder/sablefish fishery categories is 0 mt (see § 679.21(e)(3)(iv)(C)). Therefore, in accordance with § 679.21(e)(7)(ii) and (v), NMFS is prohibiting directed fishing for rockfish by vessels using trawl gear in Zone 1 of the BSAI and directed fishing for Greenland turbot/arrowtooth flounder/sablefish by vessels using trawl gear in the BSAI effective at 1200 hrs, A.l.t., March 2, 2007, through 2400 hrs, A.l.t., December 31, 2008. NMFS also is prohibiting directed fishing for rockfish outside Zone 1 in the BSAI through 1200 hrs, A.l.t., July 1, 2007, for 2007 and July 1, 2008, for 2008. Under authority of the 2006 and 2007 final harvest specifications (71 FR 10894, March 3, 2006), NMFS prohibited directed fishing for Atka mackerel in the Eastern Aleutian District and the Bering Sea subarea of the BSAI effective 1200 hrs, A.l.t., February 3, 2007, through 1200 hrs, A.l.t., September 1, 2007 (72 FR 5644, February 7, 2007). NMFS opened the first directed fisheries in the HLA in area 542 and area 543 effective 1200 hrs, A.l.t., February 5, 2007. The first HLA fishery in area 542 remained open through 1200 hrs, A.l.t., February 19, 2007. The first HLA fishery in area 543 remained open through 1200 hrs, A.l.t., February 6, 2007. The second directed fisheries in the HLA in area 542 and area 543 opened effective 1200 hrs, A.l.t., February 21, 2007. The second HLA fishery in area 542 remained open through 1200 hrs, A.l.t., March 7, 2007. The second HLA fishery in area 543 remained open through 1200 hrs, A.l.t., February 22, 2007. NMFS prohibited directed fishing for Pacific cod by catcher vessels 60 ft (18.3 m) LOA and longer using pot gear in the BSAI, effective 12 hrs, A.l.t., January 26, 2007 through 1200 hrs, A.l.t., September 1, 2007 (72 FR 4217, January 30, 2007). NMFS prohibited directed fishing for non-CDQ pollock with trawl gear in the Chinook Salmon Savings Areas of the BSAI, effective 12 noon, A.l.t., February 6, 2007, through 12 noon, A.l.t., April 15, 2007, and from 12 noon, A.l.t., September 1, 2007, through 12 midnight, A.l.t., December 31, 2007 (72 FR 6178, February 9, 2007). NMFS prohibited directed fishing for Pacific cod by catcher processor vessels using hook-and-line gear in the BSAI, effective 12 noon, A.l.t., February 12 2007, until 12 noon, A.l.t., August 15, 2007 (72 FR 7354, February 15, 2007). NMFS closed directed fishing for the rock sole, flathead sole, and “other flatfish” fishery category by vessels using trawl gear in the BSAI effective 12 noon, A.l.t., February 17, 2007 through 12 noon, A.l.t., April 1, 2007 (72 FR xxxx, February 22, 2007). NMFS prohibiting directed fishing for Pacific cod by catcher processor vessels using pot gear in the BSAI, effective 12 noon, A.l.t., February 20, 2007 through 1200 hrs, A.l.t., September 1, 2007 (72 FR xxxx, February 23, 2007). NMFS prohibited directed fishing for Pacific cod by catcher vessels 60 feet (18.3 meters (m)) LOA and longer using hook-and-line gear in the BSAI, effective 12 noon, A.l.t., February 21, 2007 (72 FR xxxx, February 26, 2007). These closures remain effective under authority of these 2007 and 2008 final harvest specifications. These closures supersede the closures announced under authority of the 2006 and 2007 final harvest specifications (71 FR 10894, March 3, 2006). While these closures are in effect, the maximum retainable amounts at § 679.20(e) and

(f)apply at any time during a fishing trip. These closures to directed fishing are in addition to closures and prohibitions found in regulations at 50 CFR part 679. Amendment 68 Sideboards Section 802 of the Consolidated Appropriations Act of 2004 (Public Law 108-199) grants NMFS specific statutory authority to manage the Central Gulf of Alaska rockfish fisheries. The Council adopted a Central Gulf of Alaska Rockfish Pilot Program (Rockfish Program) to meet the requirements of Section 802 on June 6, 2005. The Secretary approved Amendment 68 on August 11, 2006. The elements of the Rockfish Program are discussed in detail in the proposed and final rules for Amendment 68 to the FMP for Groundfish of the GOA (71 FR 33040, June 7, 2006 and 71 FR 67210, November 20, 2006, respectively). The final rule for Amendment 68 includes prohibitions on catcher vessels fishing specific groundfish fisheries in the BSAI and limitations on fishing Pacific cod in the BSAI during July. The basis for the fishing prohibitions and the BSAI catcher vessel Pacific cod sideboard limit is described in detail in the final rule for Amendment 68 (71 FR 67210, November 20, 2006). Section 679.82(d)(6)(i) establishes the BSAI catcher vessel Pacific cod sideboard limit as 0.0 mt. Therefore, in accordance with § 679.82(d)(7)(ii), NMFS is prohibiting directed fishing for BSAI Pacific cod in July for catcher vessels under the Rockfish Program sideboard limitations. Listed AFA Catcher/Processor Sideboard Limits According to § 679.64(a), the Regional Administrator will restrict the ability of listed AFA catcher/processors to engage in directed fishing for groundfish species other than pollock to protect participants in other groundfish fisheries from adverse effects resulting from the AFA and from fishery cooperatives in the directed pollock fishery. The basis for these sideboard limits is described in detail in the final rule implementing major provisions of the AFA (67 FR 79692, December 30, 2002). Table 10 lists the 2007 and 2008 catcher/processor sideboard limits. All groundfish other than pollock that are harvested by listed AFA catcher/processors, whether as targeted catch or incidental catch, will be deducted from the sideboard limits in Table 10. However, groundfish other than pollock that are delivered to listed catcher/processors by catcher vessels will not be deducted from the 2007 and 2008 sideboard limits for the listed catcher/processors. Table 10.—2007 and 2008 Listed BSAI American Fisheries Act Catcher/Processor Groundfish Sideboard Limits [Amounts are in metric tons] Target species Area 1995-1997 Retained catch Total catch Ratio of retained catch to total catch 2007 ITAC available to trawl C/Ps 2007 C/P sideboard limit 2008 ITAC available to trawl C/Ps 2008 C/P sideboard limit Pacific cod trawl BSAI 12,424 48,177 0.258 37,110 9,574 26,666 6,880 Sablefish trawl BS 8 497 0.016 1,266 20 1,263 20 AI 0 145 0.000 597 0 596 0 Atka mackerel Central AI n/a n/a n/a n/a n/a n/a n/a A season 1 n/a n/a 0.115 13,690 1,574 9,823 1,130 HLA limit 2 n/a n/a n/a 8,214 945 5,894 678 B season 1 n/a n/a 0.115 13,690 1,574 9,823 1,130 HLA limit 2 n/a n/a n/a 8,214 945 5,894 678 Western AI n/a n/a n/a n/a n/a n/a n/a A season 1 n/a n/a 0.200 4,440 888 6,831 1,366 HLA limit 2 n/a n/a n/a 2,664 533 4,099 820 B season 1 n/a n/a 0.200 4,440 888 6,831 1,366 HLA limit 2 n/a n/a n/a 2,664 533 4,099 820 Yellowfin sole BSAI 100,192 435,788 0.230 115,600 26,588 127,500 29,325 Rock sole BSAI 6,317 169,362 0.037 46,750 1,730 63,750 2,359 Greenland turbot BS 121 17,305 0.007 1,428 10 1,462 10 AI 23 4,987 0.005 646 3 655 3 Arrowtooth flounder BSAI 76 33,987 0.002 17,000 34 25,500 51 Flathead sole BSAI 1,925 52,755 0.036 25,500 918 38,250 1,377 Alaska plaice BSAI 14 9,438 0.001 21,250 21 51,000 51 Other flatfish BSAI 3,058 52,298 0.058 8,500 493 18,190 1,055 Pacific ocean perch BS 12 4,879 0.002 1,836 4 3,468 7 Eastern AI 125 6,179 0.020 4,598 92 4,376 88 Central AI 3 5,698 0.001 4,672 5 4,465 4 Western AI 54 13,598 0.004 7,141 29 6,805 27 Northern rockfish BSAI 91 13,040 0.007 7,576 53 7,539 53 Shortraker rockfish BSAI 50 2,811 0.018 392 7 392 7 Rougheye rockfish BSAI 50 2,811 0.018 187 3 187 3 Other rockfish BS 18 621 0.029 383 11 383 11 AI 22 806 0.027 497 13 497 13 Squid BSAI 73 3,328 0.022 1,675 37 1,675 37 Other species BSAI 553 68,672 0.008 31,752 254 49,313 395 1 The seasonal apportionment of Atka mackerel in the open access fishery is 50 percent in the A season and 50 percent in the B season. Listed AFA catcher/processors are limited to harvesting no more than zero in the Eastern Aleutian District and Bering Sea subarea, 20 percent of the annual ITAC specified for the Western Aleutian District, and 11.5 percent of the annual ITAC specified for the Central Aleutian District. 2 Harvest Limit Area

(HLA)limit refers to the amount of each seasonal allowance that is available for fishing inside the HLA (see § 679.2). In 2007 and 2008, 60 percent of each seasonal allowance is available for fishing inside the HLA in the Western and Central Aleutian Districts. Section 679.64(a)(5) establishes a formula for PSC sideboard limits for listed AFA catcher/processors. The basis for these sideboard limits is described in detail in the final rule implementing major provisions of the AFA (67 FR 79692, December 30, 2002). PSC species listed in Table 11 that are caught by listed AFA catcher/processors participating in any groundfish fishery other than pollock will accrue against the 2007 and 2008 PSC sideboard limits for the listed AFA catcher/processors. Section 679.21(e)(3)(v) authorizes NMFS to close directed fishing for groundfish other than pollock for listed AFA catcher/processors once a 2007 or 2008 PSC sideboard limit listed in Table 11 is reached. Crab or halibut PSC caught by listed AFA catcher/processors while fishing for pollock will accrue against the bycatch allowances annually specified for either the midwater pollock or the pollock/Atka mackerel/“other species” fishery categories under regulations at § 679.21(e)(3)(iv). Table 11.—2007 and 2008 BSAI American Fisheries Act Listed Catcher/Processor Prohibited Species Sideboard Limits 1 PSC species 1995-1997 PSC catch Total PSC Ratio of PSC catch to total PSC 2007 and 2008 PSC available to trawl vessels 2007 and 2008 C/P sideboard limit Halibut mortality 955 11,325 0.084 3,400 286 Red king crab 3,098 473,750 0.007 182,225 1,276 *C. opilio* 2 2,323,731 15,139,178 0.153 4,023,750 615,634 *C. bairdi* n/a n/a n/a n/a n/a Zone 1 2 385,978 2,750,000 0.140 906,500 126,910 Zone 2 2 406,860 8,100,000 0.050 2,747,250 137,363 1 Halibut amounts are in metric tons of halibut mortality. Crab amounts are in numbers of animals. 2 Refer to § 679.2 for definitions of areas. AFA Catcher Vessel Sideboard Limits Pursuant to § 679.64(a), the Regional Administrator restricts the ability of AFA catcher vessels to engage in directed fishing for groundfish species other than pollock to protect participants in other groundfish fisheries from adverse effects resulting from the AFA and from fishery cooperatives in the directed pollock fishery. Section 679.64(b) establishes a formula for setting AFA catcher vessel groundfish and PSC sideboard limits for the BSAI. The basis for these sideboard limits is described in detail in the final rule implementing major provisions of the AFA (67 FR 79692, December 30, 2002). Tables 12 and 13 list the 2007 and 2008 AFA catcher vessel sideboard limits. All harvests of groundfish sideboard species made by non-exempt AFA catcher vessels, whether as targeted catch or incidental catch, will be deducted from the sideboard limits listed in Table 12. Table 12.—2007 and 2008 BSAI American Fisheries Act Catcher Vessel Sideboard Limits [Amounts are in metric tons] Species Fishery by area/season/processor/gear Ratio of 1995-1997 AFA CV catch to 1995-1997 TAC 2007 initial TAC 2007 Catcher vessel sideboard limits 2008 initial TAC 2008 Catcher vessel sideboard limits Pacific cod BSAI n/a n/a n/a n/a n/a Jig gear 0.0000 3,158 0 2,269 0 Hook-and-line CV n/a n/a n/a n/a n/a Jan 1-Jun 10 0.0006 144 0 103 0 Jun 10-Dec 31 0.0006 96 0 69 0 Pot gear CV n/a n/a n/a n/a n/a Jan 1-Jun 10 0.0006 7,203 4 5,163 3 Sept 1-Dec 31 0.0006 4,803 3 3,443 2 CV < 60 feet LOA using hook-and-line or pot gear 0.0006 1,121 1 803 0 Trawl gear CV n/a n/a n/a n/a n/a Jan 20-Apr 1 0.8609 25,977 22,364 18,666 16,070 Apr 1-Jun 10 0.8609 3,711 3,195 2,667 2,296 Jun 10-Nov 1 0.8609 7,422 6,390 5,333 4,591 Sablefish BS trawl gear 0.0906 1,266 115 1,263 114 AI trawl gear 0.0645 597 39 596 38 Atka mackerel Eastern AI/BS n/a n/a n/a n/a n/a Jig gear 0.0031 220 1 157 0 Other gear n/a n/a n/a n/a n/a Jan 1-Apr 15 0.0032 10,897 35 7,780 25 Sept 1-Nov 1 0.0032 10,897 35 7,780 25 Central AI n/a n/a n/a n/a n/a Jan-Apr 15 0.0001 13,690 1 9,823 1 HLA limit 0.0001 8,214 1 5,894 1 Sept 1-Nov 1 0.0001 13,690 1 9,823 1 HLA limit 0.0001 8,214 1 5,894 1 Western AI n/a n/a n/a n/a n/a Jan-Apr 15 0.0000 4,440 0 6,831 0 HLA limit n/a 2,664 0 4,099 0 Sept 1-Nov 1 0.0000 4,440 0 6,831 0 HLA limit n/a 2,664 0 4,099 0 Yellowfin sole BSAI 0.0647 115,600 7,479 127,500 8,249 Rock sole BSAI 0.0341 46,750 1,594 63,750 2,174 Greenland Turbot BS 0.0645 1,428 92 1,462 94 AI 0.0205 646 13 655 13 Arrowtooth flounder BSAI 0.0690 17,000 1,173 25,500 1,760 Alaska plaice BSAI 0.0441 21,250 937 51,000 2,249 Other flatfish BSAI 0.0441 8,500 375 18,190 802 Pacific ocean perch BS 0.1000 1,836 184 3,468 347 Eastern AI 0.0077 4,598 35 4,376 34 Central AI 0.0025 4,672 12 4,465 11 Western AI 0.0000 7,141 0 6,805 0 Northern rockfish BSAI 0.0084 7,576 64 7,539 63 Shortraker rockfish BSAI 0.0037 392 1 392 1 Rougheye rockfish BSAI 0.0037 187 1 187 1 Other rockfish BS 0.0048 383 2 383 2 AI 0.0095 497 5 497 5 Squid BSAI 0.3827 1,675 641 1,675 641 Other species BSAI 0.0541 31,752 1,718 49,313 2,668 Flathead Sole BS trawl gear 0.0505 25,500 1,288 38,250 1,932 Halibut and crab PSC listed in Table 13 that are caught by AFA catcher vessels participating in any groundfish fishery for groundfish other than pollock will accrue against the 2007 and 2008 PSC sideboard limits for the AFA catcher vessels. Sections 679.21(d)(8) and (e)(3)(v) provide authority to close directed fishing for groundfish other than pollock for AFA catcher vessels once a 2007 or 2008 PSC sideboard limit listed in Table 13 is reached. The PSC that is caught by AFA catcher vessels while fishing for pollock in the BSAI will accrue against the bycatch allowances annually specified for either the midwater pollock or the pollock/Atka mackerel/“other species” fishery categories under regulations at § 679.21(e)(3)(iv). Table 13.—2007 and 2008 American Fisheries Act Catcher Vessel Prohibited Species Catch Sideboard Limits for the BSAI 1 [Amounts are in metric tons] PSC species Target fishery category 2 Ratio of 1995-1997 AFA CV retained catch to total retained catch 2007 and 2008 PSC limit 2007 and 2008 AFA catcher vessel PSC sideboard limit Halibut Pacific cod trawl 0.6183 1,334 825 Pacific cod hook-and-line or pot 0.0022 775 2 Yellowfin sole n/a n/a n/a January 20-April 1 0.1144 312 36 April 1-May 21 0.1144 195 22 May 21-July 1 0.1144 49 6 July 1-December 31 0.1144 380 43 Rock sole/flathead sole/other flatfish 5 n/a n/a n/a January 20-April 1 0.2841 498 141 April 1-July 1 0.2841 164 47 July 1-December 31 0.2841 167 47 Turbot/Arrowtooth/Sablefish 0.2327 0 0 Rockfish (July 1-December 31) 0.0245 69 2 Pollock/Atka mackerel/other species 0.0227 232 5 Red King Crab Zone 1 3 4 Pacific cod 0.6183 26,563 16,424 Yellowfin sole 0.1144 33,843 3,872 Rock sole/flathead sole/other flatfish 5 0.2841 121,413 34,493 Pollock/Atka mackerel/other species 0.0227 406 9 *C. opilio* COBLZ 3 Pacific cod 0.6183 120,712 74,636 Yellowfin sole 0.1144 3,098,288 354,444 Rock sole/flathead sole/other flatfish 5 0.2841 643,800 182,904 Pollock/Atka mackerel/other species 0.0227 120,712 2,740 Rockfish 0.0245 40,237 986 Turbot/Arrowtooth/Sablefish 0.2327 40,238 9,363 *C. bairdi* Zone 1 3 Pacific cod 0.6183 183,112 113,218 Yellowfin sole 0.1144 340,844 38,993 Rock sole/flathead sole/other flatfish 5 0.2841 365,320 103,787 Pollock/Atka mackerel/other species 0.0227 17,224 391 *C. bairdi* Zone 2 3 Pacific cod 0.6183 324,176 200,438 Yellowfin sole 0.1144 1,788,459 204,600 Rock sole/flathead sole/other flatfish 5 0.2841 596,154 169,367 Pollock/Atka mackerel/other species 0.0227 27,473 624 Rockfish 0.0245 10,988 269 1 Halibut amounts are in metric tons of halibut mortality. Crab amounts are in numbers of animals. 2 Target fishery categories are defined in regulation at § 679.21(e)(3)(iv). 3 Refer to § 679.2 for definitions of areas. 4 In December 2006, the Council recommended that red king crab bycatch for trawl fisheries within the RKCSS be limited to 35 percent of the total allocation to the rock sole/flathead sole/“other flatfish” fishery category (see § 679.21(e)(3)(ii)(B)). 5 “Other flatfish” for PSC monitoring includes all flatfish species, except for halibut (a prohibited species), Greenland turbot, rock sole, yellowfin sole, arrowtooth flounder. Sideboard Directed Fishing Closures AFA Catcher/Processor and Catcher Vessel Sideboard Closures The Regional Administrator has determined that many of the AFA catcher/processor and catcher vessel sideboard limits listed in Tables 14 and 15 are necessary as incidental catch to support other anticipated groundfish fisheries for the 2007 fishing year. In accordance with § 679.20(d)(1)(iv), the Regional Administrator establishes the sideboard limits listed in Tables 14 and 15 as DFAs. The Regional Administrator finds that many of these DFAs will be reached before the end of the year. Therefore, in accordance with § 679.20(d)(1)(iii), NMFS is prohibiting directed fishing by listed AFA catcher/processors for the species in the specified areas set out in Table 14 and directed fishing by non-exempt AFA catcher vessels for the species in the specified areas set out in Table 15. Table 14.—2007 and 2008 American Fisheries Act Listed Catcher/Processor Sideboard Directed Fishing Closures 1 [Amounts are in metric tons] Species Area Gear types 2007 Sideboard limit 2008 Sideboard limit Sablefish trawl BS Trawl 20 20 AI Trawl 0 0 Rock sole BSAI all 1,730 2,359 Greenland turbot BS all 10 10 AI all 3 3 Arrowtooth flounder BSAI all 34 51 Pacific ocean perch BS all 4 7 Eastern AI all 92 88 Central AI all 5 4 Western AI all 29 27 Northern rockfish BSAI all 53 53 Shortraker rockfish BSAI all 7 7 Rougheye rockfish BSAI all 3 3 Other rockfish BS all 11 11 AI all 13 13 Squid BSAI all 37 37 “Other species” BSAI all 254 395 1 Maximum retainable amounts may be found in Table 11 to 50 CFR part 679. Table 15.—2007 and 2008 American Fisheries Act Catcher Vessel Sideboard Directed Fishing Closures 1 [Amounts are in metric tons] Species Area Gear types 2007 Sideboard limit 2008 Sideboard limit Pacific cod BSAI hook-and-line 0 0 BSAI pot 8 5 BSAI jig 0 0 Sablefish BS trawl 115 114 AI trawl 39 38 Atka mackerel Eastern AI/BS jig 1 0 Eastern AI/BS other 70 50 Central AI all 2 2 Western AI all 0 0 Greenland turbot BS all 92 94 AI all 13 13 Arrowtooth flounder BSAI all 1,173 1,760 Pacific ocean perch BS all 184 347 Eastern AI all 35 34 Central AI all 12 11 Western AI all 0 0 Northern rockfish BSAI all 64 63 Shortraker rockfish BSAI all 1 1 Rougheye rockfish BSAI all 1 1 Other rockfish BS all 2 2 AI all 5 5 Squid BSAI all 641 641 “Other species” BSAI all 1,718 2,668 1 Maximum retainable amounts may be found in Table 11 to 50 CFR part 679. Response to Comments NMFS received 4 letters of comment (19 comments) in response to proposed the 2007 and 2008 harvest specifications. These comments are summarized and responded to below. *Comment 1:* All quotas should be cut in half this year and cut by 10 percent each year thereafter until we stop starving the marine life that depends on eating this fish too. *Response:* The decisions on the amount of harvest are based on the best available science and socioeconomic considerations. NMFS finds that the ABCs and TACs are consistent with the biological condition of the groundfish stocks as described in the 2006 SAFE report and approved by the Council. *Comment 2:* The Council, SSC and Advisory Panel recommended that the Alaska Fisheries Science Center convene a Pacific cod model workshop to consider recommendations from an industry sponsored review for changes to the stock assessment model. We are advised that preparations are underway for such a workshop to be held during the second quarter of 2007. We appreciate this effort and look forward to the results and to the next TAC-setting process. *Response:* NMFS supports an Alaska Fisheries Science Center workshop in 2007 to evaluate the Pacific cod model. *Comment 3:* NMFS should define “directed fishery” for purposes of CDQ allocations as the target species list in the Council's December 2005 final action on management of CDQ reserves. *Response:* This comment was submitted by the Western Alaska Community Development Association, which is the CDQ Program administrative panel (“CDQ Panel”) created under the MSA. The CDQ Panel proposed an alternative interpretation of the term “directed fishery” in section 305(i)(1) of the MSA. The interpretation of this term determines which species or species groups are allocated to the CDQ Program in the annual harvest specifications. As described in the 2007 and 2008 proposed harvest specifications for the BSAI, section 305(i)(1) of the MSA was amended on July 11, 2006, by the Coast Guard and Maritime Transportation Act of 2006. Section 305(i)(1)(B)(i) of the MSA now requires that “the annual percentage of the total allowable catch, guideline harvest level, or other annual catch limit allocated to the program in each directed fishery of the Bering Sea and Aleutian Islands shall be the percentage approved by the Secretary, or established by Federal law, as of March 1, 2006, for the program.” Prior to this amendment, the MSA stated that “a percentage of the total allowable catch of any Bering Sea fishery is allocated to the program.” Since 1998, NMFS has allocated to the CDQ Program a percentage of each groundfish TAC category, except squid. Section 305(i)(1) was amended again on January 12, 2007, by the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2006 (Public Law 109-479). This legislation amended section 305(i)(1)(B)(ii)(I) of the MSA. This section now requires that “the allocation under the program for each directed fishery of the Bering Sea and Aleutian Islands (other than a fishery for halibut, sablefish, pollock, and crab) shall be a total allocation (directed and nontarget combined) of 10.7 percent effective January 1, 2008.” As a result of these two MSA amendments, allocations of groundfish species or species groups to the CDQ Program in 2007 will be made under section 305(i)(1)(B)(i). Starting on January 1, 2008, allocations of groundfish other than pollock or sablefish will be made under section 305(i)(1)(B)(ii)(I). Allocations of pollock and sablefish in 2008 and thereafter will continue to be made under section 305(i)(1)(B)(i). The MSA requires allocation to the CDQ Program of a percentage of “each directed fishery of the Bering Sea and Aleutian Islands.” However, Congress did not define the term “directed fishery” in section 305(i)(1) or in other provisions of the MSA. NMFS proposed that the term be interpreted to mean each species or species group with a TAC that was open for directed fishing in the BSAI in 2006. While this interpretation initially appeared consistent with the language of section 305(i)(1), it did not take into consideration whether the species or species group open for directed fishing was economically valuable or whether participants in the BSAI groundfish fishery actually conducted directed fishing for the species or species group during the open period. The CDQ Panel submitted a comment to NMFS that disagreed with this interpretation and requested that NMFS define “directed fishery” as the list of target species the Council identified for the CDQ Program in December 2005. The CDQ Panel suggested that the term “directed fishery” means the same thing as a target fishery and referenced the analysis NMFS prepared for the Council's 2005 action as support for this recommendation. In that analysis, NMFS wrote that target species are those species of economic importance that are caught as the primary focus of a directed fishery. After consideration of the CDQ Panel's comments, and upon re-examination of NMFS's proposed interpretation, the statutory language, and the legislative history, NMFS has determined that the term “directed fishery” for purposes of section 305(i)(1) of the MSA means a fishery for which sufficient quota exists to open a directed fishery for that species or species group, and the species or species group is economically valuable enough for vessel operators to conduct directed fishing for that species or species group. NMFS determined that this interpretation of the term “directed fishery” for purposes of section 305(i)(1) is a more reasonable interpretation because it is more consistent with Congressional intent. Legislative history for section 305(i)(1)(B)(i) indicates that Congress did not intend “directed fishery” to include minor species that are not economically valuable or to include species or species groups that lack sufficient quota to open them to directed fishing. NMFS notes that because the definition of “directed fishery” is based on legislative history for section 305(i)(1), the definition is only applicable for purposes of section 305(i)(1). While NMFS does not find adequate support for the definition of “directed fishery” proposed by the CDQ Panel, as explained in greater detail below, the application of NMFS's revised definition of “directed fishery” results in the allocation of the same species and species groups as was recommended by the CDQ Panel with only one exception for Bogoslof pollock. Under NMFS's definition of “directed fishery,” most of the species and species groups NMFS proposed to allocate to the CDQ Program in 2007 and 2008 will remain the same. NMFS proposed that Bering Sea pollock, AI pollock, Pacific cod, sablefish from the fixed gear allocation, Atka mackerel, yellowfin sole, rock sole, Bering Sea Greenland turbot, arrowtooth flounder, flathead sole, and AI Pacific ocean perch be allocated to the CDQ Program in 2007 and 2008 and has determined that these species continue to meet the definition of “directed fishery” for purposes of section 305(i)(1) of the MSA because sufficient quota exists to open a directed fishery for these species and the species are economically valuable. The CDQ groups reported directed fisheries for all of these species in 2006. The Council and the CDQ Panel also recommended that these species be allocated to the CDQ Program. Additionally, most of the species and species groups NMFS proposed not to allocate to the CDQ Program in 2007 and 2008 will remain the same. NMFS proposed that Bering Sea Pacific ocean perch, northern rockfish, shortraker rockfish, rougheye rockfish, “other rockfish,” squid, and “other species” not be allocated to the CDQ Program in 2007 and 2008 and has determined that these species and species groups still do not meet the definition of “directed fishery” for purposes of section 305(i)(1). Sufficient quota does not exist to open directed fisheries for any of these species or species groups, except squid. Although sufficient quota exists to open squid to directed fishing, it is not economically valuable enough for the CDQ groups to target. The CDQ groups did not report directed fishing for squid in 2006, although they could have done so. The Council and the CDQ Panel also recommended that these species and species groups not be allocated to the CDQ Program. Under NMFS's proposed definition of “directed fishery,” AI Greenland turbot, “other flatfish,” and Alaska plaice would have been allocated to the CDQ Program in 2007 and 2008 because directed fishing was open for these species in the BSAI in 2006. However, AI Greenland turbot, “other flatfish,” and Alaska plaice are not directed fisheries of the BSAI for purposes of section 305(i)(1) of the MSA under the revised definition of “directed fishery.” Although sufficient quota exists to open these quota categories to directed fishing, these species are not economically valuable enough for the CDQ groups to target them. The CDQ groups could have conducted directed fisheries for all of these species in 2006, but they did not report doing so. It is reasonable to assume that the CDQ groups did not conduct directed fisheries for these species because they are not economically valuable enough to justify doing so. Therefore, these species do not meet the second part of the definition of “directed fishery” for purposes of section 305(i)(1) and are not allocated to the CDQ Program for 2007 and 2008. Both the Council and the CDQ Panel recommended that these species and species groups not be allocated to the CDQ Program. If, at some point in the future, these species become economically valuable and sufficient quota exists to support directed fisheries, these species would be allocated to the CDQ Program. Under NMFS's proposed definition of “directed fishery,” allocations of Bogoslof pollock and the trawl allocations of sablefish in the Bering Sea subarea and the AI subarea would not have been made to the CDQ Program in 2007 and 2008 because directed fishing was not allowed for these quota categories in 2006. Both the Council and the CDQ Panel recommended that these species be allocated to the CDQ Program. Section 679.20(a)(5)(ii) allows the allocation of a portion of the Bogoslof pollock TAC to the CDQ Program if directed fishing for pollock is allowed by regulation in this district. However, directed fishing for pollock currently is not allowed in the Bogoslof District. The pollock TAC is set at a low level and all of it is allocated as an ICA for both the CDQ and non-CDQ sectors. NMFS has determined that Bogoslof pollock does not meet the first part of the definition of a “directed fishery” for purposes of section 305(i)(1) of the MSA because insufficient TAC exists to support a directed fishery. Therefore, NMFS will not allocate Bogoslof pollock to the CDQ Program for 2007 and 2008. In the future, if sufficient TAC exists to allow directed fishing for pollock in the Bogoslof District, current regulations would provide for a DFA of 10 percent of this TAC to the CDQ Program. The sablefish TACs in the Bering Sea subarea and the AI subarea are first allocated between hook-and-line or pot gear (fixed gear) and trawl gear. After those gear allocations are made, 20 percent of the fixed gear allocation and 7.5 percent of the trawl allocation is allocated to the CDQ Program as two separate sablefish CDQ reserves in each subarea. Under current regulations, only catch of sablefish with fixed gear may accrue against the fixed gear sablefish CDQ reserve. However, any gear type may be used to harvest sablefish that accrues against the sablefish CDQ reserve that originated from the trawl allocation of sablefish. In addition, although directed fishing for sablefish using trawl gear is prohibited for the non-CDQ sectors, this prohibition was not applied to the CDQ fisheries. Instead, the CDQ groups are prohibited from exceeding either of their sablefish allocations and they must decide how to allocate sablefish among gear types and directed fisheries to stay within their allocations. The indirect result of these allocations is that NMFS has allowed directed fishing for sablefish on the sablefish CDQ reserve that originates from the trawl allocation of sablefish. Therefore, NMFS has determined that both trawl allocations of sablefish to the CDQ Program meet the definition of a “directed fishery” for purposes of section 305(i)(1) of the MSA. Sufficient quota exists to allow directed fishing for sablefish and sablefish is an economically valuable species that for which directed fisheries are conducted in both the CDQ and non-CDQ sectors. Based on this finding, NMFS will continue to allocate 7.5 percent of the trawl allocation of sablefish to the CDQ Program. *Comment 4:* The proposed harvest specifications and accompanying Alaska Groundfish Harvest Specifications Environmental Impact Statement

(EIS)do not represent a substantial implementation of the Alaska Groundfish Fisheries Final Programmatic Supplemental Environmental Impact Statement (PSEIS) policy statement, but rather a transparent attempt to indemnify the agency against the inadequacies of the status quo harvest strategy. The proposed harvest specifications lack the perspective of the ecosystem-based policy framework outlined in the PSEIS because there are no explicit procedures in the TAC-setting process to address the impacts of single-species fishing strategies on dependent and related species and their habitats in an ecosystem context. Therefore, the policy framework outlined in the PSEIS has not been implemented in the regulations governing the operation of the groundfish fisheries. Under the proposed harvest specifications, ecosystem concerns would remain at best ancillary to the process of allocating fish and maximizing short-term economic benefits. *Response:* The preferred harvest strategy alternative described in the EIS is derived from the policy adopted as the preferred alternative in the PSEIS (see ADDRESSES ) and is one of the actions necessary to implement that policy statement. Ecosystem concerns are integral to the EIS analysis. The purpose of the EIS is to describe the potential environmental impacts of the alternative harvest strategies, including an analysis of the potential impacts of these alternatives on ecosystem components and the ecosystem as a whole. In addition to the EIS analysis, all available scientific information on the ecosystem is analyzed and presented to decision-makers and the public on an annual basis during the harvest specifications process. The annual SAFE reports, which provide the scientific information to support the harvest specifications for each species, include ecosystem considerations sections that describe the role of each target species in the ecosystem. The SAFE report also contains a separate “Ecosystems Considerations” chapter. Groundfish fisheries management, including the harvest specification process, takes account of ecosystem requirements related to predation, competition, and habitat to provide protection for ecosystem components. Under the harvest strategy, the determination of annual harvest specifications incorporates ecosystem considerations, in the face of uncertainty in the quantitative links between species. The most significant ecosystem considerations are

(1)The upper end of the OY range in the BSAI, which imposes a constraint on total biomass removal, and

(2)OFLs that prevent overfishing of each stock. A species' OFL is a harvest limit rather than a target and ABCs are set below OFLs. The tier system sets maximum ABCs and managers can set actual ABCs lower for ecosystem considerations. TACs never exceed ABCs and are frequently set at lower levels. TACs can also be adjusted downward for ecosystem considerations. Additionally, managers have established harvest control rules for pollock, Pacific cod, and Atka mackerel that prohibit directed fishing at low biomass levels, to account for Steller sea lion prey needs. TACs and actual catches are often lower than ABCs to protect other species, especially halibut, that may be taken as bycatch. Managers frequently restrict directed fishing for many species before TACs are reached to comply with PSC limits. Inseason management closes directed fisheries when TACs are reached, and restricts fishing in other fisheries taking the species as bycatch when OFLs are approached. As noted below in the response to Comment 5, the groundfish management framework includes many measures, in addition to the harvest strategy, to mitigate the ecosystem impacts of the groundfish fisheries. *Comment 5:* Existing management measures may be construed as consistent with an ecosystem-based approach, but they do not address major ecosystem impacts of the fisheries as promulgated in the annual catch specifications. *Response:* Existing management measures address major ecosystem impacts of the fisheries, and the Council and NMFS are engaged in an ongoing effort to improve the ways this is done. The existing regulatory framework imposes many constraints on fishing activity, including time, area, and gear restrictions, in order to mitigate or control ecosystem impacts created by fishing activity. Regulations impose maximum retainable amounts on the volume of bycatch a vessel may deliver or have onboard. Prohibited species catch

(PSC)regulations impose limits on harvests of crab, salmon, herring, and halibut, and restrict fishing activity once those limits are reached. Important restrictions have been imposed on key fisheries to limit competition for Steller sea lion prey and to protect Steller sea lion critical habitat. The Pribilof Islands Habitat Conservation Area protects ecosystem components in the vicinity of those islands. The Council and NMFS have adopted numerous measures to limit bycatch and control the discards of low value fish by-products. Seabirds attracted to longlines are protected by mandatory gear requirements, such as streamers, meant to reduce incidental takes. Essential fish habitat

(EFH)and Habitat Areas of Particular Concern

(HAPC)in the AI subarea are protected by an extensive system of closed areas (see response to Comment 15). NMFS and the Council are continuing to develop ecosystem management measures for the groundfish fisheries. The Council has created a committee to inform them of ecosystem developments and to assist in formulating positions with respect to ecosystem-based management. The Council has initiated work on a fisheries ecosystem plan for the AI subarea. The Council and the State have created a staff-level interagency AI Ecosystem Team to support this effort. It has taken the lead in the establishment of the interagency Alaska Marine Ecosystem Forum to improve inter-agency coordination and communication on marine ecosystem issues. The SSC has begun to hold annual ecosystem scientific meetings at the February Council meetings. In addition to exploring how to develop ecosystem management efforts, the Council and NMFS continue to take account of ecosystem impacts of fishing activity as available information allows. For example, the Council has initiated an analysis of potential Bering Sea subarea habitat conservation measures, an analysis to address the potential impacts of shifts in fishing activity to the north including into the Beaufort Sea, and is currently consulting under the Endangered Species Act

(ESA)for Steller sea lions, sperm and humpback whales. Ecosystem protection is supported by an extensive research program by the Alaska Fisheries Science Center

(AFSC)into ecosystem components and integrated ecosystem functioning. Exempted fishing permits

(EFPs)are issued to investigate new management approaches for the control of salmon bycatch in the BSAI, and research into salmon and halibut excluder devices. Additionally, the EIS considers other actions taken to manage the fisheries, including reasonable future fisheries management actions, as these are relevant to the environmental consequences of the harvest strategy alternatives. The Council and NMFS have processes consistent with National Environmental Policy Act

(NEPA)to evaluate each action to regulate other aspects of the fisheries. The overall fishery management policy within which the harvest strategies fall has been evaluated in the PSEIS. Moreover, NMFS and the Council evaluated each management measure at the time it was adopted in the relevant NEPA document. Considering different management measures in separate actions allows for more careful analysis of alternatives and the implications of each, and is often less confusing to the public. The Council and NMFS are actively evaluating a wide range of new management measures through these processes and will continue to do so. *Comment 6:* Levels of exploitation on single stocks are set with no explicit consideration of the impacts of dependent, competing species in the food web or other impacts on associated species that flow from the exploitation of a relative few commercially desirable species. The single species F 40%% policy ignores effects on the ecosystem and simply assumes that individual target species can be fished to the maximum sustainable yield

(MSY)without significant consequences to other species in the food web. *Response:* The harvest strategy incorporates a key principle of ecosystem-based fisheries management by preserving individual stocks and preventing overfishing of those stocks. This is important for protecting ecosystem components that depend on these individual stocks. The effects of the groundfish fisheries and fishing rates are analyzed in the EIS and the annual SAFE reports. The tier system in the FMP and the harvest specifications process lead to TACs associated with fishing rates that are less than F MSY . F OFL is never greater than F MSY , or an appropriate F MSY proxy. Average multi-year fishery harvest rates fall below F MSY because the tier system treats F OFL as a limit rather than a target. The fishing rates associated with maximum permissible ABC, actual ABC, and the TAC, all fall below the F OFL , providing a margin between the actual F and the F MSY . Moreover, as discussed in response to Comment 5, other management measures often constrain actual catches and fishing rates below the TACs or the fishing rates associated with the TACs. With current levels of information, we cannot precisely specify the margin or threshold between FOFL and actual harvest rate that provides the appropriate level of protection for various ecosystem properties. The AFSC continues to develop and improve scientific information in the Ecosystems Considerations section of the SAFE report. New information added in 2006 included the relationship with Bering Sea subarea pelagic forage species, the relationship between predation/production and fishing/production, a metric proposed to evaluate the management implications of potential exploitation of forage species, and a metric proposed to evaluate the “footprint” of individual fisheries. The AFSC also continues to develop and improve several multispecies and ecosystem models to predict the possible effects of fishing and/or climate on ecosystem processes. Ecosystem modeling is extremely complex, and the incorporation of ecosystem considerations into the harvest specifications process is an evolving process. The AFSC is advancing this process through the development of multispecies fish stock assessment models that include predation, ecosystem mass-balance and simulation models, and single-species stock assessment models that include predation. The AFSC briefed the Groundfish Plan Teams on the results of these analyses to help them in their deliberations in the harvest specifications process. *Comment 7:* Selective removals of species and large differences in catch rates for managed stocks may be responsible for significant and lasting changes in the structure of groundfish assemblages and food webs in the North Pacific, as seen in other ecosystems. Selective extraction of a relatively few high-value species may provide a competitive opportunity for “under-utilized” species such as arrowtooth flounder, which appear to have increased dramatically since the 1970s. NMFS consistently attributes regional stock declines and broader system changes to the weather (“regime shifts”), a transparent stratagem that serves to justify the status quo and absolve the agency of responsibility for fishery-related systemic changes. *Response:* NMFS analyzes and considers the interactions among fish species in its evaluations of the impacts of groundfish fishing. The nature of competitive interactions among species is an area of ongoing research by the AFSC. These issues are discussed in the ecosystem sections of individual species SAFE reports and by the Plan Teams as they formulate their ABC recommendations. Species interactions are complex and imperfectly understood in the North Pacific. The AFSC is collaborating to develop a detailed, age-structured, multispecies statistical model to study this complex interaction of pollock and arrowtooth flounder. This “cultivation/depensation” model is expected to be completed in the near future. In December 2006, the BSAI Groundfish Plan Team leader briefed the Council and its SSC and AP on the complex interactions between pollock and arrowtooth flounder and on the potential application of this model whereby a species such as pollock “cultivates” its young by preying on species that would eat its young. Regime shifts remain an important consideration. Regime shifts are well documented; these changes in climate are believed to have affected relative abundance of species in the past, and are expected to do so in the future. *Comment 8:* NMFS fails to analyze the cumulative and synergistic effects of selective exploitation, benthic habitat modification, and serial depletion of targeted stocks in the North Pacific. The “Ecosystem Considerations” chapter in the annual SAFE reports does not consider the effects of large-scale fisheries off Alaska on long-term restructuring of food web dynamics and on composition of species assemblages. An evaluation of this phenomenon, and consideration of alternatives to address it, is also missing from the EIS and the harvest specification process. Additionally, the proposed harvest specifications do not mitigate the effects of selective exploitation and disproportionate exploitation rates. *Response:* NMFS takes a conservative approach to management in response to uncertainties. Conservative elements in the harvest strategies and groundfish fisheries management are listed in the responses to Comments 4, 5, 15, and 16. The EIS analyzed alternative harvest strategies that met the scope of this action, as determined by the statement of purpose and need. The EIS analyzes the effects of the alternative harvest strategies on target stocks and habitat in a comprehensive way that looks at both the individual species impacts and the overall ecosystem function impacts. NMFS agrees that uncertainty exists in assessing the ecosystem effects of alternative harvest strategies. One of the functions of an EIS is to identify these uncertainties. The EIS and the Ecosystem Considerations chapter of the SAFE reports examine trends in the trophic level of catch and species diversity. As noted in the response to Comment 10, competitive interactions between fisheries are an active area of AFSC research, and are discussed, as appropriate, in the ecosystem discussions in the species-specific sections of the SAFE reports. *Comment 9:* Neither the EIS nor its alternatives address the issues of setting exploitation levels on single stocks with no explicit consideration of the impacts of dependent, competing species in the food web or other impacts on associated species that flow from the exploitation of a relative few commercially desirable species. *Response:* The EIS directly examines the impacts of the alternative harvest strategies on non-target species, including food web interactions. The EIS examines the impacts of groundfish fishing on forage fish availability in Chapter 6, and the trophic level of catches in Chapter 11. The EIS includes detailed analyses of the impacts on prey and habitat for key species and species groupings of marine mammals and seabirds in Chapters 8 and 9. *Comment 10:* The uncertainties of ecosystem mechanics underscore the need for a much more precautionary approach to fisheries management in the context of food web and habitat conservation, and illustrate why the agency's determinations of non-significance for fishery impacts on prey availability and spatial/temporal concentration of fisheries are arbitrary and capricious. NMFS cannot demonstrate that the current and proposed levels of fishing permitted in protected species' habitats are “safe” or “insignificant.” Rather, NMFS assumes that the impact is insignificant in the absence of conclusive evidence to the contrary. The burden of proof is on the environment to show harm. This is opposite of precautionary and the opposite of an ecosystem-based approach. *Response:* NMFS did not make a determination of non-significance in the EIS. The EIS fully discloses known impacts, areas of uncertainty, and presents the information in comparative form to aid in decision-making. NMFS agrees that uncertainty exists in assessing the ecosystem effects of alternative harvest strategies. Identifying these uncertainties is one of the functions of an EIS. The EIS identifies potential adverse impacts of the alternatives on the ecosystem and the uncertainty of those impacts. NMFS is actively taking steps to reduce uncertainty and better understand the environment through ongoing scientific research. Many elements built into the harvest specifications process, and into the groundfish fisheries management regime, described in the responses to Comments 4, 5, 15, and 16, contribute to conservative management. *Comment 11:* Major habitat impacts of fishing on the EFH of FMP-managed species and foraging habitats of ESA and Marine Mammal Protection Act (MMPA)-protected species are not addressed in the EIS or mitigated in the proposed harvest specifications. *Response:* NMFS has examined in the EIS the impacts of fishing on EFH of FMP-managed species, and on the foraging habitats of ESA- and MMPA-protected species. Chapter 8 examines the impacts of alternative groundfish harvest strategies on ESA- and MMPA-listed marine mammals. Chapter 9 provides a similar examination for ESA-listed seabirds. Chapter 10 examines the impacts of the harvest strategies on EFH and incorporates by reference the analysis in the Essential Fish Habitat Environmental Impact Statement (EFH EIS, see ADDRESSES ) that examines the impact of fishing on benthic habitat. Habitat impacts of fishing on the EFH of FMP-managed species and foraging habitats of ESA- and MMPA-protected species are mitigated by the extensive habitat protection measures enacted in the BSAI. These are described in the response to Comment 15. *Comment 12:* The EIS fails to evaluate the impacts of pelagic trawl gear on habitat and the impact of the spatial concentration of pollock and Pacific cod catches on stock size, in a meaningful fashion, and fails to consider an alternative to address these impacts. There is little scientific evidence that fishing on spawning stocks of Alaskan groundfish has had adverse impacts on recruitment success. The status quo practice of targeting groundfish on spawning grounds, when the fish are most vulnerable to fishing gear, is a habitat impact of particular significance that must be addressed. The dismal abundance trends of several regional pollock stocks and large uncertainties in stock structure among many groundfish populations cry out for explicit protection of spawning grounds. *Response:* The impacts of pelagic trawling on habitat are evaluated in the EFH EIS. Chapter 10 of the EIS provides an EFH Assessment that incorporates by reference the EFH EIS analysis of the impacts of the groundfish fisheries on EFH. Fisheries management measures, other than harvest strategies, are outside the scope of the action analyzed in the EIS. Pollock and Pacific cod catches are apportioned seasonally under existing measures adopted to protect Steller sea lions. Further seasonal apportionments of catch would require regulatory changes that were outside the scope of this action, as defined by the purpose and need. *Comment 13:* The MSA's EFH provisions should require the adoption of marine reserves to protect vulnerable reproductive habitats that are targeted by the fisheries. *Response:* This is not a comment on the content of the groundfish harvest specifications or on the accompanying EIS, and deals with issues that are beyond the scope of both. *Comment 14:* The proposed harvest specifications and accompanying EIS fail to address major groundfish fishery impacts on king crab EFH in the most heavily trawled area of the Bering Sea, the Unimak-Port Moller area. *Response:* These impacts were fully analyzed in the EFH EIS. The analysis in the EFH EIS has been incorporated into the EIS by reference to eliminate repetitive discussion in Chapter 10. *Comment 15:* NMFS' assertions that the status quo EFH measures provide adequate protection or that the spatial/temporal concentration of the fisheries has insignificant impacts on EFH are not supported by evidence. The EIS fails to evaluate this information and consider alternatives that would address these impacts on fish habitat, and the proposed harvest specifications provide no adequate mitigation measures to address these impacts. NMFS cannot demonstrate that the current and proposed levels of fishing permitted in managed species' habitats are insignificant or compliant with the spirit and letter of the MSA's EFH provisions. Rather, NMFS assumes that the impact is insignificant in the absence of conclusive evidence to the contrary. The burden of proof is on the environment and the managed species to show harm. This is opposite of a precautionary approach to EFH conservation. *Response:* In this EIS NMFS fully discloses known impacts, identifies uncertainties, and presents information in comparative form to aid in decision-making. Detailed information of the effects of fishing on EFH contained in the 2005 EFH EIS was incorporated by reference in this EIS. As discussed in Chapter 2 of the EIS, fisheries management measures, other than harvest strategies, are outside the scope of this action, as defined by the statement of purpose and need. The discussion of habitat impacts in the EIS incorporated by reference the science and analysis in the EFH EIS. The analyses in Section 4.3 and Appendix B of the EFH EIS indicated that groundfish fishing has long-term effects on benthic habitat features off Alaska and acknowledged that considerable scientific uncertainty remains regarding the consequences of such habitat changes for the sustained productivity of managed species. Nevertheless, the EFH EIS concluded that the effects on EFH are minimal because the analysis found no indication that continued fishing activities at the current rate and intensity would alter the capacity of EFH to support healthy populations of managed species over the long term. Therefore, the EFH EIS determined that new protection measures for the fisheries to reduce the adverse effects on EFH were not required. Nevertheless, the Council recommended a suite of new conservative measures to reduce potential adverse effects to EFH and HAPCs from fishing activities. These actions continue the Council's policy of implementing conservative conservation measures for the Alaska fisheries, as described in the management policies and objectives added to the groundfish FMPs from the PSEIS policy statement. NMFS implemented the Council's recommendations in 2006 (71 FR 36694; June 28, 2006). The Council and NMFS have taken a conservative approach to habitat protection by enacting substantial restrictions on fishing that minimize potential adverse effects on EFH. In the Bering Sea subarea, bottom trawl closures encompass about 30,000 square nautical miles to reduce bycatch and protect seafloor habitats. Measures to protect Steller sea lions have fully or partially closed about 58,000 square nautical miles to fishing in the AI subarea and GOA. More recently, the Council and NMFS adopted a suite of new measures to reduce the effects of fishing on EFH in the AI subarea and GOA, protecting nearly 300,000 square nautical miles of habitat. The largest of these areas, the Aleutian Islands Habitat Conservation Area, prohibits bottom trawling over 279,000 square nautical miles to protect corals and other sensitive habitat features. The Bowers Ridge Habitat Conservation Zone north of Adak is closed to all mobile bottom-contact gear. The Aleutian Islands Coral Habitat Protection Areas are closed to all bottom-contact fishing gear and anchoring, protecting six especially sensitive “coral gardens.” The Council is presently undertaking an analysis of additional habitat conservation measures for the Bering Sea subarea, which considers both area closures and gear restrictions to further limit the potential adverse effects of fishing on EFH. The Council and NMFS have taken many other measures to protect habitat. These include the trawl standards for pelagic trawl gear in the BSAI to reduce bottom contact, and a wide range of protection measures, including the nearshore Bristol Bay trawl closure area, the Red King crab savings area, the Statistical area 516 seasonal closure, and the Pribilof Islands Habitat Conservation area. These actions reflect a conservative management strategy. *Comment 16:* The lack of spatial-temporal management of groundfish stocks has potentially profound adverse consequences for ESA-listed Steller sea lions and MMPA-listed northern fur seals. The apportionment of ABCs according to broad management subareas does not address the impacts of fishing at local scales relevant to foraging sea lions, fur seals, and other species. NMFS fails to address localized effects adequately in any alternative considered in the EIS or the proposed harvest specifications. NMFS cannot demonstrate that the current and proposed levels of fishing permitted in protected marine mammal species' habitats are insignificant. Existing uncertainties underscore the need for a highly precautionary approach to habitat conservation, and illustrate why the agency's claims that spatial/temporal concentration of the fisheries under the status quo have insignificant impacts on marine mammal foraging habitats and prey are not supported by evidence. As in other instances, the burden of proof is on the environment to show harm. This is opposite of a precautionary approach. *Response:* NMFS did not make a determinations of non-significance in the EIS. The EIS fully discloses known impacts, areas of uncertainty, and presents the information in comparative form to aid in decision-making. The EIS describes localized impacts of fishing activity on marine mammals. Chapter 8 in the EIS evaluates the impacts of this action on marine mammals, with particular attention to impacts on Steller sea lions and northern fur seals. The chapter describes what is known about the spatial and temporal overlap between groundfish fishing activity and marine mammal foraging habitat. The EIS summarizes the available information on the impacts of fishing activity on marine mammals and their habitat. While information on the spatial and temporal impact of groundfish fishing on other species is relatively limited, the EIS provides a review of the information available and indicates where information is lacking. Endangered Steller sea lions have been protected by a suite of measures. Groundfish fisheries conducted in accordance with the Steller sea lion protection measures adopted in 2002 have been determined not to jeopardize Steller sea lions or adversely modify their critical habitat. The protection measures involve seasonal apportionments of annual TACs, limits on the proportion of catch within habitat important for Steller sea lion foraging, limits on fishing activity within areas adjacent to haulouts and rookeries, and closure of directed fishing when biomass falls to low levels. The protection measures and the conclusions of no jeopardy or adverse modification of habitat were arrived at after careful evaluation in 2001. Since that time, NMFS has continued to investigate the determinants of Steller sea lion declines. These measures are currently being reevaluated in a new biological opinion and revised recovery plan. *Comment 17:* The proposed harvest specifications and the accompanying EIS fail in substantive ways to comply with the intent of the MSA, NEPA, the ESA, and the MMPA. *Response:* Prior to approval, the Secretary ensures that this action and all actions it takes are in compliance with the MSA, NEPA, the ESA, and the MMPA. *Comment 18:* Given the current uncertainties and lack of scientific information, it is essential to adopt a highly precautionary approach to exploitation of these ecosystems, in order to avoid the wholesale system reorganization and impoverishment that has been linked to fishing in other marine ecosystems. *Response:* The Council recommended and NMFS approves the use of a cautionary approach. *Comment 19:* There is no “balance” between the interests of fisheries and other public interests in the North Pacific region: the scales are tilted entirely to the advantage of the industrial fisheries whose interests are placed above all other public interests. The tradeoffs between often contrary FMP objectives are made by a decision-making body that is not representative of the broader public interest and that is biased heavily in favor of commercial utilization of the public resource for its own benefit. This state of affairs cries out for basic reforms of the kind outlined by the Pew Oceans Commission

(2003)and the U.S. Oceans Policy Commission

(2004)so that other public interests and societal goals are fairly represented, in order to achieve a real “balance between competing uses” of the ocean commons. *Response:* This is not a comment on the content of the groundfish harvest specifications or on the accompanying EIS, and deals with issues that are beyond the scope of both. Small Entity Compliance Guide The following information is a plain language guide to assist small entities in complying with this final rule as required by the Small Business Regulatory Enforcement Fairness Act of 1996. This final rule's primary management measures are to announce 2007 and 2008 final harvest specifications and prohibited species bycatch allowances for the groundfish fishery of the BSAI. This action is necessary to establish harvest limits and associated management measures for groundfish during the 2007 and 2008 fishing years and to accomplish the goals and objectives of the FMP. This action affects all fishermen who participate in the BSAI fishery. The specific amounts of OFL, ABC, TAC, and PSC amounts are provided in tabular form to assist the reader. NMFS will announce closures of directed fishing in the **Federal Register** and in information bulletins released by the Alaska Region. Affected fishermen should keep themselves informed of such closures. Classification NMFS determined that the FMP is necessary for the conservation and management of the BSAI groundfish fishery and that it is consistent with the Magnuson-Stevens Fishery Conservation and Management Act and other applicable laws. This action is authorized under § 679.20 and is exempt from review under Executive Order 12866. NMFS prepared a Draft EIS for this action and made it available to the public for comment (71 FR 53093, September 8, 2006). NMFS prepared the Final EIS and made it available to the public on January 12, 2007 (72 FR 1512). On February 13, 2007, NMFS issued the Record of Decision

(ROD)for the Final EIS. Copies of the Final EIS and ROD for this action are available from NMFS (see ADDRESSES ). A Final Regulatory Flexibility Analysis

(FRFA)was prepared to evaluate the impacts on small entities of alternative harvest strategies for the groundfish fisheries in the Exclusive Economic Zone

(EEZ)off of Alaska on small entities. This FRFA meets the statutory requirements of the Regulatory Flexibility Act

(RFA)of 1980, as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 (5 U.S.C. 601-612). A summary of the FRFA follows. The action under consideration is adoption of a harvest strategy to govern the harvest of groundfish in the BSAI. The preferred alternative is the status quo harvest strategy in which TACs fall within the range of ABCs recommended through the Council's harvest specification process and TACs recommended by the Council. This action is taken in accordance with the FMP and adopted by the Council pursuant to the MSA. The proposed harvest specifications were published in the **Federal Register** on December 15, 2006 (71 FR 75460). An Initial Regulatory Flexibility Analysis

(IRFA)was prepared for the proposed harvest specifications and was described in the classification section of that preamble. Copies of the IRFA prepared for this action are available from NMFS, Alaska Region (see ADDRESSES ). The public comment period ended on January 16, 2007. No comments were received regarding the economic impacts of this action. The need for and objectives of this rule are described in the preamble and not repeated here. Significant issues raised by public comment are addressed in the preamble and not repeated here. The directly regulated small entities include approximately 747 small catcher vessels, less than 17 small catcher-processors, and six Community Development Quota

(CDQ)Groups. The entities directly regulated by this action are those that harvest groundfish in the EEZ of the BSAI, and in parallel fisheries within State of Alaska waters. These include entities operating catcher vessels and catcher-processor vessels within the action area, and entities receiving direct allocations of groundfish. Catcher vessels and catcher processors were considered to be small entities if they had annual gross receipts, from all of their economic activities, and including the revenue of their affiliated operations, less than or equal to $4 million per year. Data from 2005 was used because it was the most recent available. CDQ groups receive direct allocations of groundfish, and these were considered to be small entities because they are non-profit entities. The Aleut Corporation is not a small entity because it is a holding company which does not meet the SBA $6 million threshold for holding companies (13 CFR 121.201). Estimates of first wholesale gross revenues for the BSAI non-CDQ and CDQ sectors were used as indices of the potential impacts of the alternative harvest strategies on small entities. Revenues were projected to decline from 2006 levels in 2007 and 2008 under the preferred alternative due to declines in ABCs for key species. The preferred alternative (Alternative 2) was compared to four other alternatives. These included Alternative 1, which would set TACs so as to generate fishing rates equal to the maximum permissible ABC (if the full TAC were harvested), unless the sum of TACs would exceed the regional OY, in which case harvests would be limited to the OY. Alternative 3 would set TACs to produce fishing rates equal to the most recent five year average of fishing rates. Alternative 4 would set TACs to equal the lower bound of the regional OY range. Alternative 5 would set TACs equal to zero. Alternatives 3, 4, and 5 produced smaller first wholesale revenues for each of the three groupings, than Alternative 2. Thus, Alternatives 3, 4 and 5 had greater adverse impacts on small entities. Alternative 1 sets the TACs equal to the maximum permissible ABC unless the sum of these TACs exceed the OY. In 2007 and 2008 the sum of the maximum permissible ABCs exceeded the OY. Therefore, the TACs under Alternative 1 were set equal to the OY. Also, Alternative 2 TACs are constrained by the ABCs the Plan Team and SSC recommend to the Council on the basis of a full consideration of biological issues. These ABCs are often less than Alternative 1 maximum permissible ABCs. Therefore higher TACs under Alternative 1 may not be consistent with prudent biological management of the resource. For these reasons, Alternative 2 is the preferred alternative. in the BSAI (for both non-CDQ and CDQ groups). For these reasons, Alternative 2 is the preferred alternative. This action does not modify any recordkeeping or reporting requirements. Under 5 U.S.C. 553(d)(3), an agency can waive the 30 day delay in effectiveness of a rule for good cause. These final harvest specifications were developed as quickly as possible, Plan Team review in November 2006, Council consideration and recommendations in December 2006, and NOAA Fisheries review and development in January-February 2007. For all fisheries not currently closed because the TACs established under the 2006 and 2007 final harvest specifications (71 FR 10894, March 3, 2006) were reached, the likely possibility exists for their closures prior to the expiration of a 30-day delayed effectiveness period because their TACs could be reached. Certain fisheries, such as those for pollock, Pacific cod, and Atka mackerel are intensive fast-paced fisheries. Other fisheries, such as those for flatfish, rockfish and “other species,” are critical as directed fisheries and as incidental catch in other fisheries. U.S. fishing vessels have demonstrated the capacity to catch the TAC allocations in all these fisheries. Any delay in allocating the final TAC in these fisheries would cause disruption to the industry and potential economic harm through unnecessary discards. Determining which fisheries may close is impossible because these fisheries are affected by several factors that cannot be predicted in advance, including fishing effort, weather, movement of fishery stocks, and market price. Furthermore, the closure of one fishery has a cascading effect on other fisheries by freeing-up fishing vessels, allowing them to move from closed fisheries to open ones, increasing the fishing capacity in those open fisheries and causing them to close at an accelerated pace. If the final harvest specifications are not effective by March 10, 2007, which is the start of the Pacific halibut season as specified by the IPHC, the hook-and-line sablefish fishery will not begin concurrently with the Pacific halibut season. This would cause sablefish that is caught with Pacific halibut to be needlessly discarded, as both hook-and-line sablefish and Pacific halibut are managed under the same IFQ program. Immediate effectiveness of the 2007 and 2008 final harvest specifications will allow the sablefish fishery to begin concurrently with the Pacific halibut season. Also, the immediate effectiveness of this action is required to provide consistent management and conservation of fishery resources based on the best available scientific information, and to give the fishing industry the earliest possible opportunity to plan its fishing operations. Therefore NMFS finds good cause to waive the 30 day delay in effectiveness under 5 U.S.C. 553(d)(3). Furthermore, the 2007 and 2008 final harvest specifications implement the groundfish sideboards and sideboard closures that restrict the owners of vessels with a history of participation in the Rockfish Program from using the increased flexibility provided by the Rockfish Program to expand their level of participation the catcher vessel Pacific cod fishery in BSAI groundfish fisheries. Until the 2007 and 2008 final harvest specifications are effective no sideboard restrictions or closures apply to these vessels. Accordingly, NMFS finds that there is good cause to waive the 30 day delayed effectiveness period under 5 U.S.C. 553(d)(3). Authority: 16 U.S.C. 773 *et seq.* ; 1540(f); 1801 *et seq.* ;1851 note; and 3631 *et seq.* Dated: February 22, 2007. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service. [FR Doc. E7-3692 Filed 3-1-07; 8:45 am] BILLING CODE 3510-22-P 72 41 Friday, March 2, 2007 Proposed Rules DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-27358; Directorate Identifier 2006-NM-270-AD] RIN 2120-AA64 Airworthiness Directives; Aerospatiale Model ATR42 and ATR72 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: We propose to adopt a new airworthiness directive

(AD)for the products listed above. This proposed AD results from mandatory continuing airworthiness information

(MCAI)issued by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as electrical arcing due to chafing between a bonding cable and electrical wires in the 120 VU (volt unit) electrical harness, causing the loss of some instruments and loss of one hydraulic circuit pressure (i.e., loss of pressure of one hydraulic circuit). The proposed AD would require actions that are intended to address the unsafe condition described in the MCAI. DATES: We must receive comments on this proposed AD by April 2, 2007. ADDRESSES: You may send comments by any of the following methods: • *DOT Docket Web Site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Fax:*

(202)493-2251. • *Mail:* Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590-0001. • *Hand Delivery:* Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. Examining the AD Docket You may examine the AD docket on the Internet at *http://dms.dot.gov;* or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone

(800)647-5227) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. FOR FURTHER INFORMATION CONTACT: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1137; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: Streamlined Issuance of AD The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. This streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to follow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and **Federal Register** requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S.-certificated products. This proposed AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The proposed AD contains text copied from the MCAI and for this reason might not follow our plain language principles. Comments Invited We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2007-27358; Directorate Identifier 2006-NM-270-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD. Discussion The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA Airworthiness Directive 2006-0283, dated September 14, 2006 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states that recently an ATR 42 suffered electrical arcing, causing the loss of some instruments and loss of one hydraulic circuit pressure (i.e., loss of pressure of one hydraulic circuit) due to chafing between a bonding cable and electrical wires in the 120 VU (volt unit) electrical harness. The investigations showed that: • A tubular support had been deformed and therefore impaired the spacing among electrical harness, supports, and cables; • Harness was not correctly attached; • The size of the harness was increased by addition of cables (for Service Bulletins

(SB)or customer modifications embodiments); • The bonding cable was not correctly installed. The EASA Airworthiness Directive mandates an inspection of the ATR 42 and ATR 72 fleet for correct installation of the bonding cable and restoring correct installation of the bonding cable if necessary. You may obtain further information by examining the MCAI in the AD docket. Relevant Service Information Avions de Transport Regional has issued Service Bulletins ATR42-92-0012 and ATR72-92-1013, both dated July 4, 2006. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI. FAA's Determination and Requirements of This Proposed AD This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, they have notified us of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all information provided by the State of Design Authority and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are described in a separate paragraph of the proposed AD. These requirements, if ultimately adopted, will take precedence over the actions copied from the MCAI. Costs of Compliance Based on the service information, we estimate that this proposed AD would affect about 53 products of U.S. registry. We also estimate that it would take about 1 work hour per product to comply with this proposed AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of the proposed inspection on U.S. operators to be $4,240, or $80 per product. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. *For the reasons discussed above, I certify this proposed regulation:* 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **Aerospatiale:** Docket No. FAA-2007-27358; Directorate Identifier 2006-NM-270-AD. Comments Due Date

(a)We must receive comments by April 2, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to Model ATR42-200, -300, -320, and -500 airplanes; all serial numbers up to manufacturer serial number

(MSN)643 inclusive; and Model ATR72-101, -102, -201, -202, -211, -212, and -212A airplanes, all serial numbers up to MSN 728 inclusive, except MSN 723 and 725; certificated in any category. Reason

(d)The mandatory continuing airworthiness information

(MCAI)states that recently an ATR 42 suffered electrical arcing, causing the loss of some instruments and loss of one hydraulic circuit pressure (i.e., loss of pressure of one hydraulic circuit) due to chafing between a bonding cable and electrical wires in the 120 VU (volt unit) electrical harness. The investigation showed that a tubular support had been deformed and therefore impaired the spacing among electrical harness, supports, and cables; the harness was not correctly attached; the size of the harness was increased by addition of cables (for Service Bulletins

(SB)or customer modifications embodiments); and the bonding cable was not correctly installed. The MCAI mandates an inspection of the ATR 42 and ATR 72 fleet for correct installation of the bonding cable and restoring correct installation of the bonding cable if necessary. Actions and Compliance

(e)Unless already done, do the following actions. Within 3 months after the effective date of this AD: Inspect the harness installation in the 120 VU electrical harness and, as applicable, restore correct installation of the bonding cable, in accordance with the instructions given by Avions de Transport Regional ATR42-92-0012 (for Model ATR42 airplanes) and ATR72-92-1013 (for Model ATR72 airplanes), both dated July 4, 2006; as applicable. FAA AD Differences Note: This AD differs from the MCAI and/or service information as follows: No differences. Other FAA AD Provisions

(f)The following provisions also apply to this AD:

(1)Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, ATTN: Tom Rodriguez, Aerospace Engineer, 1601 Lind Avenue, SW., Renton, Washington 98057-3356, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Before using any AMOC approved in accordance with § 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office.

(2)Airworthy Product: For any requirement in this AD to obtain corrective actions from a manufacturer or other source, use these actions if they are FAA-approved. Corrective actions are considered FAA-approved if they are approved by the State of Design Authority (or their delegated agent). You are required to assure the product is airworthy before it is returned to service.

(3)Reporting Requirements: For any reporting requirement in this AD, under the provisions of the Paperwork Reduction Act, the Office of Management and Budget

(OMB)has approved the information collection requirements and has assigned OMB Control Number 2120-0056. Related Information

(g)Refer to MCAI EASA Airworthiness Directive 2006-0283, dated September 14, 2006; and Avions de Transport Regional Service Bulletins ATR42-92-0012 and ATR72-92-1013, both dated July 4, 2006, for related information. Issued in Renton, Washington, on February 21, 2007. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-3657 Filed 3-1-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [CGD05-07-013] RIN 1625-AA08 Special Local Regulations for Marine Events; Western Branch, Elizabeth River, Portsmouth, VA AGENCY: Coast Guard, DHS. ACTION: Notice of proposed rulemaking. SUMMARY: The Coast Guard proposes to temporarily change the regulations for the “Virginia State Hydroplane Championship” hydroplane races held annually on the waters of the Western Branch of the Elizabeth River at Portsmouth, Virginia. This action is necessary because the event will be held on April 21 and 22, 2007, instead of on April 27 and 28, 2007 as established by permanent regulation. This proposed rule is intended to restrict vessel traffic in portions of the Elizabeth River and is necessary to provide for the safety of life on navigable waters during the event. DATES: Comments and related material must reach the Coast Guard on or before March 19, 2007. ADDRESSES: You may mail comments and related material to Commander (dpi), Fifth Coast Guard District, 431 Crawford Street, Portsmouth, Virginia 23704-5004, hand-deliver them to Room 415 at the same address between 9 a.m. and 2 p.m., Monday through Friday, except Federal holidays, or fax them to

(757)398-6203. The Inspections and Investigation Branch, Fifth Coast Guard District, maintains the public docket for this rulemaking. Comments and material received from the public, as well as documents indicated in this preamble as being available in the docket, will become part of this docket and will be available for inspection or copying at the above address between 9 a.m. and 2 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Dennis M. Sens, Project Manager, Inspections and Investigations Branch, at

(757)398-6204. SUPPLEMENTARY INFORMATION: Request for Comments We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD05-07-013), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them. Public Meeting We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to the address listed under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the **Federal Register** . Background and Purpose On April 21 and 22, 2007, Virginia Boat Racing Association will sponsor the “Virginia State Hydroplane Championship” hydroplane races on the waters of the Western Branch of the Elizabeth River at Portsmouth, Virginia. The event will consist of approximately 75 hydroplane powerboats conducting high-speed competitive races on the Western Branch of the Elizabeth River in the vicinity of Portsmouth City Park, Portsmouth, Virginia. A fleet of spectator vessels is expected to gather near the event site to view the competition. The regulation at 33 CFR 100.525 is effective annually for this marine event. Paragraph

(c)of Section 100.525 establishes the enforcement date for the hydroplane races. This regulation proposes to temporarily change the regulation so that the event may be held on April 21 and 22, 2007 instead of the fourth Friday and following Saturday in April. The Virginia Boat Racing Association who is the sponsor for this event still intends to hold this event annually, however, this year they have requested a change in the date of the event for 2007. The change was requested to accommodate participation by all hydroplane participants. To provide for the safety of participants, spectators, support and transiting vessels, the Coast Guard proposes to temporarily restrict vessel traffic in the event area during the hydroplane races. Discussion of Proposed Rule The Coast Guard proposes to temporarily suspend the regulations at 33 CFR 100.525 by temporarily revising the date of enforcement in paragraph

(c)to reflect the event will be conducted in 2007 on the third Saturday and Sunday in April, April 21 and 22, 2007. This proposed change is needed to accommodate the sponsors hydroplane race schedule relative to the rotation of weekend dates in the annual calendar. The special local regulations will be enforced from 8 a.m. to 6 p.m. on April 21 and 22, 2007, and will restrict navigation in the regulated area during the hydroplane races. Except for persons or vessels authorized by the Coast Guard Patrol Commander, no person or vessel may enter or remain in the regulated area during the effective period. The regulated area is needed to control vessel traffic during the event to enhance the safety of participants and transiting vessels. In addition to notice in the **Federal Register** , the maritime community will be provided extensive advance notification via the Local Notice to Mariners, and marine information broadcasts so mariners can adjust their plans accordingly. Regulatory Evaluation This proposed 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. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. The effect of this proposed action merely establishes the date on which the existing regulation would be in effect and would not impose any new restrictions on vessel traffic. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed 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 proposed rule would not have a significant economic impact on a substantial number of small entities. This proposed rule would effect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in a portion of the Western Branch of the Elizabeth River during the event. This proposed rule would not have a significant economic impact on a substantial number of small entities for the following reasons. This proposed rule would merely change the date on which the existing regulations would be enforced in the regulated area and would not impose any new restrictions on vessel traffic. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the address listed under ADDRESSES . 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. Collection of Information This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.). Federalism 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. Unfunded Mandates Reform Act 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 proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This proposed rule would 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. Civil Justice Reform This proposed 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. Protection of Children 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. Indian Tribal Governments This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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. Energy Effects We have analyzed this proposed 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. Technical Standards 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 proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this proposed rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, 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)(h), of the Instruction, from further environmental documentation. Special local regulations issued in conjunction with a regatta or marine event permit are specifically excluded from further analysis and documentation under that section. Under figure 2-1, paragraph (34)(h), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule. Comments on this section will be considered before we make the final decision on whether to categorically exclude this rule from further environmental review. List of Subjects in 33 CFR Part 100 Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways. For the reasons discussed in the preamble, the Coast Guard proposes to temporarily amend 33 CFR Part 100 as follows: PART 100—SAFETY OF LIFE ON NAVIGABLE WATERS 1. The authority citation for Part 100 continues to read as follows: Authority: 33 U.S.C. 1233; Department of Homeland Security Delegation No. 0170.1. 2. In § 100.525, from 8 a.m. to 6 p.m. on April 21 and 22, 2007, temporarily suspend paragraph (c). 3. In § 100.525, from 8 a.m. to 6 p.m. on April 21 and 22, 2007, temporarily add a new paragraph

(d)to read as follows: § 100.525 Western Branch, Elizabeth River, Portsmouth, Virginia.

(d)*Enforcement period.* This section will be enforced from 8 a.m. to 6 p.m. on April 21 and 22, 2007. A notice of enforcement of this section will be disseminated through the Fifth Coast Guard District Local Notice to Mariners announcing the specific event date and times. Notice will also be made via marine Safety Radio Broadcast on VHF-FM marine band radio channel 22 (157.1 MHz). Dated: February 15, 2007. Larry L. Hereth, Rear Admiral, U.S. Coast Guard, Commander, Fifth Coast Guard District. [FR Doc. E7-3638 Filed 3-1-07; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 405, 424, and 498 [CMS-6003-P2] RIN 0938-AI49 Medicare Program; Appeals of CMS or Contractor Determinations When a Provider or Supplier Fails To Meet the Requirements for Medicare Billing Privileges AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS. ACTION: Proposed rule. SUMMARY: This proposed rule would establish an appeals process for providers and suppliers whose applications for enrollment or renewal of enrollment were denied. It would also grant providers and suppliers the right to a hearing by an Administrative Law Judge

(ALJ)within the Department of Health and Human Services after an adverse decision at the reconsideration level when a provider or supplier's Medicare enrollment application is denied to those situations in which the provider or supplier's Medicare billing privileges are revoked. In addition, this proposed rule would grant providers and suppliers the right to Departmental Appeals Board review of an adverse ALJ decision. It would also establish timeframes for deciding enrollment appeals by an ALJ or the DAB. This proposed rule would also establish the use of electronic funds transfer

(EFT)be used for all Federal payments to providers and suppliers. Finally, this proposed rule would implement section 936(b)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which specifies the timeframes in which contractors must process all provider and supplier enrollment actions (initial enrollments, change of information actions, revalidations, etc.). DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on May 1, 2007. ADDRESSES: In commenting, please refer to file code CMS-6003-P2. Because of staff and resource limitations, we cannot accept comments by facsimile

(FAX)transmission. *You may submit comments in one of four ways (no duplicates, please):* 1. *Electronically.* You may submit electronic comments on specific issues in this regulation to *http://www.cms.hhs.gov/eRulemaking.* Click on the link “Submit electronic comments on CMS regulations with an open comment period.” (Attachments should be in Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft Word.) 2. *By regular mail.* You may mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, *Attention:* CMS-6003-P2, P.O. Box 8017, Baltimore, MD 21244-1850. Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. *By express or overnight mail.* You may send written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-6003-P2, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. *By hand or courier.* If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses. If you intend to deliver your comments to the Baltimore address, please call telephone number (410)786-7195 in advance to schedule your arrival with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 21244-1850. (Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. *Submission of comments on paperwork requirements.* You may submit comments on this document's paperwork requirements by mailing your comments to the addresses provided at the end of the “Collection of Information Requirements” section in this document. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: August Nemec,

(410)786-0612. SUPPLEMENTARY INFORMATION: *Submitting Comments:* We welcome comments from the public on all issues set forth in this rule to assist us in fully considering issues and developing policies. You can assist us by referencing the file code CMS-6003-P2. *Inspection of Public Comments:* All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: *http://www.cms.hhs.gov/eRulemaking.* Click on the link “Electronic Comments on CMS Regulations” on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951. I. Background 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, B, or C 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 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 independent laboratories; suppliers of portable x-ray services; rural health clinics; federally qualified health centers; ambulatory surgical centers; end-stage renal disease treatment facilities; and chiropractors and physical therapists in private practice. For the purposes of Part 498, the term “provider” refers to a hospital, critical access hospital, skilled nursing facility, comprehensive outpatient rehabilitation facility (CORF), home health agency or hospice, that has in effect an agreement to participate in Medicare; or a clinic, rehabilitation agency, or pubic health agency that has in effect a similar agreement but only to furnish outpatient physical therapy or speech pathology services; or community mental health center that has in effect a similar agreement but only to furnish partial hospitalization services. In addition, our regulations at § 405.874 provide an appeals process for suppliers of Durable Medical Equipment, Prosthetics and Orthotics and Supplies (DMEPOS) that wish to contest a denial of an application for a billing number or the revocation of an existing billing number. The § 405.874 appeals process affords DMEPOS suppliers the right to a carrier hearing before a carrier 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, regarding the appeals process 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 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 proposed 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 proposed 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. II. Provisions of the Proposed Rule Published on October 25, 1999 In the October 25, 1999 **Federal Register** (64 FR 57431), we published a proposed rule that set forth proposed revisions to § 405.874 (Appeals of carrier decisions that supplier standards are not met) to extend appeal rights to all suppliers whose enrollment applications for Medicare billing privileges are revoked, except for those suppliers covered under the appeals provisions of part 498. The proposed rule stated that these administrative appeal rights would apply to suppliers of durable medical equipment, prosthetics, orthotics, and supplies; ambulance service providers; independent diagnostic testing facilities; physicians; and other suppliers such as physician assistants. We also proposed revisions to the existing procedures in § 405.874. Since section 902 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003

(MMA)prohibits the Secretary from finalizing a proposed rule that was published more than 3 years earlier except under exceptional circumstances, we are not seeking comment on our earlier proposed rule. In addition, we have revised the October 25, 1999 proposed rule in order to comply with section 936 of the MMA. However, we are including a summary discussion of the significant provisions stated in the October 25, 1999 proposed rule in order to provide historical background regarding the development of this proposed rule. The following is a summary of the procedural changes found in the October 25, 1999 proposed rule. In our October 1999 proposed rule we proposed to: • Set forth the procedures to be followed by carriers concerning notifying a supplier of the denial of an enrollment application for supplier billing privileges. • Clarify that a revocation of a supplier billing number 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 number is revoked. • Change the language in current § 405.874(c) that requires a carrier hearing officer to schedule a hearing to be held within 1 week. • Clarify that we would not pay for services furnished by suppliers during a period in which the supplier's billing privileges have been denied or revoked. • Clarify that the supplier must be in compliance with all requirements in order to have its billing number reinstated, and that we must be satisfied that the supplier is in compliance and will remain in compliance. • Permit the carrier, carrier hearing officer, or CMS (then HCFA) official to reopen and revise its initial determination • Restrict DMEPOS suppliers from billing for services prior to the date that their billing number was issued. • Describe the procedure for submitting claims after a reversal of a supplier enrollment application denial or billing number revocation, or after a billing number reinstatement. III. Analysis of and Responses to Public Comments Received From the Proposed Rule Published on October 25, 1999 The following is a summary of our comments and responses to the October 25, 1999 proposed rule. Notwithstanding the presentation of these comments and responses, we are only soliciting comments on this proposed rule. *Comment:* One commenter suggested that we simplify the enrollment application (Form CMS 855) instead of removing the requirement that a carrier must accept or reject an entity's enrollment application for a billing number or request additional information within 15 days of the receipt of the enrollment application. *Response:* Since the publication of our October 25, 1999 proposed rule we have published several notices requesting public comment on the enrollment applications in the **Federal Register** including one on February 2, 2001, (66 FR 8807). The final approval notice was granted on September 25, 2001. Most recently, we sought public comments on our revised provider enrollment application on July 8, 2005. In the April 25, 2003 **Federal Register** (68 FR 22064), we published a proposed rule concerning our provider enrollment procedures entitled “Requirements for Establishing and Maintaining Medicare Billing Privileges,” that includes proposed revisions to the CMS 855 enrollment applications. In addition, to be consistent with the nomenclature in this proposed rule and existing manual instructions, we are changing the term “disallowance” to the term “denial” throughout this proposed rule. *Comment:* Two commenters suggested that carriers be given a timeframe for processing these applications, such as 30 or 45 days. Many commenters recommended that we maintain and enforce a time limit for the carrier to process enrollment applications and expressed concern about delays in billing or the inability to bill for Medicare items and services. *Response* We do maintain and enforce provider enrollment processing standards for carriers. Currently, the time limit for the carrier to process an initial determination, can be found in Program Integrity Manual, Chapter 10-Healthcare Provider/Supplier Enrollment. Carriers are evaluated against this standard in the Contractor Performance Evaluation process. In addition, section 936(a) of the MMA adds a new section 1866(j)(1)(B) to the Act, requiring the Secretary to “* * * establish by regulation procedures under which there are deadlines for actions on applications for enrollment (and, if applicable, renewal of enrollment). The Secretary shall monitor the performance of Medicare Administrative Contractors in meeting the deadlines * * *” In this proposed rule, we would establish deadlines for processing all provider and supplier enrollment actions as discussed in greater detail in section IV. of the preamble of this proposed rule. *Comment:* Several commenters suggested that we should provide temporary provider numbers during the enrollment process to permit suppliers to submit claims for their provision of items and services prior to receiving a permanent supplier billing number. *Response:* Since the publication of the October 25, 1999 proposed rule, we published the Requirements for Providers and Suppliers to Establish and Maintain Medicare enrollment final rule(71 FR 20754), where we required that providers and suppliers obtain billing numbers before enrolling in the Medicare program. The purpose of the enrollment process is to ensure that we enroll qualified, eligible individuals and entities as providers and suppliers of Medicare services. Allowing providers and suppliers to submit claims prior to enrollment in the Medicare program would undermine this process. *Comment:* Two commenters suggested that a supplier should not have to prove compliance with all enrollment qualifications because this allows the carrier to raise new objections without warning and shifts the burden of proof to the supplier. *Response:* Since the publication of the October 25, 1999 proposed rule, we published the Requirements for Providers and Suppliers to Establish and Maintain Medicare enrollment final rule (April 21, 2006, 71 FR 20754). In this final rule, we require providers and supplier to meet and maintain all Federal and State requirements to be issued and retain Medicare billing privileges. When suppliers enroll in the Medicare program, they are required to sign a certification statement that they are in compliance with all Medicare enrollment requirements. This appeals proposed rule would not alter the burden of proof already placed on the supplier in the initial application process. *Comment:* Two commenters suggested that we should propose a separate enrollment process for those suppliers whose enrollment applications have been denied, who have lost their appeal, and who decide to submit a new enrollment application to the carrier. *Response:* We maintain that if a supplier's enrollment application has been denied and the denial was upheld by the appeals process, then that supplier would still be eligible to reapply for a Medicare supplier number. If the supplier still wanted to enroll, we assume that the supplier would correct the reasons for the denial. The supplier would be required to submit the enrollment application as an initial enrollment. Therefore, a separate enrollment process for applicants who were denied enrollment would not be practical. *Comment:* A commenter stated that we had established the effective date for purposed for billing Medicare for DMEPOS services in a change of ownership

(CHOW)situation to be “the date of the actual change in ownership, rather than the date of assignment of the National Supplier Clearinghouse.” *Response:* We agree with the commenter. This is the current policy as long as at the time of the CHOW, all CMS Medicare DMEPOS supplier standards specified in § 424.57 are met. *Comment:* Three commenters stated that physicians should not be characterized as suppliers. *Response:* For purposes of Medicare terminology, it has been a longstanding practice for physicians to be considered as suppliers. Our regulations at § 400.202 define a supplier as a physician or other practitioner, or an entity other than a provider that furnishes health care services under Medicare. In addition, section 901(b) of the MMA amended section 1861 of the Act by adding paragraph (d), which defines a supplier to include a physician. Therefore, we are retaining the current definition for the purpose of this proposed rule. *Comment:* A commenter stated that it is unclear whether this regulation applies to physicians. *Response:* This proposed rule would apply to physicians, as physicians are considered suppliers in accordance with the definitions specified in § 400.202. *Comment:* One commenter stated that this regulation should have been incorporated into a rule that established requirements for obtaining and maintaining Medicare billing privileges. *Response:* As stated previously, we finalized CMS-6002-F, Requirements for Provider and Suppliers to Establish and Maintain Medicare Enrollment, on April 21, 2006 (71 FR 20754). Accordingly, we are not able to adopt this suggestion. *Comment:* A commenter suggested that we add an exception to this rule for time periods during which a supplier is unaware of the debarment or exclusion of another entity with which it is doing business. *Response:* While we understand this comment, we believe that information on excluded or debarred entities is readily available to the public. For example, the Office of Inspector General's (OIG's) Web site pages which include the following: • OIG's “List of Excluded Individuals and Entities.” This list is commonly referred to as the “OIG Sanction List” for those parties excluded by the OIG from participation in the Medicare, Medicaid, and all Federal health care programs (as defined in section 1128B(f) of the Act); • “List of Parties Excluded from Federal Procurement and Non-procurement Programs,” known as the “GSA Debarment List”, for those parties debarred, suspended or otherwise excluded by other Federal agencies from participation in Federal procurement and nonprocurement programs and activities. The aforementioned lists are in accordance with the Federal Acquisition and Streamlining Act of 1994, and with the HHS Common Rule at 45 CFR part 76. The Web site for the OIG exclusion list can be found at *http://www.oig.hhs.gov* and the Web site for the debarment list can be found at *http://www.epls.arnet.gov.* *Comment:* Two commenters suggested that we should more clearly distinguish between those suppliers whose initial enrollment applications had been denied and those whose enrollment had been revoked. *Response:* With the publication of Requirements for Provider and Suppliers to Establish and Maintain Medicare Enrollment final rule (April 21, 2006, 71 FR 20754), we believe we have clarified the differences between a denial of billing privileges and revocation of billing privileges. In addition, we believe that only one appeals process is necessary to resolve adverse administrative enrollment decisions. *Comment:* One commenter stated that the appeal rights of a supplier that has been excluded by the OIG are more expansive than the appeal rights contained in this regulation for a supplier whose billing number has been revoked, since an excluded supplier may request an Administrative Law Judge (“ALJ”) hearing. *Response:* This proposed rule reflects the requirements of section 936(a) of the MMA to grant the right to an ALJ hearing, judicial review, and DAB review to a revoked supplier. Therefore, an excluded supplier would no longer have more expansive appeal rights. *Comment:* Several commenters noted that § 405.874(a) should clearly state that the carrier should fully inform the supplier in detail as to why it has denied the supplier's enrollment application or revoked the supplier's enrollment. *Response:* We agree with the commenters. In this proposed rule, we are proposing in § 405.874(a) and

(b)that the carrier provide the reason why a supplier's enrollment application was denied or why its billing number was revoked. *Comment:* Several commenters were opposed to reducing the timeframe to file an appeal of a denial of an enrollment application or the revocation of a Medicare billing number from 90 to 60 days. *Response:* We are proposing to follow the longstanding processes of part 498, which allow 60 days for filing an appeal. *Comment:* A few commenters contended that we should accept a postmark as the reliable date to determine when suppliers have learned of a carrier decision to deny an application or revoke Medicare billing privileges. *Response:* We agree with the commenters. We believe that § 498.22(b)(3), § 498.22(d), and § 498.40 clearly address when we must accept a postmark as the reliable date to determine when suppliers have learned of a carrier decision to deny an application or revoke Medicare billing privileges. *Comment:* One commenter stated that it is confusing to base the revocation of a billing number on the effective date of the Federal action (exclusion or debarment), regardless of the date of notice from the carrier. *Response:* The OIG sends an exclusion notice to the supplier and the carrier at the same time explaining that the supplier is being excluded from Medicare, Medicaid, and other Federal health care programs. The effective date of the exclusion is 20 days after the date the notice is sent to the supplier and the carrier (see § 1001.2002(b)). The carrier does not establish the date for the exclusion nor can the carrier alter the effective date of OIG exclusion. *Comment:* One commenter stated that the carrier should not have the discretion to implement a carrier hearing officer's decision to deny or revoke a supplier billing number pending a possible appeal. This commenter suggested that carriers be required to decide within 15 days whether to appeal a hearing officer's reversal decision, and if the carrier chooses not to appeal, then it must immediately implement the decision. *Response:* In accordance with section 936(1)(b)(1) of the MMA, we propose to follow the process of part 498. These procedures have specific timeframes. *Comment:* Several commenters stated that an ALJ, rather than a CMS official, should conduct the appeal that follows the carrier hearing. *Response:* Section 936(l)(b)(1) of the MMA provides for an ALJ hearing. Therefore, we are proposing to modify our regulations to address this concern. *Comment:* One commenter stated that when a revocation of a supplier billing number is reversed upon appeal, the supplier billing number should be reinstated to the date upon which the revocation became effective. *Response:* We agree. In this proposed rule, we would revise § 405.874(d), to provide that in the case of a reversal of a revocation on appeal, a supplier billing number is reinstated back to the date that the revocation became effective. *Comment:* One commenter suggested that we should establish clear guidelines as to when and why a carrier or a carrier hearing officer can reopen an existing decision or determination, and another commenter suggested that reopening of decisions should be limited to situations where good cause has been established and new and material evidence has been uncovered. *Response:* While we considered establishing a reopening process, we believe that the appeals process that would be established in this proposed rule affords providers and suppliers with sufficient protections. We would appreciate receiving additional public comments regarding the benefits associated with expanding on the reopening process established in § 498.30. *Comment:* One commenter stated that the provisions relating to the rejection of claims fails to distinguish between suppliers whose billing numbers have been revoked and those whose enrollment applications are pending. The commenter also was concerned that payments will be rejected only when a supplier's enrollment has been revoked because a carrier's rejection of claims affords no appeal rights. *Response:* It is true that the provision that claims be rejected does not in fact, distinguish between those suppliers whose billing numbers are revoked and those whose enrollment applications are pending. Claims are rejected when the supplier does not have valid billing privileges at the time that claims were submitted. When a supplier's application is approved and it is assigned a billing number, these claims may be resubmitted and paid retroactively, except for DMEPOS suppliers, who do not have retroactive billing privileges. In addition, we maintain that claims are rejected for those suppliers whose billing privileges are revoked so the contractor does not have to hold the claims in its system indefinitely. *Comment:* Two commenters stated that we should ensure that all decisions are reached and implemented prior to the claims expiration date, or the agency should allow exceptions in circumstances when the timeframe to pay allowable claims has expired. *Response:* The timely filing requirements for claims submission, as specified in § 424.44, are not affected by an enrollment application pending processing or by the appeal of the Agency's enrollment decision. As specified in § 405.874(i), if a supplier is successful in overturning its denial or revocation, it has up to 1 year after the reversal decision to file any claims for items furnished during the overturned period. IV. Provisions of This Proposed Rule After consideration of the comments reviewed, analysis of specific issues, and the provisions of section 936(l)(b)(1) of the MMA we are modifying the October 25, 1999 proposed rule by making clarifying and editorial changes, and revising the sections affected by 936(l)(b)(1) of the MMA. With the implementation of the National Provider Identifier

(NPI)(which is a standard unique identifier for health care providers) scheduled for May 23, 2007, we believe that it is appropriate to propose use of the term “Medicare billing privileges” in lieu of the term “Medicare billing number.” (See the January 23, 2004 final rule (69 FR 3469) for more detailed information regarding the NPI.) After implementation of the NPI, providers or suppliers will have to obtain an NPI before initiating enrollment in the Medicare program. Medicare will use the NPI as the billing number. However, providers and suppliers must still enroll with a fee-for-service contractor in order to bill the Medicare program. Thus, the fee-for-service contractor will convey billing privileges. We propose to maintain § 405.874, which specifies provisions that would apply to certain suppliers as defined in § 405.802. In § 405.802, we propose to define prospective supplier and suppliers by specifying the provisions of § 405.874 that would apply. These suppliers include an independent laboratory; supplier of durable medical equipment, prosthetics, orthotics, or supplies (DMEPOS); ambulance service provider; independent diagnostic testing facility; physician, other practitioner such as physician assistant; physical therapist in independent practice; clinical laboratories; supplier of portable x-ray services; rural health clinic (RHC); Federally qualified health center (FQHC); ambulatory surgical center (ASC); an entity approved by CMS to furnish outpatient diabetes self-management training, or end-stage renal disease

(ESRD)treatment facility that is approved by CMS as meeting the conditions for coverage of its services, and prospective supplier means any of the listed entities that seek to be approved for coverage of its services under Medicare. In new § 405.874(a), Denial of a supplier enrollment application, we propose that if a carrier denies a supplier's enrollment application, the carrier must notify the supplier by certified mail. The notice must include the following:

(1)The reason for 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. We propose these changes to comply with section 936(a)(2) of the MMA. Part 498 of these regulations includes the right of a supplier to a reconsideration of a determination that it does not qualify for Medicare billing privileges. This reconsideration would be performed by a carrier hearing officer not involved in the original determination. Part 498 also grants suppliers the right to a hearing by an ALJ, DAB review and judicial review. These various levels of appeal would also apply to revocations of Medicare billing privileges. In proposed § 405.874(b)(1), Notice of revocation, we would 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 proposed § 405.874(b)(2), Revocation of a supplier's billing privileges, we would separate the procedures in existing § 405.874(a) and § 405.874(b) because we believe the language in the October 29, 1999 proposed rule was not sufficiently clear. In proposed § 405.874(b)(2), we clarify that a revocation of a supplier's 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 number is revoked. Moreover, if CMS, or one of its designated contractors revokes Medicare billing privileges, we would not revoke an individual or organization's NPI. In proposed § 405.874(b)(3), Payment, we would revise this section to clarify 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 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 propose that claims submitted to carriers for items or services furnished during a period of supplier ineligibility are to be rejected by the carrier, not denied. In § 405.874(c)(1) Appeal rights, we propose that a supplier's appeal rights would follow the processes detailed in part 498. We are proposing to revise § 405.874(d), Impact of reversal of carrier determination on claims processing, 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 propose that if a 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. Section 405.874(d)(4) would specify 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. We propose revising § 405.874(e), Reinstatement of provider's or supplier's billing privileges following corrective action, to state that if a provider or supplier completes a corrective action plan and provides sufficient evidence to the carrier that it has complied fully with the Medicare requirements, the carrier may reinstate the supplier's billing privileges. The carrier may pay for services furnished on or after the effective date of the reinstatement. The effective date of the reinstatement will be based on the date the provider or supplier is in full compliance with all Medicare requirements. However, a carrier's refusal to reinstate billing privileges based on the submission of a corrective action plan is not an initial determination and may not be appealed. We believe that allowing suppliers to appeal an adverse corrective action plan would establish two separate appeal processes and result in an administratively inefficient appeals process. Any supplier seeking to appeal a carrier's determination to deny or revoked billing privileges must submit an appeal within the timely filing period established for reconsideration, regardless of the submission of a corrective action plan. In § 405.874(f) we propose to revise 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 number 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), Submission of claims, we propose that a provider or supplier succeeding in having its enrollment application denial or billing number revocation reversed, or in having its billing number reinstated, may submit claims to the carrier for services furnished during periods of Medicare qualification, subject to the limitations in § 424.44 of this chapter, regarding the timely filing of claims. If the claims previously were filed timely but were rejected, they would be considered filed timely upon resubmission. Previously denied claims for items or services rendered during a period of denial or revocation may be resubmitted to CMS within 1 year after the date of reinstatement or reversal. In § 424.510(d)(2)(iv) Submittal of electronic funds transfer

(EFT)authorization form, we propose 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. Consistent with the authority found at 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 proposing to require the EFT payments for—(1) providers and suppliers initially enrolling in the Medicare program; and

(2)providers and suppliers submitting a CMS-855 change request who are not currently receiving payments via EFT. Note if a provider or supplier is not enrolled in the Medicare program or is not submitting a change in their enrollment information, no action is necessary. We will continue to encourage all providers and suppliers to switch to EFT payments voluntarily. We believe that this change will reduce the paperwork burden for the public and reduce our administrative costs. Moreover, we believe that the transition to EFT will help ensure that payments are made to the provider or supplier of services. Finally, in the event of a national disaster, such as Hurricane Katrina, providers and suppliers utilizing EFT would be ensured a continuity of payment. We are proposing to revise § 424.545(a), provider and supplier appeal rights, which was part of the April 21, 2006 final rule (71 FR 20754), regarding the Requirements for Providers and Suppliers To Establish and Maintain Medicare Enrollment. The existing provision states that a revocation of billing privileges also results in the termination of a corresponding provider agreement. Therefore, we are proposing to revise § 424.545(a) by— • 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). We believe that our proposal (the addition of paragraph (a)(1)(ii) is not a change from the current regulatory provision. In fact, the current provision in § 424.545(a) provides that a final decision would apply both to the revocation and the termination. However, this proposal is an effort to clarify that a provider will be able to appeal both sanctions using one appeals process. We also are proposing that this process would follow the appeals procedures established for revocations. We believe that a single appeals process would result in less administrative burden for both the agency and any affected provider. We are proposing to add § 405.874(h) to establish deadlines for the adjudication of provider enrollment actions. We are proposing that contractors adjudicate initial determinations and revalidations within 180 days of receipt and that carriers adjudicate change-of-information and reassignment of payment request within 90 days of receipt. To assist the reader in understanding the provider enrollment appeals process discussed in this proposed rule, the chart below provides first the established timeframes in which a provider or supplier must file an appeal to an adverse determination (that is, denial of billing privileges or revocation of billing privileges), and second our proposed adjudication timeframes. Additional information regarding the appeals process is described in the following preamble. Medicare provider enrollment determination Timeframe to file an appeal

(days)Proposed maximum adjudication timeframe

(days)Initial 60 180 Reconsideration 60 60 Administrative Law Judge Review 60 180 Departmental Appeals Board Review 60 180 Federal District Court N/A N/A We are proposing to update § 424.525(a)(1) and § 424.525(a)(2) for 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 are proposing a reduction from 60 to 30 days for the period allowed to furnish all supporting documentation for submitting their enrollment application. We are proposing to reject 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. We are proposing this change because approximately 70 percent of the submitted applications are incomplete or lack the supporting documents for enrollment. This change will help facilitate the enrollment process and reduce the administrative burden associated with processing these applications. We are also proposing to expand revocations by the addition of a revocation for the abuse of billing privileges to § 424.535. In the new § 424.535(a)(8) we are proposing to allow Medicare fee-for-service

(FFS)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. Specifically, we believe that it is both appropriate and necessary that CMS' FFS contractors be given the ability to revoke billing privileges when services could not have been furnished by a provider or supplier. 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 do not believe the determination made by the CMS FFS contractors constitutes a determination of fraud. In addition we believe that this new revocation authority is in line with other revocations already used by CMS and its FFS contractors. Further, providers and suppliers may appeal a contractor revocation using the process outlined in part 498. We believe that this type of provision is essential to the efficient operation of the Medicare program because it would enable us to take an important step in protecting the expenditure of public monies with respect to service providers whose motives and billing practices are questionable, at best, and, at worst, of a sort that might prompt an aggressive response from the law enforcement community. The Medicare program ought not be forced to rely solely on its authority to deny claims on a piecemeal basis while having to devote extensive resources to maintaining the kind of close scrutiny of each of these providers and suppliers that would be required to minimize the program's exposure to the payment of claims that, by anyone's definition, ought not be tolerated. For this reason, we are proposing this provision in accordance with our broad rulemaking authorities in sections 1871 and 1102 of the Act. We should note that providers or suppliers that expressly flag claims that they believe might be perceived by us as being in this category would not face prosecution under the False Claims Act. In the new § 424.535(c), we are proposing a timeframe to wait for reapplication to the Medicare program when a provider or supplier is revoked. We are proposing 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. We believe that revocations are serious matters and must be treated as such to maintain the integrity of the program. We invite public comment on whether we should consider different (that is, shorter or longer) timeframes for prohibiting a provider or supplier from re-enrolling in the Medicare program after a revocation has been issued. Under the Medicare regulations, we know from experience that it is often the case that providers, and particularly some suppliers, simply react to a termination from the program by turning around and immediately seeking reentry into the program, oftentimes in another location or with a different name. Such practices make a sham of the enforcement process leaving us with the obligation to constantly monitor suspect providers and suppliers, forcing the agency to stand by while the same offenders engage in the same noncompliant billing practices that led to their expulsion in the first place. We do not believe it is consistent with our mandate to administer an efficient program or to protect the expenditure of public monies by being compelled to take such a passive approach to what are clearly substandard practices. By having a regulatory provision that would keep such entities out of the program for 3 years, we believe we would be establishing a credible deterrent to these substandard billing practices where providers and suppliers would know that there are real consequences to their actions. The Medicare program ought not have to choose to do business with all entities simply because they express their willingness to accept Federal payment for services that they have demonstrated are too often suspicious or so poorly presented that they cause the program to devote too many resources to determine their accuracy. We are proposing to revise in § 498.1(g) in accordance with section 936(a)(2) of the MMA to provide 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 are proposing to revise the definition of a “supplier” to—(1) include a supplier of durable medical equipment, prosthetics, orthotics, or supplies (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 are also proposing to add a separate definition of “prospective supplier.” We are 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 Department of Health and Human Services. We are also proposing to revise the definition of “affected party” to specify that it includes CMS or a CMS contractor. We are proposing to revise § 498.5 by adding a new paragraph

(l)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 would use. We are proposing to revise § 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 are proposing 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 are requesting comment on this existing standard. We are proposing to revise § 498.22(a) to add that we have delegated authority to our contractors to reconsider an initial determination. We are also proposing 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. We are proposing to revise § 498.44 to remove the term Associate Commissioner for Hearings and Appeals, and we are replacing 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. With the proposed revision to § 405.874(c)(2), we want to clarify 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 number. Accordingly, we believe that the burden of proof is on the provider or supplier to show that it met all requirements upon application, or at the time of revocation. In § 498.56, we are proposing to add 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 propose to revise § 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. We believe that the efficiency and accuracy of the appeals process is enhanced when the provider or supplier submits all necessary documentation with their appeal request to prove that they are in compliance with all Medicare requirements for enrollment. If supporting evidence is not submitted with the request for a reconsideration, the contractor will contact the supplier to try to obtain the missing evidence. The contractor must make a decision based on the information in the case file. The contractor may accept any additional documentation, even if it is not specified in the appeal notice. If the provider/supplier fails to submit evidence before the reviewing official issues its decision, the provider/supplier would be precluded from introducing the evidence at higher levels of the appeals process. It is presumed that the Medicare FFS contractor made a reasonable determination in its denial or revocation of a supplier's billing privileges based on information it had at the time of the decision. The provider/supplier would be required to furnish the evidence that clearly shows the determination was in error at the time it was made. We are proposing to revise § 498.78(a) to delete the provision that an affected party concur in writing or on the record with a CMS or 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 are proposing 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. Finally, in § 498.88(g), we are proposing 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. V. Collection of Information Requirements Under the Paperwork Reduction Act of 1995 (PRA), agencies are required to provide a 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 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). 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-P2, 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-P2, *carolyn_lovett@omb.eop.gov* . Fax

(202)395-6974. VI. Response to Comments Because of the large number of public comments we normally receive on **Federal Register** documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document. VII. 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 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 to $29 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 proposed 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 proposed 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 603 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, and we determined, that this proposed 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. Lists of Subjects 42 CFR Part 405 Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medical devices, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays. 42 CFR Part 424 Emergency medical services, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements. 42 CFR Part 498 Administrative practice and procedure, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services would amend 42 CFR chapter IV as set forth below: PART 405—FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED 1. The authority citation for Part 405, subpart H, continues to read as follows: Authority: Secs. 1102, 1842(b)(3)(C), 1869(b), and 1871 of the Social Security Act (42 U.S.C. 1302, 1395u(b)(3)(C), 1395ff(b) and 1395hh). Subpart H—Appeals Under the Medicare Part B Program 2. Section 405.802 is revised by adding the definitions of “prospective supplier” and “supplier” in alphabetical order to read as follows: § 405.802 Definitions. *Prospective supplier* means any of the listed entities specified in the definition of supplier that seeks to be approved for coverage of its services under Medicare. *Supplier* means an independent laboratory; supplier of durable medical equipment, prosthetics, orthotics, or supplies (DMEPOS); ambulance service provider; independent diagnostic testing facility; physician or other practitioner such as physician assistant; physical therapist in independent practice; clinical laboratories; supplier of portable X-ray services; rural health clinic (RHC); Federally qualified health center (FQHC); ambulatory surgical center (ASC); an entity approved by CMS to furnish outpatient diabetes self-management training; or end-stage renal disease

(ESRD)treatment facility that is approved by CMS as meeting the conditions for coverage of its services. 3. Section 405.874 is revised to read as follows: § 405.874 Appeals of carrier determinations that a supplier fails to meet the requirements for Medicare billing privileges.

(a)*Denial of a supplier enrollment application.* If a carrier denies a supplier's enrollment application, the carrier 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 of this chapter.

(3)The address to which the written appeal must be mailed.

(b)*Revocation of Medicare billing privileges.*

(1)*Notice of revocation.* If a carrier revokes a supplier's Medicare billing privileges, the carrier must notify the supplier by certified mail. The notice must include the following:

(i)The reason for the revocation in sufficient detail for the supplier to understand the nature of its deficiencies.

(ii)The right to appeal in accordance with part 498 of this chapter.

(iii)The address to which the written appeal must be mailed.

(2)*Revocation of a supplier's billing privileges.* The revocation of a supplier's billing privileges is effective 15 days after the carrier mails the notice of its determination to the supplier. A revocation based on a Federal exclusion or debarment is effective with the date of the exclusion or debarment.

(3)*Payment.*

(i)Medicare does not pay for any items or services furnished by a supplier during a period in which a supplier does not have billing privileges or its billing privileges are revoked.

(ii)Carriers do not pay for services furnished by the supplier beginning with the effective date of a revocation.

(iii)Medicare does not pay for items and supplies unless the supplier has a valid, active Medicare billing number.

(iv)Claims for items or services furnished to Medicare beneficiaries after the effective date of the revocation are rejected. Rejections of claims because a supplier does not have a valid billing number may not be appealed by the supplier. Claims submitted to carriers for items or services furnished during a period of supplier ineligibility are rejected by the carrier, and not denied by the carrier.

(c)*Appeal rights.*

(1)A provider or supplier may appeal the initial determination to deny a provider or supplier's enrollment application, or if applicable, to revoke a current billing number by following the procedures specified in part 498 of this chapter.

(2)The reconsideration of a determination to deny or revoke a provider or supplier's Medicare billing privileges may be handled by a carrier hearing officer not involved in the initial determination.

(3)Providers and suppliers have the opportunity to submit evidence related to the enrollment action. Providers and suppliers must, at the time of their request, submit all evidence that they want to be considered.

(4)If supporting evidence is not submitted with the appeal request, the contractor contacts the provider or supplier to try to obtain the evidence.

(5)If the provider or supplier fails to submit this evidence before the contractor issues its decision, the provider or supplier is precluded from introducing new evidence at higher levels of the appeals process.

(d)*Impact of reversal of carrier determination on claims processing* .

(1)Claims for services furnished to Medicare beneficiaries during a period in which the supplier billing privileges was not effective are rejected.

(2)If a supplier is determined not to have qualified for a billing privileges in one period but qualified in another, carriers process claims for services furnished to beneficiaries during the period for which the supplier was Medicare-qualified. Subpart C of this part sets forth the requirements for recovery of overpayments.

(3)If a revocation of a supplier's billing privilege is reversed upon appeal, the supplier's billing privileges are reinstated back to the date that the revocation became effective.

(4)If denial of a supplier's billing privileges is reversed upon appeal and becomes binding, then the appeal decision establishes the date that the supplier's billing privileges becomes effective.

(e)*Reinstatement of supplier billing privilege following corrective action.* If a supplier completes a corrective action and provides sufficient evidence to the carrier that it has complied fully with the Medicare requirements, the carrier may reinstate the supplier's billing privileges. The carrier may pay for services furnished on or after the effective date of the reinstatement. The effective date is based on the date the supplier is in compliance with all Medicare requirements. A carrier's refusal to reinstate a supplier's billing privileges based on a corrective action is not an initial determination under part 498 of this chapter.

(f)*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, the determination establishes the effective date of the billing privileges as not earlier than the date the carrier made the determination to deny the DMEPOS supplier's enrollment application. Claims are rejected for services furnished before that effective date.

(g)*Submission of claims.* A supplier succeeding in having its enrollment application denial or billing privileges revocation reversed in a binding decision, or in having its billing privileges reinstated, may submit claims to the carrier for services furnished during periods of Medicare qualification, subject to the limitations in § 424.44 of this chapter, regarding the timely filing of claims. If the claims previously were filed timely but were rejected, they are considered filed timely upon resubmission. Previously denied claims for items or services rendered during a period of denial or revocation may be resubmitted to CMS within 1 year after the date of reinstatement or reversal.

(h)*Deadline for processing provider enrollment initial determinations.* Contractors approve or deny complete provider enrollment applications to approval or denial within the following timeframes:

(1)*Initial enrollments.* Contractors process new enrollment applications within 180 days of receipt.

(2)*Revalidation of existing enrollments.* Contractors process revalidations within 180 days of receipt.

(3)*Change-of-information and reassignment of payment request.* Contractors process change-of-information and reassignment of payment requests within 90 days of receipt. PART 424—CONDITIONS FOR MEDICARE PAYMENT 4. The authority citation for part 424 continues to read as follows: Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). 5. Section 424.510 is amended by adding a new paragraphs *(d)(2)(iv) and*

(e)to read as follows: § 424.510 Requirements for enrolling in the Medicare program. *(d)* *(2)* * * * *(iv) The revisions read as follows:* *At the time of enrollment, an enrollment change request or revalidation, providers and suppliers must agree to receive Medicare payments via EFT. In order to receive Medicare payments via EFT, providers and suppliers must submit the CMS-588 form.*

(e)Providers and suppliers must—(1) Agree to receive Medicare payment via electronic funds transfer

(EFT)at the time of enrollment, revalidation or submission of an enrollment change request; and

(2)Submit the CMS-588 form to receive Medicare payment via electronic funds transfer. 6. Section 424.525 is amended by— A. Republishing paragraph

(a)introductory text. B. Revising paragraphs (a)(1) and (a)(2). The revisions read as follows: § 424.525 Rejection of a provider or supplier's enrollment application for Medicare enrollment.

(a)*Reasons for rejection.* CMS may reject a provider or supplier's enrollment application for the following reasons:

(1)The provider or supplier fails to furnish complete information on the provider/supplier enrollment application within 30 calendar days from the date of the contractor request for the missing information.

(2)The provider or supplier fails to furnish all required supporting documentation within 30 calendar days of submitting the enrollment application. 7. Section 424.535 is amended by— A. Adding a new paragraph (a)(8). B. Redesignating paragraphs

(c)through

(f)as paragraphs

(d)through (g). C. Adding a new paragraph (c). The addition and revision read as follows: § 424.535 Revocation of enrollment and billing privileges from the Medicare program.

(a)* * *.

(8)*Abuse of billing privileges.* The provider or supplier submits a claim or claims for services that could not have been furnished to a specific individual on the date of service. These instances include but are not limited to situations where the beneficiary is deceased, the directing physician or beneficiary is not in the State or country when services were furnished, or when the equipment necessary for testing is not present where the testing is said to have occurred.

(c)*Reapplying after revocation.* After a provider, supplier, delegated official or authorizing official has had their billing privileges revoked, they must wait 3 years from the date of revocation before they can reapply to participate in the Medicare program. 8. Section 424.545 is amended by revising paragraph

(a)to read as follows: § 424.545 Provider and supplier appeal rights.

(a)*General.* A provider or supplier that is denied enrollment in the Medicare program, or whose Medicare enrollment has been revoked may appeal CMS' decision in accordance with part 498, subpart A of this chapter.

(1)*Appeals resulting in the termination of a provider agreement.*

(i)When revocation of billing privileges also results in the termination of a corresponding provider agreement, the provider may appeal CMS' decision in accordance with part 498 of this chapter with the final decision of the appeal applying to both the billing privileges and the provider agreement.

(ii)When a provider appeals the revocation of billing privileges and the termination of its provider agreement, there will be one appeals process which will address both matters. The appeal procedures for revocation of Medicare billing privileges will apply.

(2)*Payment of unpaid claims.* Payment is not made during the appeals process. If the provider or supplier is successful in overturning a denial or revocation, unpaid claims for services furnished during the overturned period may be resubmitted. PART 498—APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT AFFECT THE PARTICIPATION OF ICFs/MR AND CERTAIN NFs IN THE MEDICAID PROGRAM 9. The authority citation for part 498 continues to read as follows: Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). Subpart A—General Provisions 10. Section 498.1 is amended by revising paragraph

(g)to read as follows: § 498.1 Statutory basis.

(g)Section 1866(j) of the Act provides for a hearing and judicial review for any provider or supplier whose application for enrollment or reenrollment in Medicare is denied or whose billing privileges are revoked. 11. Section 498.2 is amended by— A. Revising the definition of “affected party”. B. Removing the definition of “OHA”. C. Adding in alphabetical order the definition of “prospective supplier”. D. Revising the definition of “supplier”. The addition and revisions read as follows: § 498.2 Definitions. *Affected party* means a provider, prospective provider, supplier, prospective supplier, or practitioner that is affected by an initial determination or by any subsequent determination or decision issued under this part, and “party” means the affected party or CMS, as appropriate. For provider or supplier enrollment appeals, an affected party includes CMS or a CMS contractor. *Prospective supplier* means any of the listed entities specified in the definition of supplier that seek to be approved for coverage of its services under Medicare. *Supplier* means an independent laboratory; supplier of portable X-ray services, rural health clinic (RHC); Federally qualified health center (FQHC); ambulatory surgical center (ASC); a supplier of durable medical equipment, prosthetics, orthotics, or supplies (DMEPOS); ambulance service provider; independent diagnostic testing facility; physician or other practitioner such as physician assistant, physical therapist in independent practice, clinical laboratories, an entity approved by CMS to furnish outpatient diabetes self-management training, or end-stage renal disease

(ESRD)treatment facility that is approved by CMS as meeting the conditions for coverage of its services. 12. Section 498.5 is amended by— A. Revising paragraph (f)(2). B. Adding a new paragraph (l). The revision and addition read as follows: § 498.5 Appeal rights.

(f)* * *

(2)A supplier or prospective supplier dissatisfied with an ALJ decision may request Board review, and has a right to seek judicial review of the Board's decision.

(l)*Appeal rights related to provider enrollment.*

(1)Any prospective provider, an 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 may request reconsideration in accordance with § 498.22(a).

(2)CMS, a CMS contractor, any prospective provider, an existing provider, prospective supplier or existing supplier dissatisfied with a reconsidered determination under paragraph (l)(1) of this section, or a revised reconsidered determination under § 498.30, is entitled to a hearing before an ALJ.

(3)CMS, a CMS contractor, any prospective provider, an existing provider, prospective supplier or existing supplier dissatisfied with a hearing decision may request Board review, and any prospective provider, an existing provider, prospective supplier, or existing supplier has a right to seek judicial review of the Board's decision. Subpart B—Initial, Reconsidered, and Revised Determinations 13. Section 498.22 is amended by revising paragraphs

(a)and (b)(1) to read as follows: § 498.22 Reconsideration.

(a)*Right to reconsideration.* CMS or one of its contractors reconsiders an initial determination that affects a prospective provider or supplier, or a hospital seeking to qualify to claim payment for all emergency hospital services furnished in a calendar year, if the affected party files a written request in accordance with paragraphs

(b)and

(c)of this section. For denial or revocation of enrollment, prospective providers and suppliers and providers and suppliers have a right to reconsideration.

(b)* * *

(1)With CMS or with the State survey agency, or in the case of prospective supplier the entity specified in the notice of initial determination; Subpart D—Hearings 14. Section 498.40 is amended by revising paragraph (a)(1) to read as follows: § 498.40 Request for hearing.

(a)* * *

(1)An affected party entitled to a hearing under § 498.5 may file a request for a hearing with the ALJ office identified in the determination letter. 15. Section 498.44 is revised to read as follows: § 498.44 Designation of hearing official.

(a)The Secretary or his or her delegate designates an ALJ or a member or members of the Board to conduct hearings.

(b)If appropriate, the Secretary or the delegate may designate another ALJ or another member or other members of the Board to conduct the hearing.

(c)As used in this part, “ALJ” includes any ALJ of the Department of Health and Human Services or members of the Board who are designated to conduct a hearing. 16. Section 498.56 is amended by— A. Revising paragraph (a)(2). B. Adding a new paragraph (e). The revision and addition read as follows: § 498.56 Hearing on new issues.

(a)* * *

(2)Except for provider or supplier enrollment appeals which are addressed in § 498.56(e), the ALJ may consider new issues even if CMS or the OIG has not made initial or reconsidered determinations on them, and even if they arose after the request for hearing was filed or after the prehearing conference.

(e)*Provider and supplier enrollment appeals: Good cause requirement.*

(1)*Examination of any new documentary evidence.* After a hearing is requested but before it is held, the ALJ will examine any new documentary evidence submitted to the ALJ by a provider or supplier to determine whether the provider or supplier has good cause for submitting the evidence for the first time at the ALJ level.

(2)*Determining if good cause exists.* An ALJ finds good cause, for example, when the new evidence is material to an issue addressed in the reconsideration and that issue was not identified as a material issue before the reconsideration.

(3)*If good cause does not exist.* If the ALJ determines that there was not good cause for submitting the evidence for the first time at the ALJ level, the ALJ must exclude the evidence from the proceeding and may not consider it in reaching a decision.

(4)*Notification to all parties.* As soon as possible, but no later than the start of the hearing, the ALJ must notify all parties of any evidence that is excluded from the hearing. 17. Section 498.78 is amended by revising paragraph

(a)to read as follows: § 498.78 Remand by the Administrative Law Judge.

(a)If CMS requests remand, the ALJ may remand any case properly before him or her to CMS. 18. A new § 498.79 is added to subpart D to read as follows: § 498.79 Timeframes for deciding an enrollment appeal before an ALJ. When a request for an ALJ hearing is filed after CMS or a FFS contractor has denied an enrollment application, the ALJ must issue a decision, dismissal order or remand to CMS, as appropriate, no later than the end of the 180-day period beginning from the date the appeal was filed with an ALJ. Subpart E—Departmental Appeals Board Review 19. Section 498.86 is amended by revising paragraph

(a)to read as follows: § 498.86 Evidence admissible on review.

(a)Except for provider or supplier enrollment appeals which are addressed in § 498.56(e), the Board may admit evidence into the record in addition to the evidence introduced at the ALJ hearing (or the documents considered by the ALJ if the hearing was waived) if the Board considers that the additional evidence is relevant and material to an issue before it. 20. Section 498.88 is amended by adding a new paragraph

(g)to read as follows: § 498.88 Decision or remand by the Departmental Appeals Board.

(g)When a request for Board review is filed after an ALJ has issued a decision or dismissal order, 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. (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance Program; and No. 93.774, Medicare—Supplementary Medical Insurance Program.) Dated: August 30, 2005. Mark B. McClellan, Administrator, Centers for Medicare and Medicaid Services. Dated: November 8, 2006. Micheal O. Leavitt, Secretary. [FR Doc. 07-870 Filed 2-23-07; 8:45 am]

Connectionstraces to 14

Traces to 14 documents