Notices. Direct final rule

30,347 words·~138 min read·/register/2007/07/20/07-3331

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BILLING CODE 3710-08-M ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R06-OAR-2006-0849; FRL-8442-8] Approval and Promulgation of Implementation Plans; Louisiana; Clean Air Interstate Rule Sulfur Dioxide Trading Program AGENCY: Environmental Protection Agency (EPA). ACTION: Direct final rule. SUMMARY: EPA is taking a direct final action to approve a revision to the Louisiana State Implementation Plan

(SIP)submitted on September 22, 2006, enacted at Louisiana Administrative Code, Title 33, Part III, Chapter 5, Section 506(C) (LAC 33:III.506(C)). This revision addresses the requirements of EPA's Clean Air Interstate Rule

(CAIR)Sulfur Dioxide (SO 2 ) Trading Program, promulgated on May 12, 2005 and subsequently revised on April 28, 2006. EPA is approving the SIP revision as fully implementing the CAIR SO 2 requirements for Louisiana. Therefore, as a consequence of this SIP approval, EPA will also withdraw the CAIR Federal Implementation Plan (CAIR FIP) concerning SO 2 emissions for Louisiana. The CAIR FIPs for all States in the CAIR region were promulgated on April 28, 2006 and subsequently revised on December 13, 2006. CAIR requires States to reduce emissions of SO 2 and nitrogen oxides (NO X ) that significantly contribute to, and interfere with maintenance of, the national ambient air quality standards for fine particulates and/or ozone in any downwind state. CAIR establishes State budgets for SO 2 and NO X and requires States to submit SIP revisions that implement these budgets in States that EPA concluded did contribute to nonattainment in downwind states. States have the flexibility to choose which control measures to adopt to achieve the budgets, including participating in the EPA-administered cap-and-trade programs. In this SIP revision that EPA is approving, EPA finds that Louisiana meets CAIR SO 2 requirements by participating in the EPA-administered cap-and-trade program addressing SO 2 emissions. The intended effect of this action is to reduce SO 2 emissions from the State of Louisiana that are contributing to nonattainment of the PM 2.5 National Ambient Air Quality Standard (NAAQS or standard) in downwind states. This action is being taken under section 110 of the Federal Clean Air Act (the Act or CAA). DATES: This rule is effective on September 18, 2007 without further notice, unless EPA receives relevant adverse comment by August 20, 2007. If EPA receives such comment, EPA will publish a timely withdrawal in the **Federal Register** informing the public that this rule will not take effect. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R06-OAR-2006-0849, by one of the following methods:

(1)*www.regulations.gov:* Follow the on-line instructions for submitting comments.

(2)*E-mail:* Mr. Jeff Robinson at *robinson.jeffrey@epa.gov.* Please also cc the person listed in the FOR FURTHER INFORMATION CONTACT paragraph below.

(3)*U.S. EPA Region 6 “Contact Us” Web site:* *http://epa.gov/region6/r6coment.htm.* Please click on “6PD” (Multimedia) and select “Air” before submitting comments.

(4)*Fax:* Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), at fax number 214-665-6762.

(5)*Mail:* Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733.

(6)*Hand or Courier Delivery:* Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal holidays. Special arrangements should be made for deliveries of boxed information. *Instructions:* Direct your comments to Docket ID No. EPA-R06-OAR-2006-0849. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *http://www.regulations.gov,* including any personal information provided, unless the comment includes information claimed to be Confidential Business Information

(CBI)or other information the disclosure of which is restricted by statute. Do not submit information through *http://www.regulations.gov* or e-mail, if you believe that it is CBI or otherwise protected from disclosure. The *http://www.regulations.gov* Web site is an “anonymous access” system, which means that EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *http://www.regulations.gov,* your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment along with any disk or CD-ROM submitted. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters and any form of encryption and should be free of any defects or viruses. For additional information about EPA's public docket, visit the EPA Docket Center homepage at *http://www.epa.gov/epahome/dockets.htm.* *Docket:* All documents in the docket are listed in the *http://www.regulations.gov* index. Although listed in the index, some information is not publicly available, e.g., CBI or other information the disclosure of which is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in *http://www.regulations.gov* or in hard copy at the Air Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made available by appointment for public inspection in the Region 6 FOIA Review Room between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal holidays. Contact the person listed in the FOR FURTHER INFORMATION CONTACT paragraph below to make an appointment. If possible, please make the appointment at least two working days in advance of your visit. A 15 cent per page fee will be charged for making photocopies of documents. On the day of the visit, please check in at the EPA Region 6 reception area on the seventh floor at 1445 Ross Avenue, Suite 700, Dallas, Texas. The State submittal related to this SIP revision, and which is part of the EPA docket, is also available for public inspection at the State Air Agency listed below during official business hours by appointment: Louisiana Department of Environmental Quality, Office of Environmental Quality Assessment, 602 N. Fifth Street, Baton Rouge, Louisiana 70802. FOR FURTHER INFORMATION CONTACT: If you have questions concerning today's proposal, please contact Ms. Adina Wiley, Air Permits Section (6PD-R), Environmental Protection Agency, Region 6, 1445 Ross Avenue, Suite 1200, Dallas, TX 75202-2733. The telephone number is

(214)665-2115. Ms. Wiley can also be reached via electronic mail at *wiley.adina@epa.gov.* SUPPLEMENTARY INFORMATION: Throughout this document wherever, any reference to “we,” “us,” or “our” is used, we mean EPA. Table of Contents I. What Action Is EPA Taking? II. What Is the Regulatory History of CAIR and the CAIR FIPs? III. What Are the General Requirements of CAIR and the CAIR FIPs? IV. What Are the Types of CAIR SIP Submittals? V. What Is EPA's Analysis of the Louisiana CAIR SO 2 SIP Submittal? A. State Budget for SO 2 Allowance Allocations B. CAIR SO 2 Cap-and-Trade Program C. Individual Opt-In Units VI. Final Action VII. Statutory and Executive Order Reviews I. What Action Is EPA Taking? EPA is taking direct final action to approve a revision to Louisiana's SIP, submitted on September 22, 2006, enacted at Louisiana Administrative Code, Title 33, Part III, Chapter 5, Section 506(C) (LAC 33:III.506(C)). In its SIP revision, Louisiana would meet CAIR SO 2 requirements by requiring certain electric generating units

(EGUs)to participate in the EPA-administered CAIR cap-and-trade program addressing SO 2 emissions. The SIP as revised that EPA is approving meets the applicable requirements of CAIR. Our detailed analysis of this SIP revision is in the Technical Support Document

(TSD)for the Louisiana CAIR SO 2 Trading Program. The TSD is available as specified in the section of this document identified as ADDRESSES . As a consequence of the SIP approval, the Administrator of EPA will also issue a final rule to withdraw the FIP concerning SO 2 emissions for Louisiana. This action will delete and reserve 40 CFR 52.985 in part 52. The withdrawal of the CAIR FIP for Louisiana is a conforming amendment that must be made once the SIP is approved because EPA's authority to issue the FIP was premised on a deficiency in the SIP for Louisiana. Once the SIP is fully approved, EPA no longer has authority for the FIP. Thus, EPA will not have the option of maintaining the FIP following the full SIP approval. Accordingly, EPA does not intend to offer an opportunity for a public hearing or an additional opportunity for written public comment on the withdrawal of the FIP. We are publishing this rule without prior proposal because we view this as a noncontroversial amendment and anticipate no relevant adverse comments. However, in the proposed rules section of this **Federal Register** publication, we are publishing a separate document that will serve as the proposal to approve the SIP revision if relevant adverse comments are received. This rule will be effective on September 18, 2007 without further notice unless we receive relevant adverse comment by August 20, 2007. If we receive relevant adverse comments, we will publish a timely withdrawal in the **Federal Register** informing the public that the rule will not take effect. We will address all public comments in a subsequent final rule based on the proposed rule. We will not institute a second comment period on this action. Any parties interested in commenting must do so now. Please note that if we receive adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of an adverse comment. II. What Is the Regulatory History of CAIR and the CAIR FIPs? The Clean Air Interstate Rule

(CAIR)was published by EPA on May 12, 2005 (70 FR 25162). In this rule, EPA determined that 28 States and the District of Columbia contribute significantly to nonattainment and interfere with maintenance of the national ambient air quality standards (NAAQS) for fine particles (PM 2.5 ) and /or 8-hour ozone in downwind States in the eastern part of the country. As a result, EPA required those upwind States to revise their SIPs to include control measures that reduce emissions of SO 2 , which is a precursor to PM 2.5 formation, and/or NO X , which is a precursor to both ozone and PM 2.5 formation. For jurisdictions that contribute significantly to downwind PM 2.5 nonattainment, CAIR sets annual State-wide emission reduction requirements (i.e., budgets) for SO 2 and annual State-wide emission reduction requirements for NO X . Similarly, for jurisdictions that contribute significantly to 8-hour ozone nonattainment, CAIR sets State-wide emission reduction requirements for NO X for the ozone season (defined at 40 CFR 97.302 as May 1st to September 30th). Under CAIR, States may implement these reduction requirements by participating in the EPA-administered cap-and-trade programs or by adopting any other control measures. Louisiana was found to significantly contribute to nonattainment of the PM 2.5 standard in Alabama and the 8-hour ozone standard in Texas, resulting in Louisiana being subject to the SO 2 , annual NO X , and ozone season NO X CAIR requirements. CAIR explains to subject States what must be included in SIPs to address the requirements of section 110(a)(2)(D) of the Clean Air Act

(CAA)with regard to interstate transport with respect to the 8-hour ozone and PM 2.5 NAAQS. EPA made national findings, effective on May 25, 2005, that the States had failed to submit SIPs meeting the requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 years after the promulgation of the 8-hour ozone and PM 2.5 NAAQS. These findings started a 2-year clock for EPA to promulgate a Federal Implementation Plan

(FIP)to address the requirements of section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP anytime after such findings are made and must do so within two years unless a SIP revision correcting the deficiency is approved by EPA before the FIP is promulgated. On April 28, 2006, EPA promulgated CAIR FIPs for all States covered by CAIR in order to ensure the emissions reductions required by CAIR are achieved on schedule. See 40 CFR 52.35 and 52.36. Each CAIR State is subject to the FIP until the State fully adopts, and EPA approves, a SIP revision meeting the requirements of CAIR. The CAIR FIPs require certain EGUs to participate in the EPA-administered CAIR SO 2 , NO X annual, and NO X ozone season trading programs, as appropriate, found at 40 CFR part 97. The CAIR FIPs' SO 2 , NO X annual, and NO X ozone season trading programs impose essentially the same requirements as, and are integrated with, the respective CAIR SIP trading programs. The integration of the CAIR FIP and SIP trading programs means that these trading programs will work together to create effectively a single trading program for each regulated pollutant (SO 2 , NO X annual, and NO X ozone season) in all States covered by the CAIR FIPs' or SIPs' trading program for that pollutant. The CAIR FIPs also allow States to submit abbreviated SIP revisions that, if approved by EPA, will automatically replace or supplement certain CAIR FIP provisions, while the CAIR FIPs remain in place for all other provisions. On April 28, 2006, EPA published two additional CAIR-related final rules that added the States of Delaware and New Jersey to the list of States subject to CAIR for PM 2.5 and announced EPA's final decisions on reconsideration of five issues, without making any substantive changes to the CAIR requirements. On December 13, 2006, EPA published minor, non-substantive revisions that serve to clarify CAIR and the CAIR FIPs. III. What Are the General Requirements of CAIR and the CAIR FIPs? CAIR establishes State-wide emission budgets for SO 2 and NO X and is to be implemented in two phases. The first phase of NO X reductions starts in 2009 and continues through 2014, while the first phase of SO 2 reductions starts in 2010 and continues through 2014. The second phase of reductions for both NO X and SO 2 starts in 2015 and continues thereafter. CAIR requires States to implement the budgets by either:

(1)Requiring EGUs to participate in the EPA-administered cap-and-trade programs; or

(2)adopting other control measures of the State's choosing and demonstrating that such control measures will result in compliance with the applicable State SO 2 and NO X budgets. The May 12, 2005 and April 28, 2006 CAIR rules provide model rules that States must adopt (with certain limited changes, if desired) if they want to participate in the EPA-administered trading programs. The December 13, 2006, revisions to CAIR and the CAIR FIPs were non-substantive and, therefore, do not affect EPA's evaluation of a State's SIP revision. With two exceptions, only States that choose to meet the requirements of CAIR through methods that exclusively regulate EGUs are allowed to participate in the EPA-administered trading programs. One exception is for States that adopt the opt-in provisions of the model rules to allow non-EGUs individually to opt into the EPA-administered trading programs. The other exception is for States that include all non-EGUs from their NO X SIP Call trading programs in their CAIR NO X ozone season trading programs. Louisiana was not subject to the NO X SIP Call requirements; therefore this exception is not available to the State. IV. What Are the Types of CAIR SIP Submittals? States have the flexibility to choose the type of control measures they will use to meet the requirements of CAIR. EPA anticipates that most States will choose to meet the CAIR requirements by selecting an option that requires EGUs to participate in the EPA-administered CAIR cap-and-trade programs. For such States, EPA has provided two approaches for submitting and obtaining approval for CAIR SIP revisions. States may submit full SIP revisions that adopt the model CAIR cap-and-trade rules. If approved, these SIP revisions will fully replace the State's CAIR FIPs. Alternatively, States may submit abbreviated SIP revisions. The provisions in the abbreviated SIP revision, if approved into a State's SIP, will not replace that State's CAIR FIP; however, the requirements for the CAIR FIPs at 40 CFR part 52 incorporate the provisions of the Federal CAIR trading programs in 40 CFR part 97. The Federal CAIR trading programs in 40 CFR part 97 provide that whenever EPA approves an abbreviated SIP revision, the provisions in the abbreviated SIP revision will be used in place of or in conjunction with, as appropriate, the corresponding provisions in 40 CFR part 97 of the State's CAIR FIP. A State submitting a full SIP revision may either adopt regulations that are substantively identical to the model rules or incorporate by reference the model rules. CAIR provides that States may only make limited changes to the model rules if the States want to participate in the EPA-administered trading programs. A full SIP revision may change the model rules only by altering their applicability and allowance allocation provisions to:

(1)Include NO X SIP Call trading sources that are not EGUs under CAIR in the CAIR NO X Ozone Season Trading Program;

(2)Provide for State allocation of NO X annual or ozone season allowances using a methodology chosen by the State;

(3)Provide for State allocation of NO X annual allowances from the compliance supplement pool

(CSP)using the State's choice of allowed, alternative methodologies; or

(4)Allow units that are not otherwise CAIR units to opt individually into the CAIR SO 2 , NO X Annual, or NO X Ozone Season Trading Programs under the opt-in provisions in the model rules. EPA's authority to issue the CAIR FIPs was premised on the deficiency of each State's SIP in addressing the CAIR requirements. EPA will not have the option of maintaining the CAIR FIP following approval of a full CAIR SIP revision. Therefore, an approved CAIR full SIP revision will replace the CAIR FIP requirements for NO X annual, NO X ozone season, or SO 2 emissions, as applicable, for that State. V. What Is EPA's Analysis of the Louisiana CAIR SO 2 SIP Submittal? A. State Budget for SO 2 Allowance Allocations The CAIR State SO 2 budgets were derived by discounting the tonnage of emissions authorized by annual allowance allocations under the Acid Rain Program under title IV of the CAA. Under CAIR, each allowance allocated in the Acid Rain Program for the years in Phase 1 of CAIR (2010 through 2014) authorizes 0.5 ton of SO 2 emissions in the CAIR trading program, and each Acid Rain Program allowance allocated for the years in Phase 2 of CAIR (2015 and thereafter) authorizes 0.35 ton of SO 2 emissions in the CAIR trading program. In today's action, EPA is approving Louisiana's SIP revision that incorporates by reference the SO 2 model trading rule as satisfying the budget requirements of 40 CFR 51.124(e). At 40 CFR 51.124(o)(1) we explain that any State that incorporates by reference the CAIR SO 2 trading program at subparts AAA through HHH of 40 CFR part 96, meets the budget obligation under 40 CFR 51.124(e). Therefore, Louisiana's SIP revision establishes the State CAIR SO 2 budgets as 59,948 tons of SO 2 emissions for 2010-2014 and 41,963 tons of SO 2 emissions in 2015 and thereafter. Louisiana's SIP revision sets these SO 2 budgets as the total amount of allowances available for allocation for a given year under the EPA-administered SO 2 cap-and-trade program. B. CAIR SO 2 Cap-and-Trade Program The provisions of the CAIR SO 2 model rule are similar to the provisions of the CAIR NO X annual and ozone season model rules, which largely mirror the structure of the NO X SIP Call model trading rule in 40 CFR part 96, subparts A through I. However, the SO 2 model rule is coordinated with the ongoing Acid Rain SO 2 cap-and-trade program under CAA title IV. The SO 2 model rule uses the title IV allowances for compliance, with each allowance allocated for 2010-2014 authorizing only 0.50 ton of emissions and each allowance allocated for 2015 and thereafter authorizing only 0.35 ton of emissions. Banked title IV allowances allocated for years before 2010 can be used at any time in the CAIR SO 2 cap-and-trade program, with each such allowance authorizing 1 ton of emissions. Title IV allowances are to be freely transferable among sources covered by the Acid Rain Program and sources covered by the CAIR SO 2 cap-and-trade program. EPA also used the CAIR SO 2 model trading rule as the basis for the SO 2 trading program in the CAIR FIPs. The CAIR FIPs' trading rules are virtually identical to the CAIR model trading rules, with changes made to account for federal rather than state implementation. The CAIR model SO 2 trading rules and the respective CAIR FIPs' trading rules are designed to work together as an integrated SO 2 trading program. In the September 22, 2006, SIP revision, Louisiana chooses to implement its CAIR SO 2 budgets by requiring EGUs to participate in the EPA-administered cap-and-trade program for SO 2 emissions. Louisiana has adopted a full SIP revision that incorporates by reference the CAIR model cap-and-trade rule for SO 2 emissions as published at 40 CFR part 96, subparts AAA-HHH on July 1, 2005, and as revised at 70 FR 25162-25405, May 12, 2005, and 71 FR 25162-25405, April 28, 2006. This SIP revision does not include subpart III, CAIR SO 2 Opt-in Units, and any references to opt-in units. This SIP revision also does not include the December 13, 2006, revisions to the SO 2 trading rules in the CAIR and CAIR FIPs. C. Individual Opt-In Units The opt-in provisions of the CAIR model trading rules allow certain non-EGUs (i.e., boilers, combustion turbines, and other stationary fossil-fuel-fired devices) that do not meet the applicability criteria for a CAIR trading program to participate voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may opt into one or more of the CAIR trading programs. In order to qualify to opt into a CAIR trading program, a unit must vent all emissions through a stack and be able to meet monitoring, recordkeeping, and reporting requirements of 40 CFR part 75. The owners and operators seeking to opt a unit into a CAIR trading program must apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in permit, the unit becomes a CAIR unit, is allocated allowances, and must meet the same allowance-holding and emissions monitoring and reporting requirements as other units subject to that CAIR trading program. The opt-in provisions provide for two methodologies for allocating allowances for opt-in units, one methodology that applies to opt-in units in general and a second methodology that allocates allowances only to opt-in units that the owners and operators intend to repower before January 1, 2015. States have several options concerning the opt-in provisions. States may adopt the CAIR opt-in provisions entirely or may adopt them but exclude one of the methodologies for allocating allowances. States may also decline to adopt the opt-in provisions. Louisiana has chosen not to allow non-EGUs to opt into the CAIR SO 2 trading program. Louisiana incorporated by reference the CAIR SO 2 Trading Program, published at 40 CFR part 96, subparts AAA-HHH on July 1, 2005, and as revised at 70 FR 25162-25405, May 12, 2005, and 71 FR 25162-25405, April 28, 2006. This SIP revision does not include subpart III, CAIR SO 2 Opt-in Units, and any references to opt-in units. VI. Final Action We are approving Louisiana's CAIR SO 2 SIP revision submitted on September 22, 2006, enacted at LAC 33:III.506(C). Under this SIP revision, Louisiana is choosing to participate in the EPA-administered cap-and-trade program for SO 2 emissions. Our technical analysis has shown that this SIP revision is consistent with the requirements of 40 CFR part 51, including the specific CAIR SO 2 requirements at 40 CFR 51.124 as published on May 12, 2005, and further revised on April 28, 2006; and all applicable requirements of the CAA. While we are approving the Louisiana CAIR SO 2 SIP as satisfying the CAIR SO 2 requirements, it is important to note that the Louisiana SIP revision does not incorporate EPA's latest revisions to CAIR made on December 13, 2006, and any future revisions. We understand that Louisiana will routinely update its SIP to reflect this change and any future EPA actions on the CAIR SO 2 Trading Program. As a consequence of this SIP approval, the Administrator of EPA will also issue, without providing an opportunity for a public hearing or an additional opportunity for written public comment, a final rule to withdraw the CAIR FIP concerning SO 2 emissions for Louisiana. This action will delete and reserve 40 CFR 52.985 in part 52. VII. Statutory and Executive Order Reviews Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason and because this action will not have a significant, adverse effect on the supply, distribution, or use of energy, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Act. The EPA interprets Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), as applying only to those regulatory actions that concern health or safety risks such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045 because it approves a state program. Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. Because this rule merely approves a state rule implementing a Federal standard, EPA lacks the discretionary authority to modify today's regulatory decision on the basis of environmental justice considerations. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). The Congressional Review Act, 5 U.S.C. 801 *et seq.* , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the **Federal Register** . A major rule cannot take effect until 60 days after it is published in the **Federal Register** . This action is not a “major rule” as defined by 5 U.S.C. 804(2). Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 18, 2007. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).) List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides. Dated: July 11, 2007. Lawrence Starfield, Acting Regional Administrator, EPA Region 6. 40 CFR part 52 is amended as follows: PART 52—[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* Subpart T—Louisiana 2. Section 52.970 is amended as follows: a. In paragraph

(c)the table entitled “EPA Approved Louisiana Regulations in the Louisiana SIP” is amended under Chapter 5—Permit Procedures, by adding in numerical order a new entry for “Section 506(c)”. b. In paragraph

(e)the table entitled “EPA Approved Louisiana Nonregulatory Provisions and Quasi-Regulatory Measures” is amended by adding a new entry for the “Clean Air Interstate Rule Sulfur Dioxide Trading Program”. § 52.970 Identification of plan.

(c)* * * EPA Approved Louisiana Regulations in the Louisiana SIP State citation Title/subject State approval date EPA approval date Comments * * * * * * * Chapter 5—Permit Procedures * * * * * * * Section 506(c) Clean Air Interstate Rule Requirements—Annual Sulfur Dioxide 09/20/06 07/20/07, [Insert *FR* page number where document begins] Sections 506(A), (B), (D), and

(E)NOT in SIP. * * * * * * *

(e)* * * EPA Approved Louisiana Nonregulatory Provisions and Quasi-Regulatory Measures Name of SIP provision Applicable geographic or nonattainment area State submittal date/effective date EPA approval date Explanation * * * * * * * Clean Air Interstate Rule Sulfur Dioxide Trading Program Statewide 09/22/06 07/20/07, [Insert *FR* page number where document begins] Acid Rain Program Provisions NOT in SIP. [FR Doc. E7-14068 Filed 7-19-07; 8:45 am] BILLING CODE 6560-50-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 402 [CMS-6146-F; CMS-6019-F] RINS 0938-AM98; 0938-AN48 Medicare Program; Revised Civil Money Penalties, Assessments, Exclusions, and Related Appeals Procedures AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: This final rule establishes the procedures for imposing exclusions for certain violations of the Medicare program and is based on the procedures that the Office of Inspector General has published for civil money penalties, assessments, and exclusions under their delegated authority. Implementation of this final rule protects beneficiaries from persons (that is, health care providers and entities) found in noncompliance with Medicare regulations, and otherwise improves the safeguard provisions under the Medicare statute. This final rule also establishes procedures that enable a person targeted for exclusion from the Medicare program to request the Centers for Medicare & Medicaid Services to act on its behalf to recommend to the Inspector General that the exclusion from Medicare be waived due to hardship that would be placed on Medicare beneficiaries as a result of the person's exclusion. DATES: *Effective Date:* This final rule is effective on August 20, 2007. FOR FURTHER INFORMATION CONTACT: Joel Cohen,

(410)786-3349. Joe Strazzire,

(410)786-2775. SUPPLEMENTARY INFORMATION: I. Background A. Statutory and Regulatory History Section 2105 of the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35) added section 1128A to the Social Security Act (the Act) to authorize the Secretary of Health and Human Services

(HHS)to impose civil money penalties (CMPs), assessments, and exclusions from the Medicare program for certain persons (that is, health care facilities, practitioners, suppliers, or other entities) under certain circumstances. Exclusion provides the ultimate enforcement tool for agencies attempting to establish compliance with legal and program standards, and is used in addition to potential civil, criminal, and other administrative proceedings. Since 1981, the Congress has significantly increased both the number and types of circumstances under which the Secretary may impose the exclusion of a person from the Medicare and State health care programs. The Secretary has delegated the authority for these provisions to either the Office of the Inspector General

(OIG)or CMS (October 20, 1994 rule, 59 FR 52967). The exclusion authorities delegated to the OIG for the most part address fraud, misrepresentation, or falsification, while those that address noncompliance with programmatic or regulatory requirements are delegated to CMS. However, the OIG has the authority to impose exclusions and to prosecute cases involving exclusions that were delegated to CMS, if CMS and the OIG jointly determine it to be in the interest of economy, efficiency, or effective coordination of activities. The determination may be made either on a case-by-case basis, or for all cases brought under a particular listed authority. In the December 14, 1998 **Federal Register** (63 FR 68687), we published a final rule entitled “Medicare and Medicaid Program; Civil Money Penalties, Assessments, Exclusions, and Related Appeals Procedures.” That rule set forth the procedures for pursuing civil money penalties

(CMPs)and assessments, and added a new part 402 to title 42, chapter IV of the Code of Federal Regulations

(CFR)to incorporate our CMP and assessment authorities. However, we did not address exclusions in that final rule. Instead, we reserved subpart C for exclusions so that we could incorporate the relevant regulations at a future date. In the December 14, 1998 final rule, we indicated that our procedures for imposing the CMPs and assessment authorities delegated to CMS were based on the procedures that the OIG had delineated in 42 CFR part 1003. We also made the OIG's hearing and appeal procedures set forth in 42 CFR part 1005 applicable to the CMP, assessment, and exclusion authorities delegated to us. In the July 23, 2004 **Federal Register** (69 FR 43956), we published a proposed rule entitled “Medicare Program; Revised Civil Money Penalties, Assessments, Exclusions, and Related Appeals Procedures.” This proposed rule would amend subpart C by establishing the procedures for imposing exclusions for certain violations of the Medicare program. The proposed rule would incorporate the general requirements and procedures that are common to the imposition of an exclusion from the Medicare program. In the August 4, 2005 **Federal Register** (70 FR 44879), we published a proposed rule entitled “Medicare Program; Revised Civil Money Penalties, Assessments, Exclusions and Related Appeals Procedures” that would implement section 949 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003

(MMA)(Pub. L. 108-173). Section 949 of the MMA amended section 1128(c)(3)(B) of the Act to indicate that “[s]ubject to subparagraph (g), in the case of an exclusion under subsection (a), the minimum period of exclusion shall be not less than 5 years, except that, upon the request of the administrator of a Federal health care program (as defined in section 1128B(f)) who determines that the exclusion would impose a hardship on individuals entitled to benefits under Part A of title XVIII or enrolled under Part B of such title, or both, the Secretary may, after consulting with the Inspector General of the Department of Health and Human Services, waive the exclusion under subsection (a)(1), (a)(3), or (a)(4) with respect to that program in the case of an individual or entity that is the sole community physician or sole source of essential specialized services in the community.” The Conference Agreement accompanying the MMA clarifies the intent of the statutory requirement that a hardship determination be made before a waiver is approved. In short, we proposed the general requirements and procedures that would allow certain providers and entities identified for exclusion from the Medicare program to request that we act on their behalf to recommend to the OIG that their exclusion from Medicare be waived because of a hardship that would result on Medicare beneficiaries. We also stated in this proposed rule our intent to respond to the public comments we received from the July 23, 2004 proposed rule and this proposed rule in a single final rule. B. Timelines for Publication of This Medicare Final Rule Section 902 of the MMA amended section 1871(a) of the Act and requires the Secretary, in consultation with the Director of the Office of Management and Budget, to establish and publish timelines for the publication of Medicare final rules based on the previous publication of a Medicare proposed or interim final rule. Section 902 of the MMA also states that the timelines for these rules may vary, but must not exceed 3 years after publication of the preceding proposed or interim final rule, except under exceptional circumstances. This final rule finalizes provisions set forth in the July 23, 2004 and the August 4, 2005 proposed rules. In addition, this final rule will be published within the 3-year time limit imposed by section 902 of the MMA. Therefore, this final rule will be published in accordance with the Congress' intent for ensuring timely publication of final rules. II. Provisions of the Proposed Rules and Analysis and Responses to Public Comments A. Provisions of the July 23, 2004 Proposed Rule This proposed rule would amend part 402, subpart C, (Exclusions) to incorporate the rules concerning exclusions associated with the CMP violations identified in part 402. Subpart C contains the general requirements and procedures that are common to the imposition of an exclusion from Medicare, Medicaid, and (where applicable) other Federal health care programs. (These regulations do not materially impact the hearing and appeals procedures currently available to any person on whom we could impose an exclusion.) We proposed adding the following provisions under part 402 subpart C. 1. Basis and Purpose (Proposed § 402.200) Section 402.200 provides the basis and purpose for the imposition of an exclusion from Medicare, Medicaid, and (where applicable) other Federal health care programs based on noncompliance with the respective provisions of part 402 subpart A, § 402.1(e). This subpart also sets forth the appeal rights of a person subject to exclusion, as well as the procedures for a person's reinstatement following an exclusion. (This subpart is based on § 1003.102, § 1003.105, § 1003.107, and § 1003.109 of the OIG's regulations.) 2. Length of Exclusion (Proposed § 402.205) This section describes the duration of exclusion from Medicare, Medicaid, and (where applicable) other Federal health care programs for the applicable violation. Currently, there are four general categories for which violations may cause exclusions. These categories involve noncompliance with assignment billings, noncompliance with charge or service limits, failure to provide information, or improperly providing information. Some exclusion provisions provide that the exclusion is imposed in accordance with section 1842(j)(2) of the Act, which provides for exclusion from participation in programs under the Act. These exclusions may not exceed 5 years. For these exclusion provisions, we propose using our discretion to set a duration for the exclusion, up to 5 years, after considering aggravating and mitigating circumstances as described in the July 23, 2004 proposed rule (69 FR 43956). By contrast, many other exclusion provisions extend to all Federal health care programs, and do not address the minimum or maximum duration of the exclusion. Instead, they simply refer to applying the provisions of section 1128A of the Act or section 1128(c) of the Act for imposition of the exclusion. However, neither section 1128A of the Act, nor section 1128(c) of the Act, address the specific duration of an exclusion for any of the title XVIII exclusion provisions described in this proposed rule. Therefore, where the duration of an exclusion is not specifically addressed by statute for a specific exclusion provision, we proposed using our discretion to apply a time period we believed was justified, taking into account appropriate aggravating and mitigating factors that are described in the July 23, 2004 proposed rule (69 FR 43956). While several provisions of title XVIII of the Act refer on their face only to CMPs, they also make cross-references to section 1128A of the Act, from which we assert that our exclusion authority derives. This is the case with both sections 1877 and 1882 of the Act. Each of these provisions incorporates by reference portions of section 1128A of the Act, articulating with specificity which section 1128A provisions are applicable. In each case, this includes section 1128A's exclusion authority (and, in the case of section 1877 of the Act, the exclusion authority is made even more clear with the term “exclusion” being found in the section heading). The applicable provision of section 1128A of the Act is the provision's last sentence, explicitly made applicable to all the foregoing, which provides that the Secretary “may make a determination in the same [CMP] proceeding to exclude the person from participation in Federal health care programs.” 3. Factors Considered in Determining Whether To Exclude, and the Length of Exclusion (Proposed § 402.208) The statute specifies the grounds for imposition of the various exclusions, but offers little detail regarding the adjudicatory processes inherent in administering them. Instead, the statute vests us with broad administrative discretion. We are sensitive to the fact that the nature of grounds for imposition of exclusions vary widely. Proposed § 402.208 would provide the specific details of the aggravating and mitigating circumstances that may be considered. (This section is based on the corresponding OIG sections of 42 CFR parts 1001 and 1003.) We note that our application of aggravating and mitigating factors flows both as a natural result of a statutory scheme that contemplates exclusions of varying lengths, as well as the Secretary's rulemaking authority specified in section 1871 of the Act. 4. Scope and Effect of Exclusion (Proposed § 402.209) Proposed § 402.209 would provide the general scope and effect of an exclusion. Generally, an excluded person may not directly or indirectly submit claims, or cause claims to be submitted, to the Medicare program. A person who submits (or causes to be submitted) claims during the course of an exclusion risks other possible sanctions, including civil and criminal liability. Medicare will not pay claims for beneficiaries who elect to see an excluded person, except, perhaps, for the first claim, which will be accompanied by a notification to the beneficiary that the person has been excluded from participation in Medicare, and that no further Medicare payments will be made on the beneficiary's behalf. (This section is based on criteria provided by the OIG in § 1001.1901.) We note in § 402.209(b)(3) that because in some cases the maximum exclusion time limit may preclude us from applying the specified prohibited conduct as the basis for denying reinstatement to the Medicare program, the fact that an excluded person has engaged in prohibited conduct may give rise to a new exclusion action by the initiating agency (CMS or OIG) that will have the practical effect of denying the person reinstatement into the Medicare program. 5. Notice of Exclusion (Proposed § 402.210) Proposed § 402.210 would specify the contents of respective notices and specifically, the timing for release of—(1) the written notice of intent to exclude (that is, the proposed determination); and

(2)the written notice of exclusion. At a minimum, the written notice of intent to exclude provides the person with information as to the reason why it is noncompliant with the statute, the length of the proposed exclusion, and instructions for responding to the notice, including providing argument against exclusion for the agency to consider. The written notice to exclude is sent to the person in the same manner as the written notice of intent to exclude if the agency determines that the exclusion is warranted. This notice would also provide the person with information on its appeal rights regarding the exclusion. (This section is based on criteria provided by the OIG in § 1001.2001, § 1001.2002, § 1001.2004, and § 1003.109.) 6. Response to Notice of Proposed Exclusion (Proposed § 402.212) Proposed § 402.212 would state the general process and procedure for a person to follow when presenting an oral or written response to the notice of intent to exclude (that is, the proposed determination). We would accept for consideration any supportive information the person provides. We would not limit nor suggest what type of information should be presented. The burden to present convincing information is left to the person's discretion. Even though this section is based on the process and procedures delineated by the OIG in § 1003.109, to encourage timely communication between the person and the initiating agency, we have added an additional element whereby the initiating agency would contact the person within 15 days of receipt of the person's request to establish a mutually agreed upon time and place for the oral presentation and discussion. 7. Appeal of Exclusion (Proposed § 402.214) Proposed § 402.214 would specify the general appeal process for requesting a hearing before an administrative law judge, and details the required elements of the written request for appeal. (This section is based on criteria provided by the OIG in § 1005.) Generally, the elements of the written request must include the basis for the disagreement with the exclusion, the general basis for the person's defense, and reasons why the proposed length of exclusion should be modified. (This section is based on criteria provided by the OIG in § 1001.2003 and § 1001.2007.) 8. Request for Reinstatement (Proposed § 402.300) In proposed § 402.300, we specified the request for reinstatement. In § 402.300(a), we described the written request for reinstatement. We stated that an excluded person may submit a written request for reinstatement to the initiating agency no sooner than 120 days prior to the terminal date of exclusion as specified in the notice of exclusion. The written request for reinstatement would be required to include documentation demonstrating that the person has met the standards set forth in § 402.302. We also state that obtaining or reactivating a Medicare provider number (or equivalent) would not constitute reinstatement. Proposed § 402.300(b) would specify that, upon receipt of a written request for reinstatement, the initiating agency may require the person to furnish additional, specific information and authorization to obtain information from private health insurers, peer review organizations, and others, as necessary, to determine whether reinstatement is granted. In § 402.300(c), we would state that failure to submit a written request for reinstatement or to furnish the required information or authorization would result in the continuation of the exclusion, unless the exclusion has been in effect for 5 years. In that case, reinstatement would be automatic. Proposed § 402.300(d) specifies that, if a period of exclusion is reduced on appeal (regardless of whether further appeal is pending), the excluded person would be permitted to request and apply for reinstatement within 120 days of the expiration of the reduced exclusion period. A written request for the reinstatement would include the same standards specified in § 402.300(b). (This section is based on criteria provided by the OIG in § 1001.3001.) 9. Basis for Reinstatement (Proposed § 402.302) In proposed § 402.302, we would specify that the initiating agency would authorize reinstatement if the agency determines that—(1) The period of exclusion has expired;

(2)there are reasonable assurances that the types of actions that formed the basis for the original exclusion will not recur; and

(3)there is no additional basis under title XVIII of the Act that will justify the continuation of the exclusion. We also stated that the initiating agency would not authorize reinstatement if the basis for denying reinstatement lies in an excluded person continuing either to submit claims (or causing claims to be submitted) or to receive and accept payments from the Medicare program for items or services it has furnished, ordered, or prescribed. This section would apply, regardless of whether the excluded person has obtained a Medicare provider number (or equivalent), either as an individual or as a member of a group, before being reinstated. In making a determination regarding reinstatement, the initiating agency would consider—(1) The conduct of the excluded provider occurring before the date of the notice of the exclusion, if that conduct was not known to the initiating agency at the time of the exclusion;

(2)the conduct of the excluded person after the date of the exclusion;

(3)whether all fines and all debts due and owing (including overpayments) to any Federal, State, or local government that relate to Medicare, Medicaid, or (where applicable) any Federal, State, or local health care program were paid in full, or alternatively that satisfactory arrangements were made to fulfill these obligations;

(4)whether the excluded person complied with, or had made satisfactory arrangements to fulfill, all of the applicable conditions of participation or conditions of coverage under the Medicare statutes and regulations; and

(5)whether the excluded person had, during the period of exclusion, submitted claims (or caused claims to be submitted) or payment to be made by Medicare, Medicaid, and (where applicable) any other Federal health care program for items or services furnished, ordered, or prescribed, and the conditions under which these actions occurred. We proposed that reinstatement would not be effective until the initiating agency grants the request and provides notice under § 402.304. Reinstatement would be effective as provided in the notice. A determination for a denial of reinstatement will not be appealable or reviewable, except as provided in § 402.306. We also proposed that an ALJ cannot require reinstatement of an excluded person according to this chapter as specified in § 402.306(d). (The content of this section is based on the criteria provided by the OIG in § 1001.3002.) 10. Approval of Request for Reinstatement (Proposed § 402.304) With regard to approval of a request for reinstatement (§ 402.304), we would state that, if the initiating agency grants a request for reinstatement, then the initiating agency would—(1) Give written notice to the excluded person specifying the date of reinstatement; and

(2)notify appropriate Federal and State agencies, and, to the extent possible, all others that were originally notified of the exclusion, that the person has been reinstated into the Medicare program. A determination by the initiating agency to reinstate an excluded person would have no effect if Medicare, Medicaid, or (where applicable) any other Federal health care program has imposed a longer period of exclusion under its own authorities. (The content of this section is based on the procedures provided by the OIG in § 1001.3003.) 11. Denial of Request for Reinstatement (Proposed § 402.306) In proposed § 402.306, we specified that if a request for reinstatement is denied, the initiating agency would provide written notice to the excluded person. Within 30 days of the date of this notice, the excluded person may submit to the initiating agency:

(1)Documentary evidence and a written argument challenging the reinstatement denial; or

(2)a written request to present written evidence or oral argument to an official of the initiating agency. If this written request is received timely by the initiating agency, the initiating agency, within 15 days of receipt of the excluded provider or entity's request, would initiate communication with the excluded person to establish a time and place for the requested meeting. After evaluating any additional evidence submitted by the excluded person (or at the end of the 30-day period described above, if no documentary evidence or written request was submitted), the initiating agency would send written notice to the excluded person either confirming the denial, or approving the reinstatement as set forth in proposed § 402.304. If the initiating agency elects to uphold its denial decision, the written notice would also indicate that a subsequent request for reinstatement would not be considered until at least 1 year after the date of the written denial notice. The decision to deny reinstatement would not be subject to administrative review. (The content of this section is based on the procedures provided by the OIG in § 1001.3004.) We received 11 comments related to the July 23, 2004 proposed rule. The following is a summary of the comments received and our responses to them. *Comment:* Commenters expressed concern over the discretion that we may apply in setting the duration of exclusion when duration is not addressed by statute. *Response:* The statute does not specifically set the duration of exclusion. Therefore, we will consider any and all factors, as listed in § 402.208, presented when weighing our decision on the length of the exclusion. We believe the circumstances and facts presented will provide a basis for determining the appropriate duration on a case-by-case basis. *Comment:* Commenters stated that wrongful conduct that occurred at a time otherwise barred by the statute of limitations should not be considered as a factor. *Response:* It is our intent to consider any and all applicable factors in making a determination of exclusion from the Medicare program, including past wrongful conduct unrelated to the specific conduct at issue. Unlike the imposition of civil monetary penalties that are only applied to the conduct at issue, we take a different position on imposing an exclusion from the Medicare program. *Comment:* One commenter indicated the financial loss to the program associated as an aggravating or mitigating factor was too small. The commenter used as an example a single hospital claim whereby the value of a single claim is typically more than the loss proposed in the rule. *Response:* We have drafted this final rule to be adopted as a generic template to account for all types of healthcare providers (for example, hospitals, physicians, and suppliers). The financial factors proposed for aggravating and mitigating circumstances provide us with the ability to consider a low dollar tolerance that would be applicable to both institutional and non-institutional providers. *Comment:* One commenter suggested that instead of considering it a mitigating factor when the noncompliance resulted from an unintentional or unrecognized error in a request for payment, and the person took prompt corrective steps once the error was discovered, that this circumstance should mean that no exclusion was warranted. *Response:* The circumstances described by the commenter would most likely result in a favorable determination. We would likely consider those particular circumstances as mitigating factors. We will look at all factors and degrees of timeliness and promptness of changing the noncompliant activity before rendering a determination on whether to exclude a person from the Medicare program and the duration of the exclusion period. *Comment:* One commenter suggested adding as a mitigating circumstance the fact that the person has an effective compliance program in place. *Response:* We agree that an effective compliance program could be considered a mitigating circumstance under § 402.208(b)(3). However, the compliance program would not be considered effective if a violation occurred during the time the program was in effect, and the violation was not identified and remedied by the person prior to CMS identifying the noncompliance. The remedial step of establishing an effective compliance program may result in the period of exclusion being modified. *Comment:* One commenter questioned the knowledge of furnishing services at the request of or direction of an excluded person, and whether, for example, a hospital has any obligation to check the list of excluded persons when furnishing services at the request of another entity. *Response:* We believe the exceptions described in § 402.209 address how we view the knowledge factor. With regard to an obligation to check the list of excluded persons, we are not aware of any statutory requirement of this type. While it is not obligatory to check the exclusions list, a provider may wish to voluntarily add this element as part of its compliance program to ensure that all claims for services of this type will be paid. *Comment:* One commenter regarded the provision that the exclusion effective date would not be delayed if an appeal was filed timely would deprive the person of economic existence. Therefore, the commenter recommended that the exclusion be stayed until the appeal process had been concluded. *Response:* As specified in § 402.210(a), before written notice of the exclusion is sent, the person would receive a notice of proposed determination. The person has the opportunity at this time to present to CMS documentary evidence and a written response, or to make an oral presentation as to why the exclusion should not be imposed. In response, we may not impose the exclusion if we find that the exclusion is unwarranted. Although the commenter may feel that the appeal process is unfair because the exclusion is not delayed, we intend to remain consistent with the process that governs the other Federal agencies. *Comment:* One commenter suggested removing or revising the requirement of providing additional information when applying for reinstatement, because that requirement is too onerous, or the additional information requested may include protected information. *Response:* If we request additional information, it is the excluded person's decision whether to provide the information. A person who seeks reinstatement should be prepared to provide evidence it deems appropriate to support the reinstatement as defined in § 402.302. However, we would base our determinations on the information that we have been provided. *Comment:* One commenter requested that the provision regarding our upholding the initial appeal determination to deny reinstatement should have appeal rights. *Response:* In reviewing the provision, the excluded person has two opportunities to present evidence to CMS that may meet the conditions for reinstatement as set forth in § 402.302. These two opportunities to present evidence are detailed in § 402.300(a) and § 402.306(a). Failing to present convincing evidence, the excluded person is again afforded the opportunity 1 year later, as detailed in § 402.306(c). We believe these situations provide an excluded person with adequate opportunity to be heard, and decline to add additional appeal rights. *Comment:* One commenter expressed that there was conflict between § 402.210(a) and § 402.212(b) regarding the time period for submitting a request for oral argument. *Response:* We reviewed the provisions and have revised the time period in § 402.212(b) to be consistent with the 30-day period in § 402.210(a) for submitting a request to present oral arguments. *Comment:* One commenter suggested that the exclusions related to the provisions of section 1882 of the Act are not intended for issuers of Medigap insurance or Medigap insurance policies. The commenter suggested that the Congress did clearly apply civil monetary penalties to the provisions, but made no explicit application or reference to exclusions. *Response:* As we discussed previously, section 1882 of the Act cross references section 1128A of the Act, articulating with specificity the applicable portions of the latter statute, which in each case includes section 1128A's exclusion authority. We believe that we have the legal authority to impose exclusions associated with violations of section 1882 of the Act. B. Provisions of the August 4, 2005 Proposed Rule This proposed rule would amend part 402, subpart C, (Exclusions) to set forth the general requirements and procedures that would allow persons targeted for exclusion from the Medicare program to request that CMS act on their behalf to recommend to the Inspector General that their exclusion from Medicare be waived because of a hardship that would result on Medicare beneficiaries. These requirements and procedures implement section 949 of the MMA. We proposed adding the following provisions under subpart C: 1. Waiver of Exclusions (Proposed § 402.308) In § 402.308, we stated that persons who have been excluded by the Inspector General may request that CMS act on their behalf to recommend to the Inspector General that their exclusion from the Medicare program be waived. We would recommend waiver if we determine that the person's exclusion from the Medicare program would place a hardship on Medicare beneficiaries. Our decision to make the recommendation of a waiver to the Inspector General is not subject to administrative or judicial review. Additionally, our recommendation of waiver is not tantamount to the automatic granting of a waiver, because it is the Inspector General who will make the final decision on whether a waiver should be granted to the excluded person. We received 2 comments related to the August 4, 2005 proposed rule (CMS-6019-P). Below is a summary of the comments received and our responses to them. *Comment:* One commenter indicated it was unable to identify the delegation of section 949 of the MMA waiver authority from the Secretary to the OIG; therefore, the commenter is opposed to the delegation. *Response:* Our authority to request a waiver under section 949 of the MMA is specified in § 402.209 of this final rule. The authority of the OIG to grant or deny a request for a waiver is outside the scope of this final rule. *Comment:* One commenter requested that we provide a definition with greater clarity for the terms used to describe persons eligible for the exclusion waiver. *Response:* We have revised § 402.308(a) to refer to § 1001.2 of the OIG regulations, which define “sole community physician” and “sole source of essential specialized services” in the Medicare community. III. Provisions of the Final Regulations We are adopting all of the provisions of the proposed rules as final with the following changes. Due to a typographical error, we are replacing § 402.105(d)(2)(xix) with § 402.105(d)(2)(ix). In § 402.308, we are adding the terms “sole community physician” and “sole source of essential specialized services in the community” to the list of definitions. For each term, we are referencing those terms as they are defined by the OIG regulations at § 1001.2. In addition, in § 402.308(b), we are revising the text, “For purposes of this part” to read as “For purposes of this subpart”. IV. Collection of Information Requirements Under the Paperwork Reduction Act of 1995, we are required to provide 30-day notice in the **Federal Register** and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget

(OMB)for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. Scope and Effect of Exclusion (§ 402.209) Section 402.209(c)(2) states that payment may be made for certain emergency items or services furnished by an excluded person, or under the medical direction or on the request of an excluded person during the period of exclusion. In order to be paid, a claim for the emergency items or services must be accompanied by a sworn statement of the person furnishing the items or services, specifying the nature of the emergency and the reason that the items or services were not furnished by a person eligible to furnish or order the items or services. The burden associated with this requirement is the time and effort associated with drafting and submitting a document containing a sworn statement that explains the circumstances under which services were furnished by an excluded individual. While this requirement does impose a burden, we believe it is exempt from the PRA as defined in 5 CFR 1320.4; information collected during the conduct of a criminal investigation or civil action or during the conduct of an administrative action, investigation, or audit involving an agency against specific individuals or entities is not subject to the PRA. Response to Notice of Proposed Determination to Exclude (§ 402.212). Section 412.212 outlines the procedures an individual must follow to submit a response to the notice of intent to exclude. Specifically, § 402.212(a) states that within 60 days of the receipt of the notice, a person may present to the initiating agency a written response to dispute whether the proposed exclusion is appropriate. In addition, the person submitting the written response to the notice may provide additional supportive documentation. The burden associated with this requirement is the time and effort associated with drafting and submitting a written response to the notice. Section 402.212(b) states that recipient of a notice of intent to exclude is also afforded an opportunity to be heard by the initiating agency in order to make an oral presentation concerning whether the proposed exclusion is warranted. The person must submit the request for an oral presentation within 60 days of the receipt of the notice. The burden associated with this requirement is the time and effort associated with submitting a request for an oral presentation. While the requirements listed in § 402.212(a) and

(b)do impose burdens, we believe they are exempt from the PRA as defined in 5 CFR 1320.4; information collected during the conduct of a criminal investigation or civil action or during the conduct of an administrative action, investigation, or audit involving an agency against specific individuals or entities is not subject to the PRA. Appeal of Exclusion (§ 402.214) Section 402.214(b) lists the conditions under which an excluded person may file a request for a hearing before an administrative law judge (ALJ). Section 402.214(d) states that an excluded person must file a request for a hearing within 60 days from the receipt of the notice of exclusion. Section 402.214(e) lists the required content of the written request for a hearing. The burden associated with these requirements is the time and effort necessary to draft and submit a request for a hearing with an ALJ as stated in § 402.214(d). In addition, the person must ensure that the request contains all of the information outlined in § 402.214(e). While these requirements do impose burdens, we believe they are exempt from the PRA as defined in 5 CFR 1320.4; information collected during the conduct of a criminal investigation or civil action or during the conduct of an administrative action, investigation, or audit involving an agency against specific individuals or entities is not subject to the PRA. Request for Reinstatement (§ 402.300) Section 402.300(a) explains that an excluded person may submit a request for reinstatement to the agency initiating the exclusion. An excluded person must submit a written request no sooner than 120 days prior to the terminal date of exclusion as specified in the notice of exclusion. Section 402.300(d) explains the request for reinstatement process for an excluded person that had the period of exclusion reduced on appeal. The excluded person must submit a written request and apply for reinstatement within 120 days of the expiration date of the reduced exclusion period. The burden associated with these requirements is the time and effort necessary to draft and submit the request for reinstatement and to apply for reinstatement. While these requirements do impose burdens, we believe they are exempt from the PRA as defined in 5 CFR 1320.4; information collected during the conduct of a criminal investigation or civil action or during the conduct of an administrative action, investigation, or audit involving an agency against specific individuals or entities is not subject to the PRA. Denial of Request for Reinstatement (§ 402.306) Section 402.306(a) explains that if a request for reinstatement is denied, the initiating agency must notify the excluded person in writing. This section also states that within 30 days of the date of the notice of denial, the excluded person may submit to the initiating agency—documentary evidence and a written argument challenging the reinstatement denial; or a written request to present written evidence or oral argument to an official of the initiating agency. The burden associated with this requirement is the time and effort necessary for the excluded person to provide the aforementioned information. While this requirement imposes burden, we believe it is exempt from the PRA as defined in 5 CFR 1320.4; information collected during the conduct of a criminal investigation or civil action or during the conduct of an administrative action, investigation, or audit involving an agency against specific individuals or entities is not subject to the PRA. Waivers of Exclusions (§ 402.308) Section 402.308 discusses the process involved in obtaining a waiver of exclusions. Section 402.308(a) states that persons may request of CMS to present, on their behalf, a request to the Office of the Inspector General

(OIG)for a waiver of the exclusion. The request must be in writing and will only be considered if it meets the criteria listed in this section. If the individual or entity meet the criteria, the written request for a waiver of exclusion must provide, at a minimum, the information listed under § 402.308(b). The burden associated with this requirement is the time and effort necessary to prepare and submit to CMS the written document requesting a waiver of exclusion. While this requirement imposes burden, we believe it is exempt from the PRA as defined in 5 CFR 1320.4; information collected during the conduct of a criminal investigation or civil action or during the conduct of an administrative action, investigation, or audit involving an agency against specific individuals or entities is not subject to the PRA. V. Regulatory Impact Statement We have examined the impacts of this final rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act

(RFA)(September 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 in any 1 year). This rule does not reach the economic threshold and thus is not considered a major rule. Any impact that may occur would only affect those limited few persons that engage in prohibited behavior. We do not anticipate any savings or costs as a result of this final rule. The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small government jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year. Individuals and States are not included in the definition of a small entity. We are not preparing an analysis for the RFA because we have determined that this rule will not have a significant economic impact on a substantial number of small entities. We believe that any impact as a result of the final rule will be minimal, since the only persons affected would be those limited few who engage in prohibited conduct. Since the vast majority of program participants comply with statutory and regulatory requirements, any aggregate economic impact would not be significant. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined that this rule will not have a significant impact on the operations of a substantial number of small rural hospitals. Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold is currently approximately $120 million. This rule will have no consequential effect on State, local, or tribal governments, or by the private sector since the majority of program participants comply with statutory and regulatory requirements. Executive Order 13132 establishes certain requirements that an agency must meet when it publishes a final rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. 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, the Office of Management and Budget reviewed this regulation. List of Subjects in 42 CFR Part 402 Administrative practice and procedure, Medicaid, Medicare, Penalties. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV part 402 as set forth below: PART 402—CIVIL MONEY PENALTIES, ASSESSMENTS, AND EXCLUSIONS 1. The authority citation for part 402 continues to read as follows: Authority: Sections 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). Subpart A—General Provisions § 402.1 [Amended] 2. In § 402.3, add the definition of “initiating agency” in alphabetical order to read: § 402.3 Definitions. *Initiating agency* means whichever agency (CMS or the OIG) initiates the interaction with the person. Subpart B—Civil Money Penalties and Assessments 3. In § 402.105, redesignate paragraph (d)(1)(xix) as paragraph (d)(1)(ix). 4. In part 402, add a new subpart C to read as follows: Subpart C—Exclusions Sec. 402.200 Basis and purpose. 402.205 Length of exclusion. 402.208 Factors considered in determining whether to exclude, and the length of exclusion. 402.209 Scope and effect of exclusion. 402.210 Notices. 402.212 Response to notice of proposed determination to exclude. 402.214 Appeal of exclusion. 402.300 Request for reinstatement. 402.302 Basis for reinstatement. 402.304 Approval of request for reinstatement. 402.306 Denial of request for reinstatement. 402.308 Waivers of exclusions. Subpart C—Exclusions § 402.200 Basis and purpose.

(a)*Basis* . This subpart is based on the sections of the Act that are specified in § 402.1(e).

(b)*Purpose* . This subpart—

(1)Provides for the imposition of an exclusion from the Medicare and Medicaid programs (and, where applicable, other Federal health care programs) against persons that violate the provisions of the Act provided in § 402.1(e) (and further described in § 402.1(c)); and

(2)Sets forth the appeal rights of persons subject to exclusion and the procedures for reinstatement following exclusion. § 402.205 Length of exclusion. The length of exclusion from participation in Medicare, Medicaid, and, where applicable, other Federal health care programs, is contingent upon the specific violation of the Medicare statute. A full description of the specific violations identified in the sections of the Act are cross-referenced in the regulatory sections listed in the table in paragraph

(a)of this section.

(a)In no event will the period of exclusion exceed 5 years for violation of the following sections of the Act: Social Security Act paragraph Code of Federal Regulations section 1833(h)(5)(D) in repeated cases § 402.1(c)(1) 1833(q)(2)(B) in repeated cases § 402.1(c)(3) 1834(a)(11)(A) § 402.1(c)(4) 1834(a)(18)(B) § 402.1(c)(5) 1834(b)(5)(C) § 402.1(c)(6) 1834(c)(4)(C) § 402.1(c)(7) 1834(h)(3) § 402.1(c)(8) 1834(j)(4) § 402.1(c)(10) 1834(k)(6) § 402.1(c)(31) 1834(l)(6) § 402.1(c)(32) 1842(b)(18)(B) § 402.1(c)(11) 1842(k) § 402.1(c)(12) 1842(l)(3) § 402.1(c)(13) 1842(m)(3) § 402.1(c)(14) 1842(n)(3) § 402.1(c)(15) 1842(p)(3)(B) in repeated cases § 402.1(c)(16) 1848(g)(1)(B) in repeated cases § 402.1(c)(17) 1848(g)(3)(B) § 402.1(c)(18) 1848(g)(4)(B)(ii) in repeated cases § 402.1(c)(19) 1879(h) § 402.1(c)(23)

(b)For violation of the following sections, there is no maximum time limit for the period of exclusion. Social Security Act paragraph Code of Federal Regulations section 1834(a)(17)(c) for a pattern of contacts § 402.1(e)(2)(i) 1834(h)(3) for a pattern of contacts § 402.1(e)(2)(ii) 1877(g)(5) § 402.1(c)(22) 1882(a)(2) § 402.1(c)(24) 1882(p)(8) § 402.1(c)(25) 1882(p)(9)(C) § 402.1(c)(26) 1882(q)(5)(C) § 402.1(c)(27) 1882(r)(6)(A) § 402.1(c)(28) 1882(s)(4) § 402.1(c)(29) 1882(t)(2) § 402.1(c)(30)

(c)For a person excluded under any of the grounds specified in paragraph

(a)of this section, notwithstanding any other requirements in this section, reinstatement occurs—

(1)At the expiration of the period of exclusion, if the exclusion was imposed for a period of 5 years; or

(2)At the expiration of 5 years from the effective date of the exclusion, if the exclusion was imposed for a period of less than 5 years and the initiating agency did not receive the appropriate written request for reinstatement as specified in § 402.300. § 402.208 Factors considered in determining whether to exclude, and the length of exclusion.

(a)*General factors.* In determining whether to exclude a person and the length of exclusion, the initiating agency considers the following:

(1)The nature of the claims and the circumstances under which they were presented.

(2)The degree of culpability, the history of prior offenses, and the financial condition of the person presenting the claims.

(3)The total number of acts in which the violation occurred.

(4)The dollar amount at issue (Medicare Trust Fund dollars or beneficiary out-of-pocket expenses).

(5)The prior history of the person insofar as its willingness or refusal to comply with requests to correct said violations.

(6)Any other facts bearing on the nature and seriousness of the person's misconduct.

(7)Any other matters that justice may require.

(b)*Criteria to be considered.* As a guideline for taking into account the general factors listed in paragraph

(a)of this section, the initiating agency may consider any one or more of the circumstances listed in paragraphs (b)(1) and (b)(2) of this section, as applicable. The respondent, in his or her written response to the notice of intent to exclude (that is, the proposed exclusion), may provide information concerning potential mitigating circumstances.

(1)*Aggravating circumstances.* An aggravating circumstance may be any of the following:

(i)The services or incidents were of several types and occurred over an extended period of time.

(ii)There were numerous services or incidents, or the nature and circumstances indicate a pattern of claims or requests for payment or a pattern of incidents, or whether a specific segment of the population was targeted.

(iii)Whether the person was held liable for criminal, civil, or administrative sanctions in connection with a program covered by this part or any other public or private program of payment for health care items or services at any time before the incident or whether the person presented any claim or made any request for payment that included an item or service subject to a determination under § 402.1.

(iv)There is proof that the person engaged in wrongful conduct, other than the specific conduct upon which liability is based, relating to government programs and in connection with the delivery of a health care item or service. The statute of limitations governing civil money penalty proceedings at section 1128A(c)(1) of the Act does not apply to proof of other wrongful conducts as an aggravating circumstance.

(v)The wrongful conduct had an adverse impact on the financial integrity of the Medicare program or its beneficiaries.

(vi)The person was the subject of an adverse action by any other Federal, State, or local government agency or board, and the adverse action is based on the same set of circumstances that serves as a basis for the imposition of the exclusion.

(vii)The noncompliance resulted in a financial loss to the Medicare program of at least $5,000.

(viii)The number of instances for which full, accurate, and complete disclosure was not made as required, or provided as requested, and the significance of the undisclosed information.

(2)*Mitigating circumstances.* A mitigating circumstance may be any of the following:

(i)All incidents of noncompliance were few in nature and of the same type, occurred within a short period of time, and the total amount claimed or requested for the items or services provided was less than $1,500.

(ii)The claim(s) or request(s) for payment for the item(s) or service(s) provided by the person were the result of an unintentional and unrecognized error in the person's process for presenting claims or requesting payment, and the person took corrective steps promptly after the error was discovered.

(iii)Previous cooperation with a law enforcement or regulatory entity resulted in convictions, exclusions, investigations, reports for weaknesses, or civil money penalties against other persons.

(iv)Alternative sources of the type of health care items or services furnished by the person are not available to the Medicare population in the person's immediate area.

(v)The person took corrective action promptly upon learning of the noncompliance from the person's employee or contractor, or by the Medicare contractor.

(vi)The person had a documented mental, emotional, or physical condition before or during the commission of the noncompliant act(s) and that condition reduces the person's culpability for the acts in question.

(vii)The completeness and timeliness of refunding to the Medicare Trust Fund or Medicare beneficiaries any inappropriate payments.

(viii)The degree of culpability of the person in failing to provide timely and complete refunds.

(3)*Other matters as justice may require.* Other circumstances of an aggravating or mitigating nature are taken into account if, in the interest of justice, those circumstances require either a reduction or increase in the sanction to ensure achievement for the purposes of this subpart.

(4)*Initiating agency authority.* Nothing in this section limits the authority of the initiating agency to settle any issue or case as provided by § 402.17, or to compromise any penalty and assessment as provided by § 402.115. § 402.209 Scope and effect of exclusion.

(a)*Scope of exclusion.* Under this title, persons may be excluded from the Medicare, Medicaid, and, where applicable, any other Federal health care programs.

(b)*Effect of exclusion on a person(s).*

(1)Unless and until an excluded person is reinstated into the Medicare program, no payment is made by Medicare, Medicaid, and, where applicable, any other Federal health care programs for any item or service furnished by the excluded person or at the direction or request of the excluded person when the person furnishing the item or service knew or had reason to know of the exclusion, on or after the effective date of the exclusion as specified in the notice of exclusion.

(2)An excluded person may not take assignment of a Medicare beneficiary's claim on or after the effective date of the exclusion.

(3)An excluded person that submits, or causes to be submitted, claims for items or services furnished during the exclusion period is subject to civil money penalty liability under section 1128A(a)(1)(D) of the Act, and criminal liability under section 1128B(a)(3) of the Act. In addition, submission of claims, or the causing of claims to be submitted for items or services furnished, ordered, or prescribed, by an excluded person may serve as the basis for denying reinstatement to the Medicare program.

(c)*Exceptions.*

(1)If a Medicare beneficiary or other person (including a supplier) submits an otherwise payable claim for items or services furnished by an excluded person, or under the medical direction or on the request of an excluded person after the effective date of the exclusion, CMS pays the first claim submitted by the beneficiary or other person and immediately notifies the claimant of the exclusion. CMS does not pay a beneficiary or other person (including a supplier) for items or services furnished by, or under, the medical direction of an excluded person more than 15 days after the date on the notice to the beneficiary or other person (including a supplier), or after the effective date of the exclusion, whichever is later.

(2)Notwithstanding the other provisions of this section, payment may be made for certain emergency items or services furnished by an excluded person, or under the medical direction or on the request of an excluded person during the period of exclusion. To be payable, a claim for the emergency items or services must be accompanied by a sworn statement of the person furnishing the items or services, specifying the nature of the emergency and the reason that the items or services were not furnished by a person eligible to furnish or order the items or services. No claim for emergency items or services is payable if those items or services were provided by an excluded person that, through employment, contractual, or under any other arrangement, routinely provides emergency health care items or services. § 402.210 Notices.

(a)*Notice of proposed determination to exclude.* When the initiating agency proposes to exclude a person from participation in a Federal health care program in accordance with this part, notice of the proposed determination to exclude must be given in writing, and delivered or sent by certified mail, return receipt requested. The written notice must include, at a minimum—

(1)Reference to the statutory basis for the exclusion.

(2)A description of the claims, requests for payment, or incidents for which the exclusion is proposed.

(3)The reason why those claims, requests for payments, or incidents subject the person to an exclusion.

(4)The length of the proposed exclusion.

(5)A description of the circumstances that were considered when determining the period of exclusion.

(6)Instructions for responding to the notice, including a specific statement of the person's right to submit documentary evidence and a written response concerning whether the exclusion is warranted, and any related issues such as potential mitigating circumstances. The notice must specify that—

(i)The person has the right to request an opportunity to meet with an official of the initiating agency to make an oral presentation; and

(ii)The request to make an oral presentation must be submitted within 30 days of the receipt of the notice of intent to exclude.

(7)If a person fails, within the time permitted under § 402.212, to exercise the right to respond to the notice of proposed determination to exclude, the initiating agency may initiate actions for the imposition of the exclusion.

(b)*Notice of exclusion.* Once the initiating agency determines that the exclusion is warranted, a written notice of exclusion is sent to the person in the same manner as described in paragraph

(a)of this section. The exclusion is effective 20 days from the date of the notice. The written notice must include, at a minimum, the following:

(1)The basis for the exclusion.

(2)The length of the exclusion and, when applicable, the factors considered in setting the length.

(3)The effect of exclusion.

(4)The earliest date on which the initiating agency considers a request for reinstatement.

(5)The requirements and procedures for reinstatement.

(6)The appeal rights available to the excluded person under part 1005 of this title.

(c)*Amendment to the notice of exclusion.* No later than 15 days before the final exhibit exchanges required under § 1005.8 of this title, the initiating agency may amend the notice of exclusion if information becomes available that justifies the imposition of a period of exclusion other than the one proposed in the original written notice. § 402.212 Response to notice of proposed determination to exclude.

(a)A person that receives a notice of intent to exclude (that is, the proposed determination) as described in § 402.210, may present to the initiating agency a written response stating whether the proposed exclusion is warranted, and may present additional supportive documentation. The person must submit this response within 60 days of the receipt of notice. The initiating agency reviews the materials presented and initiates a response to the person regarding the argument presented, and any changes to the determination, if appropriate.

(b)The person is also afforded an opportunity to make an oral presentation to the initiating agency concerning whether the proposed exclusion is warranted and any related matters. The person must submit this request within 30 days of the receipt of notice. Within 15 days of receipt of the person's request, the initiating agency initiates communication with the person to establish a mutually agreed upon time and place for the oral presentation and discussion. § 402.214 Appeal of exclusion.

(a)The procedures in part 1005 of this title apply to all appeals of exclusions. References to the Inspector General in that part apply to the initiating agency.

(b)A person excluded under this subpart may file a request for a hearing before an administrative law judge

(ALJ)only on the issues of whether—

(1)The basis for the imposition of the exclusion exists; and

(2)The duration of the exclusion is unreasonable.

(c)When the initiating agency imposes an exclusion for a period of 1 year or less, paragraph (b)(2) of this section does not apply.

(d)The excluded person must file a request for a hearing within 60 days from the receipt of notice of exclusion. The effective date of an exclusion is not delayed beyond the date stated in the notice of exclusion simply because a request for a hearing is timely filed (see paragraph

(g)of this section).

(e)A timely filed written request for a hearing must include—

(1)A statement as to the specific issues or findings of fact and conclusions of law in the notice of exclusion with which the person disagrees.

(2)Basis for the disagreement.

(3)The general basis for the defenses that the person intends to assert.

(4)Reasons why the proposed length of exclusion should be modified.

(5)Reasons, if applicable, why the health or safety of Medicare beneficiaries receiving items or services does not warrant the exclusion going into or remaining in effect before the completion of an ALJ proceeding in accordance with part 1005 of this title.

(f)If the excluded person does not file a written request for a hearing as provided in paragraph

(d)of this section, the initiating agency notifies the excluded person, by certified mail, return receipt requested, that the exclusion goes into effect or continues in accordance with the notice of exclusion. The excluded person has no right to appeal the exclusion other than as described in this section.

(g)If the excluded person files a written request for a hearing, and asserts in the request that the health or safety of Medicare beneficiaries does not warrant the exclusion going into or remaining in effect before completion of an ALJ hearing, then the initiating agency may make a determination as to whether the exclusion goes into effect or continues pending the outcome of the ALJ hearing. § 402.300 Request for reinstatement.

(a)An excluded person may submit a written request for reinstatement to the initiating agency no sooner than 120 days prior to the terminal date of exclusion as specified in the notice of exclusion. The written request for reinstatement must include documentation demonstrating that the person has met the standards set forth in § 402.302. Obtaining or reactivating a Medicare provider number (or equivalent) does not constitute reinstatement.

(b)Upon receipt of a written request for reinstatement, the initiating agency may require the person to furnish additional, specific information, and authorization to obtain information from private health insurers, peer review organizations, and others as necessary to determine whether reinstatement is granted.

(c)Failure to submit a written request for reinstatement or to furnish the required information or authorization results in the continuation of the exclusion, unless the exclusion has been in effect for 5 years. In this case, reinstatement is automatic.

(d)If a period of exclusion is reduced on appeal (regardless of whether further appeal is pending), the excluded person may request and apply for reinstatement within 120 days of the expiration of the reduced exclusion period. A written request for the reinstatement includes the same standards as noted in paragraph

(b)of this section. § 402.302 Basis for reinstatement.

(a)The initiating agency authorizes reinstatement if it determines that—

(1)The period of exclusion has expired;

(2)There are reasonable assurances that the types of actions that formed the basis for the original exclusion did not recur and will not recur; and

(3)There is no additional basis under title XVIII of the Act that justifies the continuation of the exclusion.

(b)The initiating agency does not authorize reinstatement if it determines that submitting claims or causing claims to be submitted or payments to be made by the Medicare program for items or services furnished, ordered, or prescribed, may serve as a basis for denying reinstatement. This section applies regardless of whether the excluded person has obtained a Medicare provider number (or equivalent), either as an individual or as a member of a group, before being reinstated.

(c)In making a determination regarding reinstatement, the initiating agency considers the following:

(1)Conduct of the excluded person occurring before the date of the notice of the exclusion, if that conduct was not known to the initiating agency at the time of the exclusion;

(2)Conduct of the excluded person after the date of the exclusion;

(3)Whether all fines and all debts due and owing (including overpayments) to any Federal, State, or local government that relate to Medicare, Medicaid, or, where applicable, any Federal, State, or local health care program are paid in full, or satisfactory arrangements are made to fulfill these obligations;

(4)Whether the excluded person complies with, or has made satisfactory arrangements to fulfill, all of the applicable conditions of participation or conditions of coverage under the Medicare statutes and regulations; and

(5)Whether the excluded person has, during the period of exclusion, submitted claims, or caused claims to be submitted or payment to be made by Medicare, Medicaid, and, where applicable, any other Federal health care program, for items or services furnished, ordered, or prescribed, and the conditions under which these actions occurred.

(d)Reinstatement is not effective until the initiating agency grants the request and provides notices under § 402.304. Reinstatement is effective as provided in the notice.

(e)A determination for a denial of reinstatement is not appealable or reviewable except as provided in § 402.306.

(f)An ALJ may not require reinstatement of an excluded person in accordance with this chapter. § 402.304 Approval of request for reinstatement.

(a)If the initiating agency grants a request for reinstatement, the initiating agency—

(1)Gives written notice to the excluded person specifying the date of reinstatement; and

(2)Notifies appropriate Federal and State agencies, and, to the extent possible, all others that were originally notified of the exclusion, that the person is reinstated into the Medicare program.

(b)A determination by the initiating agency to reinstate an excluded person has no effect if Medicare, Medicaid, or, where applicable, any other Federal health care program has imposed a longer period of exclusion under its own authorities. § 402.306 Denial of request for reinstatement.

(a)If a request for reinstatement is denied, the initiating agency provides written notice to the excluded person. Within 30 days of the date of this notice, the excluded person may submit to the initiating agency:

(1)Documentary evidence and a written argument challenging the reinstatement denial; or

(2)A written request to present written evidence or oral argument to an official of the initiating agency.

(b)If a written request as described in paragraph (a)(2) of this section is received timely by the initiating agency, the initiating agency, within 15 days of receipt of the excluded person's request, initiates communication with the excluded person to establish a time and place for the requested meeting.

(c)After evaluating any additional evidence submitted by the excluded person (or at the end of the 30-day period described in paragraph

(a)of this section, if no documentary evidence or written request is submitted), the initiating agency sends written notice to the excluded person either confirming the denial, or approving the reinstatement in the manner set forth in § 402.304. If the initiating agency elects to uphold its denial decision, the written notice also indicates that a subsequent request for reinstatement will not be considered until at least 1 year after the date of the written denial notice.

(d)The decision to deny reinstatement is not subject to administrative review. § 402.308 Waivers of exclusions.

(a)*Basis.* Section 1128(c)(3)(B) of the Act specifies that in the case of an exclusion from participation in the Medicare program based upon section 1128(a)(1), (a)(3), or (a)(4) of the Act, the individual may request that CMS present, on his or her behalf, a request to the OIG for a waiver of the exclusion.

(b)*Definitions.* For purposes of this section: *Excluded person* has the same meaning as a “person” as defined in § 402.3 who meets for the purposes of this subpart, the definition of the term “exclusion” in § 402.3. *Hardship* for purposes of this section means something that negatively affects Medicare beneficiaries and results from the imposition of an exclusion because the excluded person is the sole community physician or sole source of essential specialized services in the Medicare community. *Sole community physician* has the same meaning as that term is defined § 1001.2 of this title. *Sole source of essential specialized services in the community* has the same meaning as that term defined by the § 1001.2 of this title.

(c)*General rule.* If CMS determines that a hardship as defined in paragraph (b)(2) of this section results from exclusion of an affected person from the Medicare program, CMS may consider and may make a request to the Inspector General for waiver of the Medicare exclusion.

(d)*Submission and content of a waiver of exclusion request.* An excluded person must submit a request for waiver of exclusion in writing to CMS that includes the following:

(1)A copy of the exclusion notice from the OIG.

(2)A statement requesting that CMS present a waiver of exclusion request to the OIG on his or her behalf.

(3)A statement that he or she is the sole community physician or sole source of essential specialized services in the community.

(4)Documentation to support the statement in paragraph (d)(3) of this section.

(e)*Processing of waiver of exclusion requests.* CMS processes a request for a waiver of exclusion as follows:

(1)Notifies the submitter that the waiver of exclusion request has been received.

(2)Reviews and validates all submitted documents.

(3)During its analysis, CMS may require additional, specific information, and authorization to obtain information from private health insurers, peer review organizations (including, but not limited to, Quality Improvement Organizations), and others as necessary to determine validity.

(4)Makes a determination regarding whether or not to submit the waiver of exclusion request to the OIG based on review and validation of the submitted documents.

(5)If CMS elects to submit the waiver of exclusion request to the OIG, CMS copies the excluded person on the request.

(6)If CMS denies the request, then CMS notifies the excluded person of the decision and specifies the reason(s) for the decision.

(f)*Administrative or judicial review.* A determination rendered under paragraph (e)(4) of this section is not subject to administrative or judicial review. (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program) Dated: December 14, 2006. Leslie V. Norwalk, Acting Administrator, Centers for Medicare & Medicaid Services. Approved: March 26 2007. Michael O. Leavitt, Secretary. Editorial Note: This document was received at the Office of the Federal Register on July 9, 2007. [FR Doc. E7-13535 Filed 7-19-07; 8:45 am] BILLING CODE 4120-01-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 0 and 90 [WT Docket No. 02-55, ET Docket No. 00-258; ET Docket No. 95-18; RM-9498; RM-10024—FCC 07-102] Improving Public Safety Communications in the 800 MHz Band, et al. AGENCY: Federal Communications Commission. ACTION: Final rule, clarification. SUMMARY: In the Second Memorandum Opinion and Order, the Commission affirms and clarifies various rules governing the 800 MHz band reconfiguration process designed to improve public safety communications. The Second Memorandum Opinion and Order addresses various petitions for reconsideration and clarification asking the Commission to revisit certain decisions in the 800 MHz band reconfiguration proceeding. DATES: Effective August 20, 2007. FOR FURTHER INFORMATION CONTACT: John Evanoff, Public Safety and Homeland Security Bureau,

(202)418-0848, or via the Internet at *John.Evanoff@fcc.gov.* SUPPLEMENTARY INFORMATION: This document summarizes the Second Memorandum Opinion and Order in WT Docket No. 02-55, adopted on May 24, 2007, and released on May 30, 2007. The full text of this document is available for public inspection on the Commission's Internet site at *http://www.fcc.gov.* It is also available for inspection and copying during regular business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW., Washington, DC 20554. The full text of this document also may be purchased from the Commission's duplication contractor, Best Copy and Printing Inc., Portals II, 445 12th St., SW., Room CY-B402, Washington, DC 20554; telephone

(202)488-5300; fax

(202)488-5563; e-mail *FCC@BCPIWEB.COM.* Background 1. In the 800 MHz Report and Order, 69 FR 67823, November 22, 2004, the Commission adopted technical and procedural measures to address the ongoing and growing problem of interference to public safety communications in the 800 MHz band. Specifically, the Commission addressed the ongoing interference problem over the short-term by adopting technical standards defining unacceptable interference in the 800 MHz band and detailing responsibility for interference abatement. The Commission further determined that solving the interference problem for the long-term necessitated reconfiguring the 800 MHz band to separate generally incompatible technologies whose current proximity to each other is the identified root cause of unacceptable interference. Accordingly, the Commission adopted a new band plan for the 800 MHz band and established a transition mechanism for licensees in the band to relocate to their new spectrum assignments. The Commission subsequently issued a Supplemental Order and Order on Reconsideration, 70 FR 6758, February 8, 2005, making certain clarifications of, and changes to, the provisions of the 800 MHz Report and Order and its accompanying interference mitigation and band reconfiguration rules. In October 2005, the Commission released a Memorandum Opinion and Order (800 MHz MO&O), 70 FR 76704, December 28, 2005, making certain further changes and clarifications to the 800 MHz interference mitigation and band reconfiguration rules. In this Order, we address various petitions for reconsideration and clarification of the Commission's 800 MHz MO&O, previously unaddressed portions of a petition for reconsideration of the 800 MHz Report and Order and a petition for partial waiver of the rebanding rules, as well as several petitions dealing with clearing of the 1.9 GHz Broadcast Auxiliary Services

(BAS)band, including a joint petition for declaratory ruling and several petitions for clarification or reconsideration. Discussion 2. The Second Memorandum Opinion and Order affirms the eligibility criteria for relocating licensees to the enhanced specialized mobile radio

(ESMR)band. In addition to affirming the eligibility criteria for relocation to the ESMR band, the order released today also clarifies the costs that Sprint Nextel Corp. (Sprint) must pay to relocate non-ESMR licensees relocating to the ESMR band. 3. The Commission also denied petitions seeking to require Sprint Nextel to pay licensees' post-mediation litigation costs. The order also clarifies procedures that are to be used if there is a shortfall of spectrum in the ESMR band and outlines steps for a revised band plan and timetable for the Puerto Rico market. It also addresses rebanding for Guam, the Northern Mariana Islands, American Samoa, and the Gulf of Mexico and clarifies the 800 MHz application freeze's impact on modification applications. The order also defines limits on Sprint Nextel operations that are near public safety channels before the transition is completed. The order also denied a petition filed by Mobile Relay Associates seeking a partial waiver of the rebanding rules to allow it to relocate to the ESMR band. The order also denies a petition filed by Charles Guskey as repetitive and untimely. 4. The order also partially grants petitions asking the FCC to require Sprint Nextel to relocate broadcast auxiliary service

(BAS)facilities associated to translator TV stations or operated by full-power TV stations on a short-term basis. The Commission said it will permit, but not require, the carrier to pay and claim credit for such costs. The order also delegates to the Public Safety and Homeland Security Bureau the authority to adopt rules for the Canadian and Mexican border regions once spectrum-sharing agreements between the U.S. and those countries are finalized. Final Regulatory Flexibility Certification 5. The Regulatory Flexibility Act of 1980, as amended (RFA), requires that a regulatory flexibility analysis be prepared for notice-and-comment rule making proceedings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which:

(1)Is independently owned and operated;

(2)is not dominant in its field of operation; and

(3)satisfies any additional criteria established by the Small Business Administration (SBA). In sum, we certify that the rule changes and actions in this Second Memorandum Opinion and Order will not have a significant economic impact on a substantial number of small entities. 6. *ESMR Band Eligibility.* In this proceeding the Commission divided the 800 MHz band into a cellular portion (ESMR band) and non-cellular portion to create spectral separation between incompatible technologies. Section 90.614 provides that the cellular portion would be reserved for licensees that operate cellular high density systems. Several parties sought reconsideration of the eligibility and operating requirements applicable to the cellular band arguing that these requirements are overly restrictive. In the 800 MHz Memorandum Opinion and Order, we clarified eligibility of licensees to relocate to the ESMR band to include low-density cellular operations and deferred consideration of a petition for reconsideration filed by Richard M. Duncan seeking to permit site-based Specialized Mobile Radio

(SMR)licensees to relocate to the ESMR band. Sprint Nextel Corporation sought reconsideration of the provisions of the 800 MHz MO&O that clarified and expanded the rights of certain licensees other than Sprint and SouthernLINC to relocate to the ESMR band. After careful analysis, we find no reason to upset the Commission's balancing of interests that led to the revised eligibility criteria for the ESMR band contained in the 800 MHz MO&O. Those criteria are designed to eliminate potential interference between incompatible technologies and to provide ESMR licensees flexibility in managing their systems. Here, we affirm the eligibility criteria established in the 800 MHz MO&O for relocation to the ESMR band and are taking no action with respect to any entity. Therefore, we certify that our decision to deny the Sprint and Duncan petitions will not have a significant economic impact on a substantial number of small entities. 7. *ESMR Band Plan.* In some Southeastern markets where both Southern LINC and Sprint offer ESMR service, insufficient spectrum exists in the 816-824/861-869 MHz band segment to accommodate existing ESMR systems. To accommodate Sprint and SouthernLINC, the Commission created an expanded ESMR band in the Southeast. Sprint sought clarification that the 800 MHz Report and Order “adopted two remedies in the event there is insufficient spectrum in the ESMR segment to accommodate all eligible licensees in a market:

(1)Expanding the ESMR segment and, in the event a channel shortfall remained

(2)distributing the available channels on a pro rata basis among licensees.” Although we agree with Sprint that the Commission has the discretion to apportion ESMR spectrum, we find no support for Sprint's contention that licensees themselves have similar discretion. We also clarify that under limited circumstances, the Commission may apportion the ESMR band pro rata to licensees eligible to operate there. Because our decision merely clarifies pre-existing rules applicable to the ESMR Band, we have adopted no new rule and have taken no other action that affects any entity. Therefore, we certify that our decision will not have a significant economic impact on a substantial number of small entities. 8. *Puerto Rico.* The Puerto Rico market presents a unique situation that is distinct from other markets. Sprint holds considerably less spectrum in Puerto Rico than it does elsewhere, and there are several other licensees who have acquired significant EA license holdings in Puerto Rico at auction and seek to operate as ESMRs. In addition, Puerto Rico has numerous site-based incumbents that will need to be relocated to the non-ESMR block. Thus, an alternative band plan is appropriate here. Accordingly we provide the 800 MHz Transition Administrator

(TA)with specific criteria and direct the TA to propose an alternative band plan within 60 days of the release of this order, including, if necessary, a pro rata distribution of ESMR spectrum. At this time, we have no basis for anticipating that any future decision by the TA in either proposing an alternative band plan or proposing a pro rata distribution would adversely affect any small entities. Accordingly, at this time, we certify that our decision will not have a significant economic impact on a substantial number of small entities. 9. Furthermore, to the extent that any action taken in the future might impose an adverse economic impact in Puerto Rico, that impact will be borne by Sprint because Sprint must pay the costs of 800 MHz band reconfiguration. Under Small Business Administration criteria, Sprint is a large entity. Further, there is no evidence in the record that non-Sprint licensees in the Puerto Rico market, including small wireless cellular, public safety, governmental entities or other wireless entities, would suffer adverse economic consequences. 10. *Guam, the Northern Mariana Islands, American Samoa, and the Gulf of Mexico.* Sprint asks that we reconsider the Commission's decision in the 800 MHz MO&O to require band reconfiguration in areas that have no associated NPSPAC region. These areas include American Samoa, Guam, the Northern Mariana Islands, and the Gulf of Mexico. Because there are no public safety entities in the Gulf of Mexico and Sprint does not hold spectrum rights in the Gulf of Mexico, we see no risk in the Gulf of the type of interference to public safety systems that would require rebanding. However, we deny Sprint's request as it relates to Guam, the Northern Mariana Islands, and American Samoa. We believe that funding band reconfiguration in these markets does not pose an inequitable burden on Sprint. We take this position because Sprint alone will bear the cost of band reconfiguration in Guam, the Northern Mariana Islands, and American Samoa. Therefore, we certify that this action will not have a significant economic impact on a substantial number of small entities. 11. *Application Freeze.* In the 800 MHz Report and Order, the Commission imposed a freeze on the acceptance of 800 MHz applications in order to maintain a stable spectral landscape during the band relocation process. The Commission stated, however, that de minimis modifications to a currently authorized system are not subject to the application freeze so long as the modifications are necessary to effectuate band reconfiguration. Sprint requests that we broaden this exception to the freeze to “permit certain license modifications * * * provided they do not materially diminish public safety's spectral or operational expectancies.” While Sprint fails to define “spectral or operational expectancies” we agree that some flexibility may be appropriate. In this connection, we clarify that licensees may seek a waiver of the application freeze. Because grant of such a waiver would provide benefits to public safety service providers and to the public through improved public safety communications, we believe that only benefits will result. Therefore, we certify that this action will not have a significant economic impact on a substantial number of small entities. 12. *Post-litigation costs.* Under the 800 MHz Report and Order, Sprint is required to pay the costs of mediation to resolve disputes associated with a frequency reconfiguration agreement. The Wireless Telecommunications Bureau issued a public notice that stated: “Licensees that enter mediation with Sprint Nextel are entitled to reimbursement of ‘reasonable, prudent and necessary costs and expenses' associated with reaching a mediated frequency reconfiguration agreement. However, licensees who fail to reach a mediated agreement must bear their own costs associated [with] all further administrative or judicial appeals of band reconfiguration issues, including de novo review * * * and appeal of any such review before an A[dministrative] L[aw] J[udge].” Some parties have filed petitions for reconsideration suggesting that the Commission require Sprint to pay opposing parties' litigation costs when they seek *de novo* review before the Commission of issues that have not been resolved by negotiation or TA-sponsored mediation. We deny those petitions. Under the Commission's orders in this proceeding, Sprint must pay all licensees' reasonable costs of negotiation and TA-sponsored mediation, regardless of outcome. This ensures that licensees can take full advantage of these mechanisms at no cost to themselves, while at the same time encouraging resolution of issues by negotiated agreement and mediation rather than litigation. However, requiring Sprint to pay its opponents' litigation costs before the Commission and beyond would increase the likelihood of litigation and add cost and delay to the rebanding process. Moreover, the Commission lacks statutory authority to award such costs in cases that come before it. While parties that pursue administrative or judicial appeals may incur some cost, such cost would be undertaken voluntarily. Further, there is no evidence in the record that a substantial number of parties will pursue such legal challenges. Therefore, we certify that this action will not have a significant economic impact on a substantial number of small entities. 13. *NPSPAC Band Operational Restrictions.* The Tri-State Radio Planning Committee, FCC Region 8 (Region 8) asks us to impose operational restrictions on Sprint in two distinct situations:

(1)When a NPSPAC licensee has moved one or more of its channels to the new NPSPAC frequencies and Sprint has not yet completely vacated the former General Category channels and

(2)when Sprint wishes to commence operations in the ESMR band, but has not fully cleared the ESMR band of NPSPAC incumbents. Region 8 is concerned that these situations, though temporary, could create the risk of harmful interference through the interleaving of incompatible technologies that was the genesis of this proceeding. To address this risk, Region 8 requests that:

(a)We require Sprint to cease current operation on any channel 1-120 frequency within 25 kHz of relocated NPSPAC stations within 88 kilometers (km), and

(b)Sprint not be allowed to begin operations on any former NPSPAC channel within 88 kilometers of the site of any current NPSPAC station which has not been relocated to the new NPSPAC frequencies. Region 8 asks that we maintain these limitations in place until the entire NPSPAC band has been relocated and all relocated licensees have finalized the relocation process. Given that NPSPAC communications primarily involve the safety of life and property and because interference with these communications could have tragic results, we agree with Region 8's concerns. Because these operational restrictions apply only to Sprint, a large entity, we certify that this action will not have a significant economic impact on a substantial number of small entities. 14. *Charles Guskey Petition.* Charles Guskey, a principal of Preferred Communications, contends that the 800 MHz MO&O failed to adequately address his prior petition for reconsideration of the 800 MHz Supplemental Order. Guskey contends that:

(1)The Commission undervalued the 1.9 GHz spectrum by at least a billion dollars, giving Nextel a windfall;

(2)Preferred be allowed to relocate its General Category EA channels (encumbered or not) to clean spectrum in the ESMR band; and

(3)Puerto Rico needs to be treated as a unique market, and Preferred awarded the 1.9 GHz spectrum in Puerto Rico in exchange for relocating public safety systems in that market. Because we dismiss the Petition as repetitive and untimely, we certify that this action will not have a significant economic impact on a substantial number of small entities. 15. *Broadcast Auxiliary Service Facilities.* We partially grant petitions to require Sprint to relocate BAS facilities associated with translator television stations or operated by full-power television stations on a short-term basis by permitting, but not requiring, Sprint to pay and claim credit for the costs incurred in relocating these BAS facilities. Some parties have filed petitions for reconsideration and clarification urging the Commission to require Sprint to relocate secondary BAS translator facilities. We instead permit, but not require, Sprint to relocate such facilities and to receive credit for such relocations at the “true-up,” consistent with Commission precedent regarding other secondary BAS stations. Because secondary BAS operations can be displaced at any time by primary operations, under well-established Commission policy the licensees of such facilities are not eligible for mandatory relocation reimbursement. Further, our narrow decision to permit Sprint to pay for relocation of secondary BAS facilities associated with translator and LPTV stations and short-term BAS facilities operating under section 74.24 is limited to the facts present here and may not be construed in other contexts as a revision of Commission rules and policies affecting stations operating pursuant to secondary authorizations. Also, allowing Sprint to pay for relocation of these secondary BAS facilities does not in any way alter Mobile Satellite Service licensees' obligations concerning the relocation of BAS incumbents with primary authorizations. Therefore, because our decision to permit such relocation affects only Sprint, a large entity, we certify that our decision to provide Sprint flexibility in managing BAS relocation will not have a significant economic impact on a substantial number of small entities. 16. *Southeast Band Plan.* In the 800 MHz MO&O, the Commission updated Sections 90.617(a),

(b)and

(d)to reflect the distribution of channels between the various categories in the SouthernLINC/Sprint markets located in the Southeastern part of the United States. Specifically, the Commission modified the band plan for the SouthernLINC/Sprint markets to reflect a reduced Expansion Band of one-half megahertz for those locations within a seventy mile radius of Atlanta, Georgia. As a result of this change, there are now two different band plans for the SouthernLINC/Sprint markets—one band plan for locations outside the seventy mile radius and one band plan for locations within a seventy mile radius of Atlanta, Georgia. The Commission inadvertently omitted this rule change. In this Second Memorandum Opinion and Order, the Commission on its own motion revises Section 90.617(g) and

(h)to add a reference to vacated spectrum in the Atlanta market. This rule change is necessary to identify the particular spectrum that will be available for public safety and critical infrastructure industry use within a 70-mile radius of Atlanta and the spectrum that will be available outside that radius. We also remove all language from Section 90.617 which indicates that the agreement between SouthernLINC and Sprint still needs to be approved by the Wireless Telecommunications Bureau. Responsibility over the 800 MHz band reconfiguration proceeding has been delegated to the Public Safety and Homeland Security Bureau. Because these rule changes are procedural in nature and are intended to correct an inadvertent omission and reflect organizational changes, we certify that these changes will not have a significant economic impact on a substantial number of small entities. 17. *Band Plan.* On our own motion, we modify section 90.203(i)—pertaining to equipment certification—to reflect the location of the NPSPAC band after band reconfiguration. We also correct the base frequency for one of the frequencies listed in the table in section 90.613. The Commission inadvertently failed to update these sections in the 800 MHz Report and Order. Therefore, we correct these inadvertent omissions and certify that these changes will not have a significant economic impact on a substantial number of small entities. 18. *Border Area.* Finally, on our own motion, we address implementation of 800 MHz band plan rules for the Canadian and Mexican border regions. We delegate specific authority to the Public Safety and Homeland Security Bureau to propose and adopt new 800 MHz band plan rules for U.S. primary spectrum in the Canadian and Mexican border regions once the relevant agreements with Canada and Mexico are finalized. This is similar to authority that has been previously delegated to the Wireless Telecommunications Bureau. We amend therefore Section 0.392(e) of our rules to provide the Chief of the Public Safety and Homeland Security Bureau with the same delegated authority. Thus this rule change is purely procedural in nature and therefore we certify that these changes will not have a significant economic impact on a substantial number of small entities. Therefore, we certify that the requirements of the Second Memorandum Opinion and Order will not have a significant economic impact on a substantial number of small entities. Paperwork Reduction Act Analysis 19. This document does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Report to Congress 20. The Commission will send a copy of this Report and Order, Second Memorandum Opinion and Order in a report to be sent to Congress and the General Accounting Office pursuant to the Congressional Review Act. In addition, the Second Memorandum Opinion and Order and this final certification will be sent to the Chief Counsel for Advocacy of the Small Business Administration. Report to Small Business Administration 21. The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this Second Memorandum Opinion and Order including the Regulatory Flexibility Certification and to the Chief Counsel for Advocacy of the Small Business Administration. Ordering Clauses 22. Accordingly, *It is ordered* that, pursuant to Sections 4(i), 303(f), 332, 337 and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(f), 332, 337 and 405, this Second Memorandum Opinion and Order is hereby adopted. 23. *It is further ordered* that, pursuant to Sections 1, 4(i), 303(f) and (r), 332, and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 1, 154(i), 303(f) and (r), 332, and 405, the Request for Clarification of Communications & Industrial Electronics, Inc., North Sight Communications, Inc. and Ragan Communications, Inc. on January 27, 2006 is granted to the extent described herein and denied in all other respects. 24. *It is further ordered* that the Petition for Reconsideration of Report and Order, Fifth Report and Order, Fourth Memorandum Opinion and Order, and Order, filed by Richard W. Duncan d/b/a Anderson Communications, filed Dec. 22, 2004 is denied to the extent described herein. 25. *It is further ordered* that the Petition for Reconsideration filed by Charles D. Guskey on January 27, 2006, the Petition for Partial Reconsideration and Clarification filed by the Safety and Frequency Equity Competition Coalition on January 27, 2006; and the Petition for Reconsideration filed by Schwaninger & Associates are dismissed. 26. *It is further ordered* that the Petition for Clarification filed by Chair of the NPSPAC Region 8 Regional Planning Committee on March 3, 2006 is granted. *It is further ordered* that the Petition for Reconsideration filed by Sprint Nextel Corporation, on January 27, 2006 is granted in part, denied in part, dismissed in part and deferred in part to the extent described herein. 27. *It is further ordered* that the Petitions for Clarification and/or Reconsideration filed by the Mohave County Board of Supervisors, the Association for Maximum Service Television, Fox Television Stations Inc., KTVK Inc., Multimedia Holdings Corporation, Meredith Corporation, and Scripps Howard Broadcasting Company on January 27, 2006 are granted in part and denied in part to the extent described herein. 28. *It is further ordered* that the Petition for Clarification filed by Fox Television Stations Inc. and Gray Television Licensee Inc. on March 20, 2007 Is granted in part and denied in part to the extent described herein. 29. *It is further ordered* pursuant to the authority of Section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), and sections 1.925 of the Commission's Rules, 47 CFR 1.925 that the Request for Waiver submitted by Mobile Relay Associates in the above-captioned proceeding on January 24, 2006 is denied. 30. *It is further ordered* that the amendments of the Commission's Rules as set forth in Appendix B are adopted, effective August 24, 2007. 31. *It Is Further Ordered* that the Final Regulatory Flexibility Analysis, required by Section 604 of the Regulatory Flexibility Act, 5 U.S.C. 604, and as set forth herein is adopted. List of Subjects 47 CFR Part 0 Commission organization. 47 CFR Part 90 Communications. Federal Communications Commission. Marlene H. Dortch, Secretary. Rule Changes For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 0 and 90 as follows: PART 0—COMMISSION ORGANIZATION 1. The authority citation for part 0 continues to read as follows: Authority: Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 225, unless otherwise noted. 2. Section 0.392(e) is revised to read as follows: § 0.392 Authority delegated.

(e)The Chief, Public Safety and Homeland Security Bureau shall not have authority to issue notices of proposed rulemaking, notices of inquiry, or reports or orders arising from either of the foregoing except such orders involving ministerial conforming amendments to rule parts, or orders conforming any of the applicable rules to formally adopted international conventions or agreements where novel questions of fact, law, or policy are not involved. PART 90—PRIVATE LAND MOBILE RADIO SERVICES 3. The authority citation for part 90 continues to read as follows: Authority: 4(i), 11, 303(g), 303(r), and 302(c)(7) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 161, 303(g), 303(r), 332(c)(7). 4. Section 90.203(i) is revised to read as follows. § 90.203 Certification required.

(i)Equipment certificated after February 16, 1988 and marketed for public safety operation in the 806-809/851-854 MHz bands must have the capability to be programmed for operation on the mutual aid channels as designated in § 90.617(a)(1) of the rules. 5. The frequency table in § 90.613 is amended by revising the entry for channel 169 listed in Table of 806-824/851-869 MHz Channel Designations as follows. § 90.613 Frequencies available. Channel No. Base frequency

(MHz)* * * * * 169 .2250 * * * * * 6. Section 90.617 is amended by revising the undesignated introductory text and paragraphs

(g)and

(h)to read as follows: § 90.617 Frequencies in the 809.75-824/854.750-869 MHz, and 896-901/935-940 MHz bands available for trunked, conventional, or cellular system use in non-border areas. The following channels will be available at locations farther then 110 km (68.4 miles) from the U.S./Mexico border and 140 km (87 miles) from the U.S./Canadian border (“non-border areas”).

(g)In a given NPSPAC region, channels below 471 listed in Tables 2 and 4B which are vacated by licensees relocating to channels 551-830 and which remain vacant after band reconfiguration will be available as indicated in § 90.617(g)(1 through 3). The only exception will be for the counties listed in § 90.614(c). At locations greater then 113 km (70 mi) from the center city coordinates of Atlanta, GA within the counties listed in § 90.614(c), the channels listed in Tables 2A and 4C which are vacated by licensees relocating to channels 411-830 and which remain vacant after band reconfiguration will be available as indicated in § 90.617(g)(1 through 3). At locations within 113 km (70 mi) of the center city coordinates of Atlanta, GA, the channels listed in Tables 2B and 4D which are vacated by licensees relocating to channels 411-830 and which remain vacant after band reconfiguration will be available as follows:

(1)Only to eligible applicants in the Public Safety Category until three years after the release of a public notice announcing the completion of band reconfiguration in that region;

(2)Only to eligible applicants in the Public Safety or Critical Infrastructure Industry Categories from three to five years after the release of a public notice announcing the completion of band reconfiguration in that region;

(3)Five years after the release of a public notice announcing the completion of band reconfiguration in that region, these channels revert back to their original pool categories.

(h)In a given 800 MHz NPSPAC region—except for the counties listed in § 90.614(c)—channels below 471 listed in Tables 2 and 4B which are vacated by a licensee relocating to channels 511-550 and remain vacant after band reconfiguration will be available as follows:

(1)Only to eligible applicants in the Public Safety Category until three years after the release of a public notice announcing the completion of band reconfiguration in that region;

(3)Five years after the release of a public notice announcing the completion of band reconfiguration in that region, these channels revert back to their original pool categories. [FR Doc. E7-14099 Filed 7-19-07; 8:45 am] BILLING CODE 6712-01-P DEPARTMENT OF ENERGY 48 CFR Part 970 [Docket No. E7-10037] RIN 1991-AB67 Acquisition Regulation: Implementation of DOE's Cooperative Audit Strategy for Its Management and Operating Contracts; Correction AGENCY: Office of Procurement and Assistance Management, Department of Energy. ACTION: Correcting amendments. SUMMARY: This document corrects a final rule (FR document E7-10037), which was published in the **Federal Register** of Thursday, May 24, 2007 (72 FR 29077), regarding the Acquisition Regulation: Implementation of DOE's Cooperative Audit Strategy for Its Management and Operating Contracts. This correction revises the date of the clause at 48 CFR 970.5203-1. DATES: *Effective date:* July 20, 2007. FOR FURTHER INFORMATION CONTACT: Helen Oxberger,

(202)287-1332, e-mail: *Helen.oxberger@hq.doe.gov* . SUPPLEMENTARY INFORMATION: Background The Department of Energy

(DOE)in the final regulation that is the subject of this correction amended its Acquisition Regulation

(DEAR)by making minor amendments to existing contractor internal audit requirements, through the use of the Cooperative Audit Strategy. Need for Correction This correction revises the date of the clause at 48 CFR 970.5203-1. List of Subjects in 48 CFR Part 970 Government procurement. Accordingly, 48 CFR part 970 is corrected by making the following correcting amendment: PART 970—DOE MANAGEMENT AND OPERATING CONTRACTS 1. The authority citation for part 970 continues to read as follows: Authority: 42 U.S.C. 2201, 2282a, 2282b, 2282c; 42 U.S.C. 7101 *et seq.* ; 41 U.S.C. 418b; 50 U.S.C. 2401 *et seq.* 970.5203-1 [Corrected] 2. Section 970.5203-1 is amended by revising the date of the clause to read “(JUNE 2007)”. Issued in Washington, DC, on July 16, 2007. Edward R. Simpson, Director, Office of Procurement and Assistance Management, Department of Energy. David O. Boyd, Director, Office of Acquisition and Supply Management, National Nuclear Security Administration. [FR Doc. E7-14060 Filed 7-19-07; 8:45 am] BILLING CODE 6450-01-P 72 139 Friday, July 20, 2007 Proposed Rules DEPARTMENT OF AGRICULTURE Grain Inspection, Packers and Stockyards Administration 7 CFR Chapter VIII RIN 0580-AB00 The Role of USDA in Differentiating Grain Inputs for Ethanol Production and Standardizing Testing of the Co-Products of Ethanol Production AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA. ACTION: Advance notice of proposed rulemaking. SUMMARY: We are inviting comments from producers, handlers, processors, livestock feeders, industry representatives, and other interested persons on the appropriate government role with regard to differentiating grain attributes for ethanol conversion, as well as standardizing the testing of co-products of ethanol production, commonly referred to as distillers grains. We have monitored the development of this expanding industry and believe now is an appropriate time to seek input from stakeholders in order to foster collaboration among segments of this industry and support the marketing of ethanol co-products. DATES: We will consider comments that we receive by September 18, 2007. ADDRESSES: We invite you to submit comments on this advance notice of proposed rulemaking. You may submit comments by any of the following methods: • *E-Mail:* Send comments via electronic mail to *comments.gipsa@usda.gov.* • *Mail:* Send hardcopy written comments to Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, Washington, DC 20250-3604. • *Fax:* Send comments by facsimile transmission to:

(202)690-2755. • *Hand Delivery or Courier:* Deliver comments to: Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, Washington, DC 20250-3604. • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov.* Follow the online instructions for submitting comments. • *Instructions:* All comments should make reference to the date and page number of this issue of the **Federal Register** . • *Read Comments:* All comments will be available for public inspection in the above office during regular business hours (7 CFR 1.27 (b)). FOR FURTHER INFORMATION CONTACT: Eric Jabs at GIPSA, USDA, 6501 Beacon Drive, Suite 180 Stop 1404, Kansas City, MO 64133; Telephone

(816)823-4635; Fax Number

(816)823-4644; e-mail *Eric.J.Jabs@usda.gov.* SUPPLEMENTARY INFORMATION: Executive Order 12866 This advance notice of proposed rulemaking has been determined to be not significant for the purposes of Executive Order 12866, and therefore, has not been reviewed by the Office of Management and Budget. Background The modern fuel ethanol industry uses cereal grains, such as corn, sorghum, and wheat, to convert the starch in the seeds to ethanol by fermentation and distillation. GIPSA has followed the growth of this industry for several years, focusing on utilization of grains, the subsequent impact on supply, and the development of markets for the co-product known as distillers grains. Expansion of the fuel ethanol industry is driven, among other things, by the Energy Policy Act of 2005 (42 U.S.C. 15801) which mandates that 7.5 billion gallons of renewable fuels are utilized by 2012 (which has had a bullish impact on corn prices), the relationship between ethanol prices and crude oil futures, and overall profitability in the ethanol sector. At the beginning of 2007, there were 110 bio-refineries or ethanol plants on-line in 19 States with an annual capacity of 5.5 billion gallons. Seventy-three refineries were under construction and eight were expanding, creating an additional 6 billions gallons of production capacity by 2009. Corn is currently the primary grain for ethanol production (more than 95 percent). In calendar year 2006, 1.8 billion bushels of corn produced 4.9 billion gallons of ethanol and 12 million metric tons of distillers grains. In calendar year 2006, the United States exported 1.25 million metric tons of distillers dried grains (DDG), primarily to Mexico, the European Union, Canada, Japan, Taiwan, and others. Distillers grains are typically marketed to feed formulators for livestock feeding, primarily beef, dairy, pork, and poultry. Most U.S. ethanol plants are located in reasonable proximity to animal feeding operations to aid logistics. When used locally, the distillers grains move by truck and are sold on a “wet” (50-65 percent moisture content) basis, which saves the cost of drying. Distillers grains may move by rail, either to feedlots or to export facilities. In this case, DDG have a moisture content of about 11-12 percent and 75-80 percent of distillers grains are sold this way. One bushel of corn produces approximately 2.8 gallons of ethanol and 17 pounds of distillers grains. The grains used for ethanol production are standardized in 7 CFR Part 810. Unless exported, there is no requirement for those grains to be officially inspected. The Association of American Feed Control Officials (AAFCO) has developed definitions for distillers grains as provided in their 2006 Official Publication. Section 27 of the Feed Ingredient Definitions provides definitions for Corn Distillers Dried Grains (DDG), Corn Distillers Dried Grains with Solubles (DDGS), Corn Distillers Wet Grains

(DWG)and Corn Condensed Distillers Solubles (CDS). (2006 Official Publication, Association of American Feed Control Officials Incorporated. Sharon Krebs, Editor. Oxford, IN. 2006. Distillers Products, pages 273-274.) Trading Without Federal Standards There are well developed markets for by-products of standardized grain which trade without government participation. Examples include soybean meal, soybean oil, and brewers spent grains. In the soybean meal market, the National Oilseed Processors Association

(NOPA)established trading rules in 1933, which were last revised in February 2007. The rules serve as guides, and parties to trades are free to adopt, modify, or disregard the rules. These rules govern sampling, testing, and specifications for soybean meal. Soybean meal trades on the Chicago Board of Trade, and the standard specifications for deliverable grade define specified levels of protein, fat, fiber and moisture content. Unlike distillers grains which are highly variable, soybean meal is very consistent because one processing method is used almost exclusively. Testing Grain We contacted industry participants and heard that price was the focal point for ethanol processors, while grain quality and timing of deliveries were also of concern. Basic quality factors a processor might consider when sourcing grain include moisture content, protein content, and mycotoxins (aflatoxins in corn for example) content. Additional factors for testing might include some aspect of starch quality, nutrient composition, crude fat, crude fiber; a test to differentiate a grain specifically designed for ethanol conversion, such as grain with a high total fermentable starch content; or an end-use trait, such as a specific amino acid characteristic. Many processors indicated that co-product quality was of concern when sourcing grain, and most processors have grain inspected, either in-house or by contract with an independent laboratory. Conversion of grain to ethanol consumes the starch and leaves the remainder of the grain as the co-product. As a general rule, conversion results in a three-fold concentration in the residual material (i.e., protein, fat, or mycotoxins) in the distillers dried grains. Aflatoxin, Deoxynivalenol, Fumonisins, Zearalenone, and T2 Toxin are mycotoxins that can be present in distiller's grains by-products if the grain delivered to the ethanol plant is contaminated. Mycotoxins are not destroyed during the ethanol production process and are not destroyed during the drying process to produce distillers grains co-products. Definitions and Standardization of Testing for Distillers Grains While we heard from industry participants that at this time there is no need for GIPSA to establish grading standards for distillers grains (but we might have a role in minimizing market inefficiencies caused by inconsistent testing, either through standardization or validating tests used by the market), others have asked that we at least consider whether there is a need for official standards. Some stakeholders told us they do not feel that current industry-based definitions adequately describe the products. Alternately, an industry working group, including the American Feed Industry Association (AFIA), the Renewable Fuels Association, and the National Corn Growers Association, states that the current definitions adequately define the distillers products of today, preferring a broad definition. Further, the working group stated that the AFIA Ingredient Guidelines should be considered for updating to address modern processing technologies. The industry working group also evaluated empirical methods of analyses for Distillers Dried Grains with Solubles

(DDGS)for which “there are no guidelines or recommendations on which analytical test methods should be used * * *”, focusing on analytical methods for moisture, crude protein, crude fat and crude fiber. DDGS currently accounts for about half of the distillers grains industry volume. Potential Role for GIPSA GIPSA facilitates the marketing of livestock, poultry, meat, cereals, oilseeds, and related agricultural products, and promotes fair and competitive trading practices for the overall benefit of consumers and American agriculture. We facilitate the marketing of U.S. grains and oilseeds by establishing standards for quality assessments, regulating handling practices, and managing a network of Federal, State, and private laboratories that provide impartial, user-fee funded official inspection and weighing services. Recognizing that sampling is the single largest source of error in the analysis of grains, we offer sampling guidelines to the grain handling industry. Finally, for grains and commodities which are not standardized (e.g., hulless oats, popcorn, corn gluten feed), we provide official procedures for analysis of specific factors. As agricultural crops evolve and varieties with enhanced traits are developed, reliable tests must be developed to quantify the quality traits important to the market. Rapid tests and test kits are evaluated that detect biotechnology derived grains and oil seeds, analyze protein, moisture, oil, and mycotoxins. With the development of such new testing procedures, reference methods are needed to validate and improve their accuracy. This is an area where GIPSA has experience and expertise, which may prove valuable in this instance. Objective grain/co-product quality assessments (official and unofficial) require reliable, well-standardized measurement methods. Inspection methods can be classified as reference (direct) methods or secondary (indirect) methods. Reference methods are those that “define” the quantity or quality in question. To provide the market with rapid, cost-effective quality assessments, GIPSA develops secondary or rapid methods, based on national reference methods, for routine inspection use in the official system. These secondary methods make physical, chemical, electronic, and/or optical measurements related to the desired quality characteristics. GIPSA conducts research to develop, evaluate, and improve reference methods and secondary methods for grain and grain product quality analysis to better meet global grain inspection and marketing needs. In 2001, we took a new approach in response to the market's need for testing the products of agricultural biotechnology. We established a voluntary proficiency program to organizations testing for biotechnology-derived grains and oilseeds to improve the reliability of testing. We also evaluate the performance of rapid tests developed to detect biotechnology-derived grains and oilseeds and mycotoxins, and confirm the tests operate in accordance with the manufacturers' claims. GIPSA is issuing this advance notice of proposed rulemaking to invite comments from all interested persons on how we can best facilitate the marketing of distillers grains in today's evolving marketplace. We are seeking comment on market needs and the feasibility and desirability of GIPSA's programs to facilitate the marketing of these products. All interested persons are encouraged to comment on the following issues related to this notice: 1. What should GIPSA's role, if any, be in standardizing the testing of inputs and outputs of ethanol co-product processing? 2. What factors are currently assessed on the input grains for ethanol conversion? Please list the factors by specific grain. What other factors would you test input grain for, if a test were available? 3. What analytes or factors are currently assessed on co-products of ethanol production? Please list the factors by specific co-product type. What other factors would you test for, if a test were available? 4. The industry lacks agreement on reference methods for analysis of co-product attributes. Should GIPSA play a role in the standardization of reference methods? If so, what should that role be? 5. Secondary or rapid methods are used by the official inspection system to determine product quality. Should GIPSA play a role in the validation or standardization of secondary or rapid methods? Should we limit our participation to validating the performance of test kits? Are there rapid tests in existence other than test kits of which you are aware? 6. Should we work on developing reference methods for tests of specific traits in grains, such as fermentable starch content? Should GIPSA pursue standardized, secondary tests for the presence of specific traits in grains, such as fermentable starch content? 7. Are co-products of ethanol production considered cereal products, according to the European Union regulations (COMMISSION REGULATION

(EC)No 856/2005) for mycotoxin limits in cereals and cereal products? Should GIPSA validate the performance of test kits for the detection of mycotoxins in distillers grains? If so, what are the limits of detection which should be considered? We welcome your comments on these issues as well as any comments or suggestions related to distillers grains. Authority: 7 U.S.C. 71-87. David R. Shipman, Acting Administrator, Grain Inspection, Packers and Stockyards Administration. [FR Doc. E7-14018 Filed 7-19-07; 8:45 am] BILLING CODE 3410-KD-P DEPARTMENT OF AGRICULTURE Grain Inspection, Packers and Stockyards Administration 7 CFR Part 810 RIN 0580-AA96 Request for Public Comment on the United States Standards for Soybeans AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA. ACTION: Advance notice of proposed rulemaking; extension of comment period. SUMMARY: We published an advance notice of proposed rulemaking in the **Federal Register** on May 1, 2007, (72 FR 23775), initiating a review of the United States Standards for Soybeans to determine their effectiveness and responsiveness to current grain industry needs. The notice provided an opportunity for interested parties to forward written comments to GIPSA until July 2, 2007. As a result of a request from the soybean industry, we are reopening the comment period to provide interested parties with additional time in which to comment. DATES: We will consider comments that we receive by August 20, 2007. ADDRESSES: We invite you to submit comments on this advance notice of proposed rulemaking. You may submit comments by any of the following methods: • *E-Mail:* Send comments via electronic mail to *comments.gipsa@usda.gov* • *Mail:* Send hardcopy written comments to Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, Washington, DC 20250-3604 • *Fax:* Send comments by facsimile transmission to:

(202)690-2755 • *Hand Delivery or Courier:* Deliver comments to: Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, Washington, DC 20250-3604. • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov.* Follow the online instructions for submitting comments. • *Instructions:* All comments should make reference to the date and page number of this issue of the **Federal Register** . • *Read Comments:* All comments will be available for public inspection in the above office during regular business hours (7 CFR 1.27(b)). FOR FURTHER INFORMATION CONTACT: Marianne Plaus at GIPSA, USDA, 1400 Independence Avenue, SW., Washington, DC 20250-3630; Telephone

(202)720-0228; Fax Number

(202)720-1015; e-mail *Marianne.Plaus@usda.gov.* SUPPLEMENTARY INFORMATION: GIPSA published an advance notice of proposed rulemaking in the **Federal Register** on May 1, 2007, (72 FR 23775) with the intent to obtain public comment on the United States Standards for Soybeans (7 CFR Part 810). Our intent is, through the comments, to determine their effectiveness and responsiveness to current grain industry needs. The comment period of 60 days from the date of publication closed on July 2, 2007. GIPSA received a request from the soybean industry to provide interested parties additional time to comment. As a result, the comment period is reopened for a 30 day period. Authority: 7 U.S.C. 71-87. Alan Christian, Acting Administrator, Grain Inspection, Packers and Stockyards Administration. [FR Doc. E7-14017 Filed 7-19-07; 8:45 am] BILLING CODE 3410-KD-P COMMODITY FUTURES TRADING COMMISSION 17 CFR Parts 40 and 41 RIN 3038-AC44 Confidential Information and Commission Records and Information AGENCY: Commodity Futures Trading Commission. ACTION: Notice of proposed rulemaking. SUMMARY: The Commodity Futures Trading Commission is proposing to amend the procedures for confidential treatment requests by derivatives transaction execution facilities (DTEF), derivatives clearing organizations (DCO), or designated contract markets

(DCM)for products and rules submitted via certification procedures or for Commission review and approval. The proposed rules will provide the exclusive means of requesting confidential treatment for product and rule submissions filed under Parts 40 and 41 of the Commission's regulations. Specifically, DCMs, DTEFs, and DCOs will be required to follow the customary procedures of requesting confidential treatment of information submitted to the Commission except: The submitter also will be required to file a detailed written justification simultaneously with the request for confidential treatment; and the submitter will be required to segregate the material deemed confidential in an appendix to the submission. Additionally, Commission staff may make an initial determination to grant or deny confidential treatment to such material before receiving a request under the Freedom of Information Act (FOIA). The Commission is proposing these amendments to expedite the confidential treatment review process and consequently allow the Commission to provide the public with more immediate access to non-confidential information. DATES: Submit comments on or before August 20, 2007. ADDRESSES: You may submit comments by any of the following methods: • *Federal eRulemaking Portal: http://www.regulations.gov.* • *Mail/Hand Deliver:* Eileen A. Donovan, Acting Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. • *E-mail: secretary@cftc.gov.* FOR FURTHER INFORMATION CONTACT: Riva Adriance, Deputy Director for Market Review,

(202)418-5494; or David Steinberg, Attorney Advisor,

(202)418-5102, Division of Market Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. Electronic mail: *radriance@cftc.gov* or *dsteinberg@cftc.gov.* This document is also available at *http://www.regulations.gov.* SUPPLEMENTARY INFORMATION: I. Background A. Overview During the past two years, the Commission has observed an increase in the number of registered entity filings submitted under Parts 40 and 41 of the Commission's regulations that are accompanied by a request for confidential treatment. 1 Most of these requests for confidential treatment have been submitted to the Commission in connection with market maker incentive plans. 2 Under current regulation 145.9(d)(10), when the Commission receives a request for confidential treatment for material submitted to the Commission, no determination with respect to any request for confidential treatment will be made until the Commission receives a FOIA request for the subject material. After receipt of the FOIA request, Commission Regulation 145.9(e)(1) generally requires the Assistant Secretary of the Commission to notify the submitter that the Commission received a FOIA request for material subject to the request for confidential treatment. 3 In most cases, the Assistant Secretary also requests that the submitter file a detailed written justification of the confidential treatment request within ten business days. 4 1 A registered entity is defined under Section 1a(29) of the Commodity Exchange Act

(Act)as a DCM under Section 5 of the Act (including Section 5f), a DTEF registered under Section 5a of the Act, and a DCO registered under Section 5b of the Act. (Section 5f of the Act, along with Part 41 of the Commission's regulations, establishes requirements for national securities exchanges, national securities associations and alternative trading systems registered with the Securities and Exchange Commission to notice register with the Commission in order to list security futures products (i.e., futures on a single equity security and futures on narrow-based security indexes)). 2 Market maker incentive plans are created by a registered entity to increase volume of trading and liquidity, typically for new product launches or in markets that for other reasons have low trading volume. In general, registered entities have requested confidential treatment for the name of the market maker(s), the compensation provided by the registered entity to the market maker(s), trade priorities (i.e., percentage of the order flow), and the bid/ask spread level. 3 Commission Regulation 145.9(e)(1) provides that if the Assistant Secretary or his or her designee determines that a FOIA request seeks material for which confidential treatment has been requested pursuant to regulation 145.9, the Assistant Secretary or his or her designee shall require the submitter to file a detailed written justification of the confidential treatment request within ten business days (unless under regulation 145.9(d)(7) an extension of time has been granted) of that determination unless, pursuant to an earlier FOIA request, a prior determination to release or withhold the material has been made, the submitter has already provided sufficient information to grant the request for confidential treatment, or the material is otherwise in the public domain. 4 Commission Regulation 145.9(d)(7). As a result, both the requirement that a FOIA request must be received to trigger the confidentiality review and the need for submission of a detailed written justification delays the Commission's ability to make a timely confidentiality determination as to whether any information should be made public. Furthermore, in some cases, the Commission never receives a FOIA request for the subject material, which prevents the Commission from moving forward with the confidential treatment review process. While the Commission recognizes limited circumstances where a registered entity filing a submission under Parts 40 and 41 may be entitled to confidential treatment, the Commission has a history of generally making certified rules and products and other rule submissions public and, furthermore, for DCMs, Designation Criterion 7 and Core Principle 7 often require such publication. 5 5 The Commission has been publishing rule submissions on the Commission's website since August of 2003. Prior to this date, Commission staff had consistently determined that submissions filed pursuant to Section 5a(a)(12) of the Act were public, and, pursuant to Appendix A(b)(3) or Part 145, rule filings submitted under Section 5a(a)(12) were made available in the Commission's reading room. Section 5a(a)(12) was removed from the Act with the passage of the Commodity Futures Modernization Act of 2000 (CFMA). As a result, the Commission amended Appendix A (b)(3) to Part 145. Current Appendix A (b)(3) to Part 145 requires the Office of the Secretariat to make registered entity filings relating to rules as defined in Commission Regulation 40.1 available to the public unless the filing is covered by a request for confidential treatment. *See* 69 FR 67503-67508 (November 18, 2004). The Commission believes the submissions now filed under Sections 5c(c)(1) and 5c(c)(2) of the Act should, except in limited circumstances, continue to be made publicly available as they generally do not cause any competitive harm to the registered entity. B. Freedom of Information Act The Freedom of Information Act, 5 U.S.C. 552, provides generally that the public has a right of access to federal agency records except to the extent such records, or portions of them, are protected from disclosure by one (or more) of nine exemptions. A submitter requesting confidential treatment must request in writing that the Commission afford confidential treatment under FOIA for any information submitted to the Commission while specifying the grounds on which confidential treatment is being requested. 6 A registered entity typically asserts that the information submitted to the Commission should be exempt from disclosure pursuant to FOIA exemption (b)(4), 5 U.S.C. 552 (b)(4), because the release of such information will cause competitive harm to the submitter. 7 Commission Regulation 145.9 sets forth the procedures that a submitter of information to the Commission must follow in order to obtain confidential treatment for such information. That same provision, however, also permits the Commission to specify “alternative procedures” for “a particular study, report, investigation, or other matter.” 8 Consistent with that authority, the Commission is proposing to specify alternative procedures for processing requests for confidential treatment of registered entity filings submitted under Parts 40 and 41 of the Commission's regulations. 6 Commission Regulation 145.9(d)(1). 7 Exemption (b)(4) of FOIA protects trade secrets and commercial or financial information obtained from a person that is privileged or confidential. See also Commission Regulation 145.9(d)(ii). Commission Regulation 145.9(d) provides other grounds for non-disclosure of information, including information that:

(1)Is specifically exempted by a statute that either requires that the matters be withheld from the public so as to leave no discretion on the issue or establishes particular criteria for withholding or refers to particular types of matters to be withheld;

(2)would constitute a clearly unwarranted invasion of the submitter's personal privacy;

(3)would reveal investigatory records compiled for law enforcement purposes whose disclosure would constitute an unwarranted invasion of the personal privacy of the submitter; and

(4)would reveal investigatory records for law enforcement purposes when disclosure would interfere with enforcement proceedings or disclose investigative techniques and procedures, provided that the claim may be made only by a designated contract market or registered futures association with regard to its own investigatory records. 8 Commission Regulation 145.9(b). II. Proposed Amendments A. Procedures for Requesting Confidential Treatment Under Parts 40 and 41 The Commission is proposing to add paragraph

(c)to Commission Regulation 40.8 to list the procedures that a registered entity must follow when filing a request for confidential treatment. Section 40.8(c) would provide the exclusive method of requesting confidential treatment for information required to be filed under Parts 40 and 41. In addition, the proposal would add new regulations 40.2(a)(3)(iv), 40.6(a)(3)(vi), 41.23(a)(7), and 41.24(a)(6) and amend regulations 40.3(a)(7) and 40.5(a)(8) to direct the registered entity requesting confidential treatment to follow the new procedures specified in Commission Regulation 40.8(c). Proposed regulation 40.8(c) would further require the registered entity to follow the procedures in Commission Regulation 145.9 except that:

(1)A detailed written justification of the confidential treatment request must be filed simultaneously with the submission; and

(2)the material deemed confidential must be filed in an appendix to the request. Finally, the proposed rules would allow Commission staff to make an initial determination to grant or deny confidential treatment before receiving a FOIA request for the subject material. The requirement that a registered entity follow the procedures in proposed new regulation 40.8(c) would address the absence of guidance in the Commission's regulations for a registered entity when filing a “reasonable justification” along with the request for confidential treatment for submissions filed under Parts 40 and 41. The proposed rules would remove the reasonable justification requirement from Commission Regulations 40.3(a)(7) and 40.5(a)(8) and direct the submitter to follow the procedures of regulation 40.8(c) with the filing of the detailed written justification. 9 Additionally, the requirement that the registered entity simultaneously file the detailed written justification with the request for confidential treatment would eliminate the ten-business-day period permitted under regulation 145.9(e)(1) for the submitter to file the detailed written justification after receiving notice that a FOIA request has been received by the Commission. With these changes, the Commission would be able to conduct a thorough analysis of the detailed written justification without delay and weigh, in a more deliberate manner, the potential harm in releasing any portion of the submission against allowing the public to have more timely access to the non-confidential information. 9 67 FR 62873-62880 (October 9, 2002). Amendments to rules 40.3 and 40.5 (which require the registered entity to identify with particularity information in the submission that will be subject to a request for confidential treatment and support the request for confidential treatment with reasonable justification) were made to conform with language in Commission Regulations 37.5(b)(5) and 38.3(a)(5) (which pertain to applicants for DTEF registration and contract market designation, respectively) that required the submitter to include a reasonable justification in support of the request for confidential treatment. However, Commission Regulations 37.5(b)(5) and 38.3(a)(5) were amended by eliminating the reasonable justification requirement. Instead, these regulations now require the applicant to follow the procedures in Commission Regulation 145.9 when requesting confidential treatment. See 69 FR 67811-67817 (November 22, 2004). The proposed rules would not affect the ability of the submitter to object to the denial of a confidential treatment request. Thus, the submitter would still be able to file an appeal of any adverse determination with the Commission's Office of the General Counsel. 10 The Commission also notes that a determination that any part of the request for confidential treatment should be granted may be reconsidered if a FOIA request is received by the Commission for the subject material. 10 Commission Regulation 145.9(g). The proposed rule requiring material deemed confidential to be placed in an appendix to the submission would enable the Commission to make the non-confidential information available to the public as soon as it receives the submission. The Commission has observed that registered entities requesting confidential treatment sometimes ask for confidentiality for the entire submission. When this happens, the Commission is unable to make any part of the submission immediately available to the public, even when it is clear that information contained in the filing is not confidential and, furthermore, for DCMs, such publication may be required under Designation Criterion 7 and Core Principle 7. 11 11 The Commission notes that provisions under these Parts may not apply to all registered entities. For example, Section 40.2 applies to all registered entities while 40.3 applies only to DCMs and DTEFs and not DCOs. For example, during the past year, Commission staff has contacted certain registered entities that requested confidential treatment for submissions containing market maker incentive plans and requested that they amend their original submissions by placing the confidential information in an appendix. This has enabled the Commission to make the underlying submissions containing the non-confidential information available to the public. The registered entities have been receptive to these requests. Based upon this experience, the Commission does not believe its proposed amendments would place an undue burden on registered entities requesting confidential treatment. Registered entities are consequently on notice that requests for confidential treatment may only cover the appendix to the submission while the underlying submission would be made immediately available to the public. B. Public Availability of Terms and Conditions of Products and Mechanisms for Executing Transactions on or Through the Facilities of the Contract Market The terms and conditions of contracts must be made available to market authorities, market participants, and the public by the DCM under Section 5(d)(7) of the Act. 12 Regulations 40.3(a)(7) and 40.5(a)(8) currently provide that a product's terms and conditions, as contained in contents of a filing of a submission to the Commission, are publicly available at the time of their submission. The Commission believes the requirement that a product's terms and conditions be publicly available at the time of submission also applies to submissions containing terms and conditions that are filed under regulations 40.2, 40.6, 41.23, and 41.24. In an effort to create a more logical placement in the Commission's regulations for the public availability of a product's terms and conditions, the Commission proposes to relocate this provision to new paragraph 40.8(d) under the Availability of Public Information section of Part 40. This would ensure that registered entities are fully aware, and the public would be on notice that this information is available. 12 67 FR 62874-75 (Oct. 9, 2002). Product terms and conditions that are made publicly available at the time of their submission to the Commission enable the Commission to obtain the views of market participants and others to ascertain whether the proposed product would be readily susceptible to manipulation, or otherwise violate the Act. Commission staff routinely conduct trade interviews when reviewing novel instruments to ascertain the relative susceptibility of a product to being manipulated. To be meaningful, these interviews require the release of the proposed instrument's terms and conditions. Generally, the Commission intends to continue its long-standing practice of requesting public comment on the terms and conditions of new products under review for Commission approval by publication of notices in the **Federal Register** . In instances where notice in the **Federal Register** is impracticable or otherwise unnecessary, notice of a submission for voluntary approval and of the public availability of the proposed product's terms and conditions will be through the Commission's internet Web site ( *http://www.cftc.gov* ). The terms and conditions of products eligible for trading by self-certification will be available from the Commission, at the time that the exchange legally could commence trading—the beginning of the business day following certification to the Commission. The mechanisms for executing transactions on or through the facilities of the contract market must also be made available to market authorities, market participants, and the public by the DCM under Section 5(d)(7) of the Act. The Commission proposes adding language to new paragraph 40.8(d) to make clear to registered entities that this information is public and to inform the public that this information is also available. The Commission notes that mechanisms for executing transactions on or through the facilities of the contract market generally include such information as trading algorithms and information from an exchange's rulebook that pertain to trading. Moreover, the Commission notes that requests for confidential treatment covering the mechanisms for executing transactions on or through the facilities of the contract market and a product's terms and conditions will not be processed. III. Cost-Benefit Analysis Section 15(a) of the Act, as amended by section 119 of the CFMA, requires the Commission to consider the costs and benefits of its action before issuing a new regulation under the Act. By its terms, section 15(a) as amended does not require the Commission to quantify the costs and benefits of a new regulation or to determine whether the benefits of the regulation outweigh its costs. Rather, section 15(a) simply requires the Commission to “consider the costs and benefits” of its action. Section 15(a) of the Act further specifies that costs and benefits shall be evaluated in light of five broad areas of market and public concern: Protection of market participants and the public; efficiency, competitiveness, and financial integrity of futures markets; price discovery; sound risk management practices; and other public interest considerations. Accordingly, the Commission could, in its discretion, give greater weight to any one of the five enumerated areas and could, in its discretion, determine that, notwithstanding its costs, a particular regulation was necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the Act. The Commission is considering the costs and benefits of these proposed regulations in light of the specified provisions of section 15(a) of the Act: 1. Protection of market participants and the public. The proposed amendments should have no effect on the Commission's ability to protect market participants and the public. 2. Efficiency and competition. The proposed amendments are expected to benefit efficiency by making the non-confidential information from registered entity submissions available to the public in a more timely manner. The Commission anticipates that the costs of compliance with the confidential treatment procedures will be minimal. The proposed amendments should have no effect, from the standpoint of imposing costs or creating benefits, on competition in the futures and options markets. 3. Financial integrity of futures markets and price discovery. The amendments should have no effect, from the standpoint of imposing costs or creating benefits, on the financial integrity or price discovery function of the futures and options markets. 4. Sound risk management practices. The amendments being proposed herein should have no effect on the risk management practices of the futures and options industry. 5. Other public considerations. No additional public considerations could be determined. After considering these factors, the Commission has determined to propose the rules and rule amendments set forth below. The Commission invites public comment on its application of the cost-benefit provision. Commenters also are invited to submit any data that they may have quantifying the costs and benefits of the proposal with their comment letters. IV. Related Matters A. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 *et seq.* (2000), requires federal agencies, in proposing regulations, to consider the impact of those regulations on small entities. The regulations proposed herein would affect derivatives transaction execution facilities, designated contract markets, and derivatives clearing organizations. The Commission has previously determined that the foregoing entities are not small entities for purposes of the RFA. 13 Accordingly, the Acting Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed regulations will not have a significant economic impact on a substantial number of small entities. 13 47 FR 18618, 18619 (April 30, 1982) discussing contract markets; 66 FR 42256, 42268 (August 10, 2001) discussing exempt boards of trade, exempt commercial markets and derivatives transaction execution facilities; 66FR 45605, 45609 (August 29, 2001) discussing derivatives clearing organizations. B. Paperwork Reduction Act of 1995 This proposed rulemaking contains information collection requirements. As required by the Paperwork Reduction Act

(PRA)of 1995 (44 U.S.C. 3504(h)), the Commission has submitted a copy of this section to the Office of Management and Budget

(OMB)for its review. *Collection of Information:* Rules Relating to Part 40, Provisions Common to DCMs, DTEFs, and DCOs, OMB Control Number 3038-0022. The expected effect of the proposed amended regulations will be to increase the burden previously approved by OMB for this collection of information by 16 hours as it will result in the filing of approximately five additional pages when a registered entity files a detailed written justification and confidential appendix under Commission Regulations 40.2, 40.3, 40.4, 40.5, and 40.6. The estimated burden was calculated as follows: *Estimated number of respondents:* 12. *Annual responses by each respondent:* .30. *Total annual responses:* 4. *Estimated average hours per response:* 4. *Annual reporting burden:* 16. *Collection of Information:* Rules Relating to Part 41, Security Futures Products, OMB Control Number 3038-0059. The expected effect of the proposed amended regulations will be to increase the burden previously approved by OMB for this collection of information by 3.6 hours as it will result in the filing of approximately five additional pages when a registered entity files a detailed written justification and confidential appendix under Commission Regulations 41.23 and 41.24. *Estimated number of respondents:* 3. *Annual responses by each respondent:* .30. *Total annual responses:* .90. *Estimated average hours per response:* 4. *Annual reporting burden:* 3.6. Organizations and individuals desiring to submit comments on the information collection requirements should direct them to the Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10202, New Executive Office Building, 725 17th Street, NW., Washington, DC 20503; Attention: Desk Officer for the Commodity Futures Trading Commission. In compliance with the PRA, the Commission, through these proposed regulations, solicits comments to:

(1)Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;

(2)evaluate the accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

(3)enhance the quality, usefulness, and clarity of the information to be collected; and

(4)minimize the burden of collecting information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission responses. OMB is required to make a decision concerning the collection of information contained in these proposed regulations between 30 and 60 days after publication of this document in the **Federal Register** . Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. This does not affect the deadline for the public to comment to the Commission on the proposed regulations. Copies of the information collection submission to OMB are available from the CFTC Clearance Officer, 1155 21st Street, NW., Washington DC 20581,

(202)418-5160. List of Subjects 17 CFR Part 40 Commodity futures, Contract markets, Designation application, Reporting and recordkeeping requirements. 17 CFR Part 41 Security futures. For the reasons stated in the preamble, the Commission proposes to amend 17 CFR parts 40 and 41 as follows: PART 40—PROVISIONS COMMON TO CONTRACT MARKETS, DERIVATIVES TRANSACTION EXECUTION FACILITIES AND DERIVATIVES CLEARING ORGANIZATIONS 1. The authority for part 40 continues to read as follows: Authority: 7 U.S.C. 1a, 2, 5, 6, 6c, 7, 7a, 8 and 12a, as amended by appendix E of Pub. L. 106-554, 114 Stat. 2763A-365. 2. Section 40.2 is amended by adding paragraph (a)(3)(v) to read as follows: § 40.2 Listing products for trading by certification.

(a)* * *

(3)* * *

(v)A request for confidential treatment as permitted under the procedures of § 40.8. 3. Section 40.3 is amended by revising paragraph (a)(7) to read as follows: § 40.3 Voluntary submission of new products for Commission review and approval.

(a)* * *

(7)Include a request for confidential treatment as permitted under the procedures of § 40.8. 4. Section 40.5 is amended by revising paragraph (a)(8) to read as follows: § 40.5 Voluntary submission of rules for Commission review and approval.

(a)* * *

(8)Include a request for confidential treatment as permitted under the procedures of § 40.8. 5. Section 40.6 is amended by adding new paragraph (a)(3)(vi) to read as follows: § 40.6 Self-certification of rules by designated contract markets and registered derivatives clearing organizations.

(a)* * *

(3)* * *

(vi)A request for confidential treatment as permitted under the procedures of § 40.8. 6. Section 40.8 is amended by adding new paragraphs

(c)and

(d)to read as follows: § 40.8 Availability of public information.

(c)A registered entity's filing of new products under the self-certification procedures, new products for Commission review and approval, new rules and rule amendments for Commission review and approval, and new rules and rule amendments submitted under the self-certification procedures will be treated as public information unless covered by a request for confidential treatment. If a registered entity files a request for confidential treatment, the procedures in § 145.9 of this chapter shall apply with the following exceptions:

(1)A detailed written justification of the confidential treatment request must be filed simultaneously with the request for confidential treatment;

(2)The material deemed confidential must be segregated in an appendix to the submission; and

(3)Commission staff may make an initial determination with respect to the request for confidential treatment before receiving a request under the Freedom of Information Act for the material for which confidential treatment is being sought.

(d)A registered entity's filing regarding a product's terms and conditions and the mechanisms for executing transactions on or through the facilities of the contract market will be made publicly available at the time of submission and requests for confidential treatment covering this information will be denied. PART 41—SECURITY FUTURES PRODUCTS 7. The authority citation for part 41 continues to read as follows: Authority: Sections 206, 251 and 252, Pub. L. 106-554, 114 Stat. 2763, 7 U.S.C. 1a, 2, 6f, 6j, 7a-2, 12a; 15 U.S.C. 78g(c)(2). 8. Section 41.23 is amended by adding new paragraph (a)(7) to read as follows: § 41.23 Listing of security futures products for trading.

(a)* * *

(7)Includes a request for confidential treatment as permitted under the procedures of § 40.8. 9. Section 41.24 is amended by adding new paragraph (a)(6) to read as follows: § 41.24 Rule amendments to security futures products.

(a)* * *

(6)Includes a request for confidential treatment as permitted under the procedures of § 40.8. Issued in Washington, DC, on July 17, 2007 by the Commission. Eileen A. Donovan, Acting Secretary of the Commission. [FR Doc. E7-14103 Filed 7-19-07; 8:45 am] BILLING CODE 6351-01-P AGENCY FOR INTERNATIONAL DEVELOPMENT 22 CFR Part 215 RIN 0412-AA61 Privacy Act of 1974, Implementation of Exemptions AGENCY: United States Agency for International Development. ACTION: Proposed rule. SUMMARY: The United States Agency for International Development (USAID) is concurrently establishing a new system of records pursuant to the provisions of the Privacy Act of 1974 (5 U.S.C. 552a), entitled the “Partner Vetting System” (PVS). In this proposed rulemaking, USAID proposes to exempt portions of this system of records from one or more provisions of the Privacy Act because of criminal, civil, and administrative enforcement requirements. DATES: Submit comments on or before September 18, 2007. ADDRESSES: You may submit comments, identified by RIN 0412-AA61, by any of the following methods: *Federal eRulemaking Portal:* *http://www.regulations.gov.* Follow the instructions for submitting comments. *Mail:* U.S. Agency for International Development, Chief Privacy Officer, 1300 Pennsylvania Avenue NW., Room 2.12-003, Washington, DC 20523-2120. *Instructions:* All submissions must include the title of the proposed action, and Regulatory Information Number

(RIN)for this rulemaking. Please include your name, title, organization, postal address, telephone number, and e-mail address in the text of the message. FOR FURTHER INFORMATION CONTACT: Jeff Denale, Coordinator for Counterterrorism, Office of Security, United States Agency for International Development, Ronald Reagan Building, 1300 Pennsylvania Avenue, NW., Washington, DC 20523 by phone

(202)712-1264. SUPPLEMENTARY INFORMATION: A. Background In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, USAID is publishing a new system of records notice for the Office of Security named Partner Vetting System (PVS). The PVS will support the vetting of directors, officers, or other employees of non-governmental organizations who apply for USAID contracts, grants, cooperative agreements or other funding and those who apply for registration with USAID as Private Voluntary Organizations. The information collected from these individuals will be used to conduct screening to ensure USAID funds and USAID-funded activities are not purposefully or inadvertently used to provide support to entities or individuals deemed to be a risk to national security. As these individuals and organizations are not employees or job applicants, nor would they be eligible for or require security clearances, traditional employment or security clearance investigative mechanisms are not authorized or appropriate for the stated purposes. USAID proposes to exempt this system, in part, from certain provisions of the Privacy Act and to add the PVS system to 22 CFR 215.14, Specific Exemptions. USAID needs this exemption in order to protect information related to investigations from disclosure to subjects of investigations and to protect classified information related to the government's national security programs. Specifically, the exemptions are required to preclude subjects of investigations from frustrating the investigative process; to avoid disclosure of investigative techniques; protect the identities and physical safety of confidential informants and of law enforcement personnel; ensure the Office of Security's ability to obtain information from third parties and other sources; protect the privacy of third parties; and safeguard classified information. Aside form the specific protections afforded classified information that may underpin the screening mechanisms involved, USAID must also protect the names of organizations and individuals within this system. Because the results of screening on any particular organization or individual may be derived from classified and sensitive law enforcement and intelligence information, USAID cannot confirm or deny whether an individual “passed” or “failed” screening. The nondisclosure of the information protects the government's operational counterterrorism and counterintelligence missions, as well as the personal safety of those involved in counterterrorism investigations. B. Regulatory Planning and Review This is not a significant regulatory action and, therefore, is not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. C. Regulatory Flexibility Act Pursuant to requirements set forth in the Regulatory Flexibility Act

(RFA)(5 U.S.C. 601 *et seq.* ), USAID has considered the economic impact of the rule and has determined that its provisions would not have a significant economic impact on a substantial number of small entities. D. Paperwork Reduction Act The Paperwork Reduction Act does apply because the proposed changes impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501 *et seq.* List of Subjects in 22 CFR Part 215 Freedom of Information, Investigations, Privacy. For the reasons stated in the preamble, the USAID proposes to amend 22 CFR part 215 as follows: PART 215—REGULATIONS FOR IMPLEMENTATION OF PRIVACY ACT OF 1974 1. The authority citation for 22 CFR part 215 is revised to read as follows: Authority: Pub. L. 93-579, 88 Stat. 1896 (5 U.S.C. 553, (b),

(c)and (e). 2. Amend § 215.13 by adding paragraph (c)(2) to read as follows: § 215.13 General exemptions.

(c)* * *

(2)*Partner Vetting System.* This system is exempt from sections (c)(3) and (4); (d);

(e)(1), (2), and (3);

(4)(G), (H), and (I);

(5)and (8); (f), (g), and

(h)of 5 U.S.C. 552a. These exemptions are necessary to insure the proper functioning of the law enforcement activity, to protect confidential sources of information, to fulfill promises of confidentiality, to maintain the integrity of the law enforcement procedures, to avoid premature disclosure of the knowledge of criminal activity and the evidentiary bases of possible enforcement actions, to prevent interferences with law enforcement proceeding, to avoid the disclosure of investigative techniques, to avoid endangering the law enforcement personnel, to maintain the ability to obtain candid and necessary information, to fulfill commitments made to sources to protect the confidentiality of information, to avoid endangering these sources, and to facilitate proper selection or continuance of the best applicants or persons for a given position or contract. Although the primary functions of USAID are not of a law enforcement nature, the mandate to ensure USAID funding is not purposefully or inadvertently used to provide support to entities or individuals deemed to be a risk to national security necessarily requires coordination with law enforcement and intelligence agencies as well as use of their information. Use of these agencies' information necessitates the conveyance of these other systems exemptions to protect the information as stated. 3. Amend 22 CFR 215.14 by adding the heading “Note to paragraph (c)(5)” to the undesignated text at the end of the section and paragraph (c)(6) to read as follows: § 215.14 Specific exemptions.

(c)* * *

(6)*Partner Vetting System.* This system is exempt under 5 U.S.C. 552a (k)(1), (k)(2), and (k)(5) from the provision of 5 U.S.C. 552a (c)(3); (d); (e)(1); (e)(4) (G), (H), (I); and (f). These exemptions are claimed to protect the materials required by executive order to be kept secret in the interest of national defense of foreign policy, to prevent subjects of investigation from frustrating the investigatory process, to insure the proper functioning and integrity of law enforcement activities, to prevent disclosure of investigative techniques, to maintain the ability to obtain candid and necessary information, to fulfill commitments made to sources to protect the confidentiality of information, to avoid endangering these sources, and to facilitate proper selection or continuance of the best applicants or persons for a given position or contract. Philip M. Heneghan, Chief Privacy Officer. [FR Doc. 07-3331 Filed 7-19-07; 8:45 am]

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