Notices. Interim final rule

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BILLING CODE 4510-43-P DEPARTMENT OF DEFENSE Office of the Secretary 32 CFR Part 199 [DOD-2007-HA-0048] RIN 0720-AB16 TRICARE; Outpatient Hospital Prospective Payment System

(OPPS)AGENCY: Office of the Secretary, DoD. ACTION: Interim final rule. SUMMARY: This interim final rule implements a prospective payment system for hospital outpatient services similar to that furnished to Medicare beneficiaries, as set forth in section 1833(t) of the Social Security Act. The rule also recognizes applicable statutory requirements and changes arising from Medicare's continuing experience with this system including certain related provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The Department is publishing this rule as an interim final rule to implement existing statutory requirements for adoption of Medicare payment methods for institutional care. Interim final rule publication will ensure the expeditious implementation of a proven hospital OPPS, providing incentives for hospitals to furnish outpatient services in an efficient and effective manner. However, public comments are invited and will be considered for possible revisions to the final rule. DATES: *Effective Dates:* September 13, 2007. *Comments:* Written comments received at the address indicated below by October 15, 2007 will be accepted. ADDRESSES: You may submit comments, identified by docket number and or RIN number and title, by any of the following methods: • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. • *Mail:* Federal Docket Management System Office, 1160 Defense Pentagon, Washington, DC 20301-1160. *Instructions:* All submissions received must include the agency name and docket number or Regulatory Information Number

(RIN)for this **Federal Register** document. The general policy for comments and other submissions from members of the public is to make these submissions available for public viewing on the Internet at *http://regulations.gov* as they are received without change, including any personal identifiers or contact information. FOR FURTHER INFORMATION CONTACT: David E. Bennett, TRICARE Management Activity, Medical Benefits and Reimbursement Systems, telephone

(303)676-3494. SUPPLEMENTARY INFORMATION: I. Justification for Interim Final Rule

(IFR)Making In accordance with Title 5, Part I, Chapter 5, Subchapter II, § 553(b)(3)(B) of the Administrative Procedures Act, the following rationale is being provided for implementing TRICARE's OPPS under the IFR process. In the National Defense Authorization Act for Fiscal Year 2002 (NDAA-02), Public Law 107-107 (December 28, 2001), several reforms were enacted relating to TRICARE coverage and payment methods for skilled nursing and home health services which were all implemented through interim final rule

(IFR)making to ensure expeditious implementation of Congressionally mandated reimbursement systems. In addition to the requirement that TRICARE establish an integrated sub-acute care program consisting of skilled nursing facility and home health care services modeled after the Medicare program, Congress also—in section 707 of NDAA-02—changed the statutory authorization (in 10 U.S.C. 1079(j)(2)) that TRICARE payment methods for institutional care “may be” determined to the extent practicable in accordance with Medicare payment rules to a mandate that TRICARE payment methods “shall be” determined to the extent practicable in accordance with Medicare payment rules. Section 707(c) required that the amendments made by this section shall take effect on the date that is 90 days after the date of the enactment of the Act. In the supplementary sections of both the Sub-Acute Care Program interim and final rules (67 FR 40597, June 13, 2002, and 70 FR 61377—Supplementary Information, VIII. Payment Methods for Hospital Outpatient Services), the public was informed of the Agency's intent to adopt and implement the Medicare Prospective Payment System to the extent practicable. However, because of complexities of the Medicare transition process and the lack of TRICARE cost report data comparable to Medicare's, it was not practicable for the Department to adopt Medicare OPPS for hospital outpatient services at that time. It was recognized that adoption of the Medicare OPPS would require full commitment by the Agency to ensure expeditious implementation of the OPPS given the fact that Medicare's outpatient reimbursement system had been in effect since August 1, 2000. A formal OPPS work group was formed over 2 1/2 years ago to finalize operational requirements and develop sophisticated software for processing and payment of hospital outpatient claims. Although the agency was committed to mirroring the basic Medicare reimbursement methodology as closely as possible (i.e., Medicare Ambulatory Payment Classification

(APC)system, national APC payment rates, geographical wage adjustments, discounting, coding requirements, etc.), there were modifications that had to be done to the software grouping and pricing components to accommodate TRICARE's unique beneficiary and benefit structure. The continual updating of grouping and pricing software based on ongoing Medicare quarterly updates, along with TRICARE specific requirements, have been a challenge to both TRICARE and its Managed Care Support Contractors. Based on the agency's requirement to implement OPPS as mandated under section 707 of NDAA-02 (i.e., the statutory change to 10 U.S.C. 1079(j)(2)) that TRICARE payment methods for institutional care shall be determined to the extent practicable in accordance with Medicare payment rules), and to maximize the administrative efficiencies and cost-savings of this new reimbursement system, TRICARE opted to go with the same interim final rule making process that it used in implementing the two previously mandated Medicare reimbursement systems (i.e., the TRICARE Home Health Agency and the Skilled Nursing Facility Prospective Payment System, which also statutorily mandated under the same NDAA as OPPS—which was section 707 of NDAA-02). The fact that TRICARE will be following Medicare changes to the extent practicable (i.e., outpatient services provided in hospitals subject to Medicare OPPS as specified in 42 CFR § 413.65 and 42 CFR § 419.20 will be paid in accordance with the provisions outlined in section 1833(t) of the Social Security Act and its implementing Medicare regulation (42 CFR 419)) would make it difficult to conform to the traditional proposed and final rule making process since changes would be continual and ongoing based on Medicare rules and policy transmittals. The IFR process would most accurately reflect the provisions of the payment methodology at the time of implementation, while at the same time affording public review and comment which will be addressed in the Final Rule. It is estimated that going with proposed and final rulemaking instead of interim final and final rule making would result in at least a 12-month delay in implementation of the TRICARE Outpatient Prospective Payment System, which in turn would result in the program foregoing projected cost-savings in the amount of $50 to $70 million. TRICARE's Managed Care Support Contractors (MCSCs) have fully integrated the OPPS Outpatient Code Editor and Pricer into their claims processing systems (i.e., the software modules that were developed to process and accurately price hospital outpatient claims). A 12-month delay in implementation of OPPS would result in an additional $8-12 million in administrative costs for the government. Even though the system would remain in test mode it would have to be maintained and updated during the delay (4-6 updates), which would require staff support and programming. Maintaining multiple outpatient reimbursement systems would impose an administrative burden on TRICARE and its MCSCs. A delay would also be extremely challenging from a public relations standpoint, since the MCSCs have already gone out to their network hospitals and renegotiated contracts. Approximately 97 percent of all network agreements have been renegotiated to accommodate implementation of the TRICARE OPPS. As a result, providers are anticipating conversion to OPPS within the near future (i.e., they are reconfiguring their charge masters to accommodate TRICARE OPPS billing). OPPS will ensure consistency of hospital outpatient payments throughout the United States, thus reducing the denial and return of claims to providers for coding errors. Providers will have access to OCE/Pricer software that will facilitate the filing and payment of outpatient claims with their TRICARE claims processors. A 12-month delay would reduce overall administrative cost savings for both providers and TRICARE contractors. These administrative efficiencies/cost-savings will not be lost through IFR making. The general public and other interested parties ( *e.g.* , consulting groups and medical associations) are also anticipating implementation of OPPS in the near future. A significant delay in implementation will cause frustration and confusion. The education efforts will have to be doubled to accommodate a significant delay in implementation of OPPS. There is urgency for TRICARE implementation of the Medicare OPPS given the fact that the Medicare OPPS has been in place since August 1, 2000. The initial delay, which was reflected in the previous Sub-Acute Care Program interim and final rules (67 FR 40597, June 13, 2002, and 70 FR 61377), was due in part to the Agency's desire to avoid the transitioning provisions that were in effect under the Medicare program from its implementation though CY 2005. The remaining time was necessary to accommodate the revised programming necessary to accommodate TRICARE's unique population and benefit structure. The OPPS workgroup (both TMA and contractor staff) has worked over the past three years to ensure expeditious implementation of this Congressionally mandated outpatient reimbursement system. II. Overview The OPPS evolved out of Congressional mandates for replacement of Medicare's cost-based payment methodology with a prospective payment system (PPS). Medicare implemented OPPS for services furnished on or after August 1, 2000, with temporary transitional provisions to buffer the financial impact of the new prospective payment system (e.g., incorporating transitional pass-through adjustments and proportional reductions in beneficiary cost-sharing to lessen potential payment reductions experienced under the new OPPS). Congress likewise established enabling legislation under section 707 of the National Defense Authorization Act of Fiscal Year 2002 (NDAA-02), Pub. L. 107-107 (December 28, 2001) changing the statutory authorization [in 10 U.S.C. 1079(j)(2)] that TRICARE payment methods for institutional care be determined, to the extent practicable, in accordance with the same reimbursement rules used by Medicare. Similarly, under 10 U.S.C. 1079(h), the amount to be paid to health care professional and other non-institutional health care providers “shall be equal to an amount determined to be appropriate, to the extent practicable, in accordance with the same reimbursement rules used by Medicare”. Based on these statutory provisions, TRICARE is adopting Medicare's prospective payment system for reimbursement of hospital outpatient services currently in effect for the Medicare program as required under the Balanced Budget Act of 1997 (BBA 1997), (Pub. L 105-33) which added section 1833(t) of the Social Security Act providing comprehensive provisions for establishment of a hospital OPPS. The Act required development of a classification system for covered outpatient services that consisted of groups arranged so that the services within each group were comparable clinically and with respect to the use of resources. The Act also described the method for determining the Medicare payment amount and beneficiary coinsurance amount for services covered under the outpatient PPS. This included the formula for calculating the conversion factor and data requirements for establishing relative payment weights. Centers for Medicare and Medicaid Services

(CMS)published a proposed rule in the **Federal Register** on September 8, 1998 (63 FR 47552) setting forth the proposed PPS for hospital outpatient services. On June 30, 1999, a correction notice was published (64 FR 35258) to correct a number of technical and typographical errors contained in the September 8, 1998 proposed rule. Subsequent to publication of the proposed rule, the Medicare, Medicaid, and State Child Health Insurance Program (SCHIP) Balanced Budget Refinement Act of 1999 (BBRA 1999) (Pub. L. 106-133) enacted on November 29, 1999, made major changes that affected the proposed outpatient PPS. The following BBRA 1999 provisions were implemented in a final rule (65 FR 18434) published on April 7, 2000. • Made adjustments for covered services whose costs exceed a given threshold (i.e., an outlier payment). • Established transitional pass-through payments for certain medical devices, drugs, and biologicals. • Placed limitations on judicial review for determining outlier payments and the determination of additional payments for certain medical devices, drugs, and biologicals. • Included as covered outpatient services implantable prosthetics and durable medical equipment and diagnostic x-ray, laboratory, and other tests associated with those implantable items. • Limited the variation of costs of services within each payment classification group. • Required at least annual review of the groups, relative payment weights, and the wage and other adjustments to take into account changes in medical practice, the addition of new services, new cost data, and other relevant information or factors. • Established transitional corridors that would limit payment reductions under the hospital outpatient PPS. • Established hold harmless provisions for rural and cancer hospitals. • Provided that the coinsurance amount for a procedure performed in a year could not exceed the hospital inpatient deductible for the year. Section 1833(t) of the Social Security Act was subsequently amended by the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act

(BIPA)of 2000 (Pub. L. 106-554) and the Medicare Prescription Drug, Improvement, and Modernization Act

(MMA)of 2003 (Pub. L. 108-173), making additional changes in the OPPS. As a prelude to implementation of the OPPS, Congress enacted the Omnibus Budget Reconciliation Act of 1986

(OBRA)(Pub. L. 99-509) which paved the way for development of a PPS for hospital outpatient services by prohibiting payment for nonphysician services furnished to hospital patients (inpatients and outpatients), unless the services were furnished either directly or under arrangement with the hospital, except for services of physician assistants, nurse practitioners and clinical nurse specialists. Exceptions were also made for clinical diagnostic procedures, the payment of which may only be made to the person or entity that performed, or supervised the performance of, the test; and for exceptionally intensive hospital outpatient services provided to skilled nursing facility

(SNF)residents that lie well beyond the scope of the care that SNFs would ordinarily furnish, and thus beyond the ordinary scope of the SNF care plan. Consolidated billing facilitated the payment of services included within the scope of each ambulatory payment classification (APC). The OBRA also mandated hospitals to report claims for services under the Healthcare Common Procedure Coding System (HCPCS) which enabled the identification of specific procedures and services used in the development of outpatient PPS rates. Ongoing changes and refinement to the OPPS have been accomplished through annual proposed and final rulemaking, along with interim transmittals and program memoranda taking into consideration changes in medical practice, addition of new services, new cost data, and other relevant information and factors. TRICARE will recognize to the extent practicable all applicable statutory requirements and changes arising from Medicare's continuing experience with this prospective payment system, including changes to the amounts and factors used to determine the payment rates for hospital outpatient services paid under the prospective payment system [e.g., annual recalibration (updating) of group weights and conversion factors and adjustments for area wage differences (wage index updates)]. While TRICARE intends to remain as true as possible to Medicare's basic OPPS methodology (i.e., adoption and updating of the Medicare data elements used to calculate the prospective payment amounts), there will be some deviations required to accommodate the uniqueness of the TRICARE program. These deviations have been designed to accommodate existing TRICARE benefit structure and claims processing procedures/systems implemented under the TRICARE Next Generation Contracts (T-NEX), while at the same time eliminating any undue financial burden to TRICARE Prime, Extra, and Standard beneficiary populations. Following is a brief discussion of each of these deviations: • *Outpatient Code Editor (OCE)* —The Medicare Outpatient Code Editor with APC program edits data to help identify possible errors in coding and assigns Ambulatory Payment Classification numbers based on HCPCS codes for payment under the OPPS. The OPPS is an outpatient equivalent of the inpatient, Diagnosis Related Group (DRG)-based PPS. Like the inpatient system based on DRGs, each APC has a pre-established prospective payment amount associated with it. However, unlike the inpatient system that assigns a patient to a single DRG, multiple APCs can be assigned to one outpatient claim. If a patient has multiple outpatient services during a single visit, the total payment for the visit is computed as the sum of the individual payments for each service. Medicare provides updated versions of the OCE, along with installation and user manuals, to its fiscal intermediaries on a quarterly basis. The updated OCE reflects all new coding and editing changes during that quarter. It was found upon initial testing of the OCE that it could not be used in its present form given the fact that the extensive editing embedded in its software program was specific to Medicare's benefit structure and internal claims processing requirements. As a result, the Agency has developed a TRICARE-specific OCE which will better accommodate the benefit structure and claims processing systems currently in place under the T-NEX contracts. This modified software package will edit claims data for errors and indicate actions to be taken and reasons why the actions are necessary. This expanded functionality will facilitate the linkage between the action being taken, the reasons for the action, and the information on the claim that caused the action. The edits will be specific for TRICARE, ensuring compliance with current claims processing criteria. The OCE will also assign an APC number for each service covered under the OPPS and return information to be used as input to the TRICARE PRICER program. Like Medicare's OCE, the TRICARE-specific OCE will be updated on a quarterly basis incorporating, to the extent practicable, all Medicare changes/updates (i.e., those changes initiated through rulemaking and transmittals/program memoranda). Periodic updating of the TRICARE-specific OCE will ensure consistency and accuracy of claims processing and payment under the OPPS. • *Deductible and Cost-Sharing* —Medicare's OPPS coinsurance was initially frozen at 20 percent of the national median charge for the services within each APC (wage adjusted for the provider's geographic area) or 20 percent of the APC payment rate, whichever was greater (i.e., the coinsurance for an APC could not fall below 20 percent of the APC payment rate). This was designed so that, as the total payment to the provider increased each year based on market basket updates, the present or frozen coinsurance amount would become a smaller portion of the total payment until the coinsurance represented 20 percent of the total. Once the coinsurance became 20 percent of the payment amount, annual updates would be applied to the coinsurance so that it would continue to account for 20 percent of the total charge. Wage adjusted coinsurance amounts were further limited by the Medicare inpatient deductible. Subsequent legislation has accelerated the reduction of beneficiary copayment amounts by imposing prescribed percentage limitations off of the APC payment rate. For example, for all services paid under the OPPS in CY 2005, the national unadjusted copayment amount cannot exceed 45 percent of the APC rate. Accelerated reductions were imposed specifically for those APC groups for which coinsurance represented a relatively high proportion of the total payment. A program payment percentage is calculated for each APC by subtracting the unadjusted national coinsurance amount for the APC from the unadjusted payment rate and dividing the result by the unadjusted payment rate. The payment rate for each APC group is the basis for determining the total payment (subject to wage-index adjustment) that a hospital will receive from the beneficiary and the Medicare program. Since imposition of Medicare's unadjusted national coinsurance amounts would have an adverse financial impact on TRICARE beneficiaries (i.e., imposition of significantly higher cost-sharing for Primary beneficiaries), the Agency has opted to use the following hospital outpatient deductible and cost-sharing/copayments currently being applied in Tables 1 and 2 below for Prime, Extra, and Standard TRICARE programs for hospital outpatient services: Table 1.—Hospital Outpatient Deductibles TRICARE programs Active duty family members E1-E4 E5 and above Retirees, their family members and survivors Prime None None None. Extra $50 per Individual $150 per Individual $150 per Individual. $100 Maximum per family $300 Maximum per family $300 Maximum per family. Standard $50 per Individual $150 per Individual $150 per Individual. $100 Maximum per family $300 Maximum per family $300 Maximum per family. Table 2.—Hospital Outpatient Copayments/Cost-Sharing TRICARE prime program Active duty family members E1-E4 E5 and above Retirees, their family members and survivors TRICARE extra program TRICARE standard program $0 copayment per visit $0 copayment per visit $12 copayment per visit Active Duty Family Members: Cost-share—15% of fee negotiated by contractor Retirees, Their Family Members and Survivors: Cost-share—20% of the fee negotiated by the contractor Active Duty Family Members: Cost-share—20% of the allowable charge. Retirees, Their Family Members & Survivors: Cost-share—25% of the allowable charge. • *Hold-Harmless Protection* —Since the inception of the Medicare OPPS, providers have been eligible to receive additional transitional outpatient payments

(TOPs)if the payments they received under the OPPS were less than the payments they could have received for the same services under the payment system in effect before the OPPS. Prior to January 1, 2004, most hospitals that realized lower payments under OPPS received transitional corridor payments based on a percent of the decreased payments, with the exception of cancer hospitals, children's hospitals and rural hospitals having 100 or fewer beds which were held harmless under this provision and paid the full amount of the decrease in payment under the OPPS. Since transitional corridor payments were intended to be temporary payments to ease the provider's transition from a prior cost-based payment system to a prospective payments system, they were terminated as of January 1, 2004, with the exception of cancer and children's hospitals who were held harmless permanently under transitional corridor provisions of the statute (section 1833(t)(7) of the Social Security Act). The authority for making transitional corridor payments under section 1833(t)(7)(D)(i) of the Act, as amended by section 411 Pub. L. 108-173, expired for rural hospitals having 100 or fewer beds, and sole community hospitals

(SCHs)located in rural areas as of December 31, 2005. However, subsequent legislation (Section 5105 of Pub. L. 109-171) reinstituted the hold-harmless transitional outpatient payments

(TOPs)for covered OPD services furnished on or after January 1, 2006, and before January 1, 2009, for rural hospitals having 100 or fewer beds that are not SCHs. This provision provided an increased payment for such hospitals for outpatient services if the OPPS payment they received was less than the pre-BBA payment amount (i.e., the amount that was received prior to implementation of OPPS) that they would have received for the same covered service. When the OPPS payment is less than the payment the provider would have received prior to OPPS implementation, the amount of payment is increased by 90 percent of the amount of that difference for CY 2007, and by 85 percent of the amount of the difference for CY 2008. The amount of payment under Section 1833(t)(13)(B) of the Act, as amended by section 411 of Pub. L. 108-73, also provided a payment increase for rural SCHs of 7.1 percent for all services and procedures paid under the OPPS, excluding drugs, biologicals, brachytherapy seeds and services paid under pass-through payments effective January 1, 2006, if justified by a study of the difference in costs for rural SCHs. While the Agency adopted the hold-harmless TOPs for rural hospitals having 100 or fewer beds and SCHs, it opted to totally exempt cancer and children's hospitals from the OPPS in lieu of imposing the hold-harmless provision, given the administrative complexity of capturing the data required for payment of monthly interim TOP amounts. TOPs would require a comparison of what would have been paid [i.e., billed charges and CHAMPUS Maximum Allowable Charge

(CMAC)amounts] prior to implementation of the OPPS for hospital outpatient services to those amounts actually paid under the OPPS for the same services. A TOP would be allowed in addition to the OPPS amount if payment to a cancer or children's hospital was lower than the amount that would have been paid prior to implementation of the OPPS. Since transitional corridor payments were specifically designed to supplement the losses experienced under the OPPS (i.e., to pay for services at the full amount that would have been allowed prior to implementation of the OPPS), and most, if not all, outpatient services paid at a billed or CMAC would exceed the OPPS amount, the program cannot justify the administrative burden/expense of maintaining the hold-harmless provisions for cancer and children's hospitals. As a result, TRICARE will continue to reimburse cancer and children's hospitals on a fee-for-services basis using billed charges and CMAC rates; i.e., they will be excluded altogether from the OPPS. Adoption of the Medicare OPPS has also highlighted other policy considerations which must be addressed in order to accommodate preexisting authorization criteria and reimbursement systems. Following are these identified policy considerations and prescribed resolutions: • *Partial Hospitalization Programs (PHP)* —Currently, TRICARE coverage extends to both full- and half-day psychiatric partial hospitalization services furnished by TRICARE-authorized partial psychiatric hospitalization programs and authorized mental health providers for the active treatment of a mental disorder. Each psychiatric partial hospitalization program must be either a distinct part of an otherwise authorized institutional provider or a freestanding program certified pursuant to TRICARE certification standards; i.e., the facility must be accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) under the current edition of the Accreditation Manual for Mental Health, Chemical Dependency, and Mental Retardation/Developmental Disabilities Services and meet all other requirements as prescribed under 32 CFR 199.6(b)(4)(xii)(A) through (D). These authorized and participating partial hospitalization programs are paid a percentage off of the average inpatient per diem amount per case to both high- and low-volume psychiatric hospitals. Full-day partial hospitalization programs (minimum of 6 hours) receive 40 percent of the average inpatient per diem, while partial hospitalization programs with less than 6 hours (with a minimum of three hours) will be paid a per diem of 75 percent of the rate for full-day partial hospitalization programs. Although the prescribed payment methodology for PHP under OPPS is similar to that currently being used (i.e., payment under a per diem recognizing the provider's overhead costs and support staff), there are subtle differences in that OPPS' all-inclusive per diems represent actual median costs of furnishing a day of partial hospitalization while per diems under the existing TRICARE system as prescribed under 32 CFR 199.14(a)(2)(ix) are extrapolated from inpatient costs based on the intensity of the program (i.e., dependent on whether it is classified as a full- or half-day program). Another notable difference between the two programs is the continuation of reimbursement of half-day PHPs (≥ to 3 hrs. but < 6 hrs.) under TRICARE which are currently not recognized for payment under the Medicare OPPS (i.e., Medicare has not established a separate APC for half-day PHPs which can be used for reimbursement under the TRICARE OPPS). This deviation from the Medicare PHP required the establishment of an additional APC, the per diem of which was set at 75 percent of the unadjusted full-day PHP APC amount (i.e., 75 percent of the APC 0033 amount of $234.73, equaling $176.05 for CY 2007). This will ensure continued coverage of a well established mental health treatment modality (half-day PHP) which has been in place under TRICARE for over a decade. The above-established per diems reflect the structure and scheduling of PHPs, and the composition of the PHP APC consists of the cost of all services provided each day. Although there is a requirement that each PHP day include a psychotherapy service, there is no specification regarding the specific mix of other services furnished within the day. The TRICARE criteria under which PHP services may be rendered are different than Medicare's—both with regard to the need for PHP services and facility requirements. Currently, Medicare OPPS partial hospitalization services may be provided to patients in lieu of inpatient psychiatric care in hospital outpatient departments or Medicare-certified community mental health centers (CMHCs). The Agency has opted to retain the existing mental health review criteria under 32 CFR 199.4(b)(10) in order to ensure the continued level and quality of mental health care afforded under the basic program. Following are the TRICARE review criteria for determining the medical necessity of psychiatric partial hospitalization services: • The patient is suffering significant impairment from a mental disorder (as defined in § 199.2) which interferes with age appropriate functioning. • The patient is unable to maintain himself or herself in the community, with appropriate support, at a sufficient level of functioning to permit an adequate course of therapy exclusively on an outpatient basis (but is able, with appropriate support, to maintain a basic level of functioning to permit partial hospitalization services and presents no substantial imminent risk of harm to self or others). • The patient is in need of crisis stabilization, treatment of partially stabilized mental health disorders, or services as a transition from an inpatient program. • The admission into the partial hospitalization program is based on the development of an individualized diagnosis and treatment plan expected to be effective for the patient and permit treatment at a less intensive level. Based on existing mental health review criteria under 32 CFR 199.4(b)(10) and certification requirements prescribed under 32 CFR 1996(b)(4)(xii)(A), including accreditation by the JCAHO, under the current edition of the Accreditation Manual for Mental Health, Chemical Dependency, and Mental Retardation/Developmental Disabilities Services, not all hospital-based PHPs will be assured of receiving payment under the OPPS unless they meet the above prescribed certification requirements and enter into a participation agreement with TRICARE. CMHC PHPs have been excluded from payment under the TRICARE OPPS since CMHCs are not recognized as authorized providers under the TRICARE program. While the authorization standards under 32 CFR 199.6(b)(4)(xii)(A) through

(D)will be retained/applied for both hospital-based and freestanding PHPs currently recognized under the Program, including the requirement for a written participation agreement with TRICARE, freestanding PHPs will be exempt from OPPS and will continue to be reimbursed under the old TRICARE PHP per diem system as prescribed under 32 CFR 199.14(a)(2)(ix), subject to their own unique mental health copayment/cost-sharing provisions. • *Ambulatory Surgery Procedures* —Currently, ambulatory surgery procedures provided in both freestanding ambulatory surgery centers

(ASCs)and hospital outpatient departments or emergency rooms are paid using prospectively determined rates established on a cost basis and divided into eleven groups as prescribed under 32 CFR 199.14(d). These payment groups are further adjusted for area labor costs based on Metropolitan Statistical Areas (MSAs). The payment rates established under this system apply only to facility charges for ambulatory surgery (e.g., standard overhead amounts that include, but are not limited to, nursing and technician services, use of the facility and supplies and equipment directly related to the surgical procedure) and do not include such items as physician's fees, laboratory, X-rays or diagnostic procedures (other than those directly related to the performance of the surgical procedure), prosthetics and durable medical equipment for use in the patient's home. Ambulatory surgery procedures (both provided in hospital-based and freestanding ambulatory surgery centers) are subject to their own unique copayment/cost-sharing provisions under the current TRICARE ambulatory surgery benefit. With implementation of the OPPS, hospital-based ambulatory surgery procedures will no longer be reimbursed under the original eleven tier payment system, but will instead be paid on a rate-per-service basis that varies according to the APC group to which the surgical procedure is assigned. The relative weight of the APC group will represent the median hospital cost of the services included in the APC relative to the median cost of services included in APC 0606, Level 3 Clinic Visit. The prospective payment rate for each APC will be calculated by multiplying the APC's relative weight by a nationally established conversion factor and adjusting it for geographic wage differences. The APC payment will be subject to the deductible and cost-sharing/copayment amounts currently being applied under Prime, Extra, and Standard TRICARE programs for hospital outpatient services. Denial of Medicare inpatient procedures will also be adhered to under the OPPS (i.e., denial of inpatient surgical procedures performed in a hospital outpatient setting) except for those inpatient procedures, which upon medical review, could be safely and efficaciously rendered in an outpatient setting due to TRICARE's younger, healthier beneficiary population. TRICARE-specific APCs will be developed for these designated inpatient procedures based on median costs off of the most recent 12 months of claims history. OPPS reimbursement will also be extended for an inpatient procedure performed to resuscitate or stabilize a patient with an emergent, life-threatening condition who dies before being admitted as a patient, which in this case, will be paid under a new technology APC. Freestanding ASCs will be exempt from OPPS and will continue to be paid under the existing eleven tier payment system. ASC procedures will be placed into one of ten groups by their median per procedure cost, starting with $0 to $299 for Group 1, and ending with $1,000 to $1,299 for Group 9 and $1,300 and above for Group 10, subject to their own unique copayment/cost-sharing provisions under the TRICARE freestanding ambulatory surgery benefit. The eleventh payment tier/group was added to the ASC reimbursement system as of November 1, 1998, for extracorporeal shock wave lithotripsy, with a rate established off of the inpatient Diagnostic Related Group

(DRG)323 which is currently $3,289. • *Birthing Centers* —As described in 32 CFR 199.6(b)(4)(xi)(3), a birthing center is a freestanding or institution-affiliated outpatient maternity care program which principally provides a planned course of outpatient prenatal care and outpatient childbirth services limited to low-risk pregnancies. These all-inclusive maternity and childbirth services are currently being reimbursed in accordance with 32 CFR 199.14(e) at the lower of the TRICARE established all-inclusive rate or the billed charge. The all-inclusive rate includes laboratory studies, prenatal management, labor management, delivery, post-partum management, newborn care, birth assistant, certified nurse-midwife professional services, physician professional services, and the use of the facility to the extent that they are usually associated with a normal pregnancy and childbirth. Since institutional-affiliated maternity centers will continue to be reimbursed under the TRICARE maximum allowable birthing center all-inclusive rate methodology as prescribed under 32 CFR 199.14(e), payment will be equal to the sum of the Class 3 CMAC for total obstetrical care for a normal pregnancy and delivery (CPT code 59400) and the TMA supplied non-professional component amount, which includes both the technical and professional components of tests usually associated with a normal pregnancy and childbirth. As a result, hospital-based birthing centers will continue to be reimbursed the same as freestanding birthing centers except that updating of the hospital-based all inclusive rate, consisting of the CMAC for procedure code 59400 (Birthing Center, all-inclusive charge, complete) and the state specific non-professional component, will lag two months behind the freestanding birthing center all-inclusive update; i.e., the freestanding birthing center all-inclusive rate components will usually be updated on February 1 of each year to coincide with the annual CMAC file update, followed by the hospital-based birthing center all-inclusive rate component updates on April 1 of the same year. There will also be differences in cost-sharing based on the particular outpatient setting, since the cost-share amount for freestanding birthing center claims will continue to be calculated using the ambulatory surgery formula while cost-share for hospital-based claims will be calculated under the regular outpatient cost-sharing provisions. • *Observation Stays* —Observation Services are those services furnished on a hospital's premises, including the use of a bed and periodic monitoring by a hospital's staff, which are reasonable and necessary to evaluate an outpatient's condition or to determine the need for a possible admission to the hospital as an inpatient. Under Medicare, a hospital may receive separate APC payments for observation services for patients having diagnoses of chest pain, asthma, or congestive heart failure, when billed in conjunction with an evaluation and management visit for a minimum of 8 hours. Since these qualifying diagnoses would greatly restrict separate payment of observation stays currently being reimbursed based solely on medical necessity, they are being expanded to accommodate the special needs of unique TRICARE beneficiary populations (e.g., separate payment for maternity observations stays). Separate payment of maternity observation stays required the modification of the existing conditional criteria for separate payment of observation stays associated with pain, asthma or congestive heart failure. Under the TRICARE OPPS, additional hospital services (e.g., separate emergency room visit or clinic visit) will not be required on a claim with a maternity diagnosis in order to receive separate payment for an observation stay. The minimum time requirements have also been reduced from 8 to 4 hours to ensure maximum coverage of medically necessary maternity observation stays. • *End-State Renal Disease

(ESRD)Dialysis Services* —In accordance with sections 1881(b)

(2)and (b)(7) of the Social Security Act, a facility that furnishes dialysis services to Medicare patients with ESRD is paid a prospectively determined rate for each dialysis treatment furnished. The rate is a composite that includes all costs associated with furnishing dialysis services except for the costs of physician services and certain laboratory tests and drugs that are billed separately. CMS has exercised the authority granted under section 1833(t)(1)(B)(i) to exclude from the outpatient PPS those services for patients with ESRD that are paid under the ESRD composite rate. Since TRICARE does not have a comparable composite rate in effect for payment of ESRD services, they will be reimbursed under TRICARE's OPPS. III. Treatment Settings Subject to Outpatient Prospective Payment System The outpatient prospective payment system is applicable to any hospital participating in the Medicare program except for Critical Access Hospitals (CAHs), Indian Health Service hospitals, certain hospitals in Maryland that qualify for payment under the state's cost containment waiver, and hospitals located outside one of the 50 states, the District of Columbia and Puerto Rico and specialty care providers which include:

(1)Cancer and children's hospitals;

(2)freestanding ASCs;

(3)freestanding partial hospitalization programs (PHPs);

(4)freestanding psychiatric and substance use disorder rehabilitation facilities (SUDRFs);

(5)comprehensive outpatient rehabilitation facilities (CORFs);

(6)home health agencies (HHAs);

(7)hospice programs;

(8)other corporate services providers (e.g., freestanding cardiac catheterization centers, freestanding sleep diagnostic centers, and freestanding hyperbaric oxygen treatment centers);

(9)freestanding birthing centers;

(10)VA hospitals; and

(11)freestanding ESRD centers. Due to their inability to meet the more stringent requirements imposed for hospital-based and freestanding PHPs under the Program. CMHCs have also been excluded from payment under OPPS for partial hospitalization program

(PHP)services since they are not recognized as authorized providers under the TRICARE program. An outpatient department, remote location hospital, satellite facility, or other provider-based entity must also be either created by, or acquired by, a main provider (hospital qualifying for payment under OPPS) for the purpose of furnishing health care services of the same type as those furnished by the main provider under the name, ownership, and financial administrative control of the main provider, in accordance with the following requirements under 42 CFR § 413.65 (Medicare Regulation) in order to qualify for payment under the OPPS: • *Licensure* —The outpatient department, remote location hospital, or the satellite facility and the main hospital are operated under the same license, except in areas where the State requires a separate license for the department of the provider. • *Clinical Integration* —Professional staff of the outpatient department, remote location hospital or satellite facility are monitored by, and have clinical privileges at the main hospital. The medical director of the outpatient facility must also maintain a reporting relationship with the chief medical officer at the main hospital that has the same frequency, intensity and level of accountability that exists in the relationship between other departmental medical directors and the chief medical officer of the main hospital. Medical records for patients treated in the facility or organization must be integrated into a unified retrieval system (or cross reference) of the main hospital and there must be full access to all services provided at the main hospital for patients treated in the outpatient facility requiring further care. • *Financial integration.* The financial operation of the outpatient facility must be fully integrated within the financial system of the main hospital, as evidenced by shared income and expenses between the main hospital and outpatient facility. • *Public awareness.* The outpatient department, remote location hospital, or a satellite facility is held out to the public and other payers as part of the main provider. When patients enter the outpatient facility they are aware that they are entering the main provider and are billed accordingly. Having clear criteria for provider-based status is important because this designation can result in additional TRICARE payments for services at the provider-based facility (i.e., the incorporation of additional facility costs for covered outpatient services/procedures). TRICARE will accept CMS' provider-based status evaluations/determinations for all hospital outpatient facilities seeking reimbursement under the TRICARE OPPS. IV. Application of Ambulatory Payment Classification

(APC)Model Payment for services under the OPPS is based on grouping outpatient services into APC groups in accordance with provisions outlined in section 1833(t) of the Social Security Act and its implementing regulation 42 CFR part 419. This grouping is accommodated through the reporting of HCPCS codes and descriptors that are used to group homogenous services (both clinically and in terms of resource consumption) into their respective APC groups. During the development of the hospital OPPS it was recognized that certain hospital outpatient services were being paid based on fee schedules or other prospectively determined rates that were being applied across other ambulatory care settings. As a result, the following services were excluded from the OPPS in order to achieve consistency of payment across different service delivery sites:

(1)Physician services;

(2)nurse practitioner and clinical nurse specialist services;

(3)physician assistant services;

(4)certified nurse-midwife services;

(5)services of a qualified psychologist;

(6)clinical social worker services, except under half- and full-day partial hospitalization programs in which the services are included within the per diem payment amount;

(7)services of an anesthetist;

(8)screening and diagnostic mammographies;

(9)clinical diagnostic services;

(10)non-implantable DME, orthotics, prosthetics, and prosthetic devices and supplies;

(11)hospital outpatient services furnished to SNF inpatients as part of their comprehensive care plan;

(12)ambulance services;

(13)physical therapy;

(14)speech-language pathology;

(15)occupational therapy;

(16)influenza and pneumococcal pneumonia vaccines;

(17)take-home surgical dressings;

(18)services and procedures designated as requiring inpatient care; and

(19)ambulance services. These services will continue to be reimbursed under the current CMAC fee schedule or other TRICARE-recognized allowable charge methodology (e.g., statewide prevailings). The remaining outpatient procedures which were not being paid under current fee schedules or other prospectively determined rates were grouped under an APC as set forth in section 1833(t)(2)(B) of the Social Security Act and under 42 CFR § 419.31 based on the following criteria: • *Resource Homogeneity* —The amount and type of facility resources (for example, operating room, medical supplies, and equipment) that are used to furnish or perform the individual procedures or services within each APC group should be homogeneous. That is, the resources used are relatively constant across all procedures or services even though resources used may vary somewhat among individual patients. • *Clinical Homogeneity* —The definition of each APC should be “clinically meaningful.” That is, the procedures or services included within the APC group relate generally to a common organ system or etiology, have the same degree of extensiveness, and utilize the same method of treatment. • *Provider Concentration* —The degree of provider concentration associated with the individual services that comprise the APC is considered. If a particular service is offered only in a limited number of hospitals, then the impact of payment for the services is concentrated in a subset of hospitals. Therefore, it is important to have an accurate payment level for services with a high degree of provider concentration. Conversely, the accuracy of payment levels for services that are routinely offered by most hospitals does not bias the payment system against any subset of hospitals. • *Frequency of Service* —Unless there is a high degree of provider concentration, creating separate APC groups for services that are infrequently performed is avoided. Since it is difficult to establish reliable payment rates for low-volume groups, HCPCS codes are assigned to an APC that is most similar in terms of resource use and clinical coherence. • *Minimal Opportunities for Upcoding and Code Fragmentation* —The APC system is intended to discourage using a code in a higher paying group to define the care. That is, putting two related codes such as the codes, for excising a lesion for 1.1 cm and one of 1.0 cm, in different APC groups may create an incentive to exaggerate the size of the lesions in order to justify the incrementally higher payment. APC groups based on subtle distinctions would be susceptible to this kind of coding. Therefore, APC groups were kept as broad and inclusive as possible without sacrificing resource or clinical homogeneity. These procedures, along with their specific HCPCS coding and descriptors, were used to identify and group services within each established APC group. They included:

(1)Surgical procedures (including hospital-based ASC procedures currently being paid under the eleven tier ASC payment methodology);

(2)radiology, including radiation therapy;

(3)clinic visits;

(4)emergency department visits;

(5)diagnostic services and other diagnostic tests;

(6)partial hospitalization for the mentally ill;

(7)surgical pathology;

(8)cancer therapy;

(9)implantable medical items (e.g., prosthetic implants, implantable DME and implantable items used in performing diagnostic x-rays and laboratory tests);

(10)specific hospital outpatient services furnished to a beneficiary who is admitted to a SNF, but in which case the services are beyond the scope of SNF comprehensive care plans;

(11)certain preventive services, such as colorectal cancer screening;

(12)acute dialysis (e.g., dialysis for poisoning); and

(13)ESRD services. These hospital outpatient procedures will be paid on a rate-per-service basis that varies according to the APC group to which they are assigned. In accordance with section 1833(t)(2) of the Social Security Act, services and items within an APC group cannot be considered comparable with respect to the use of resources in the APC group if the highest median cost is more than 2 times the lowest median cost for an item or service within the same group (referred to a the “2 times rule”). Exceptions may be granted in unusual cases, such as low-volume items and services, but cannot be extended in cases of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug and Cosmetic Act. V. Packaging and Special Payment Provisions Under OPPS The prospective payment system establishes a national payment rate, standardized for geographic wage differences, that includes operating and capital-related costs that are directly related and integral to performing a procedure or furnishing a service on an outpatient basis, which has ultimately resulted in the establishment of distinct groups of surgical, diagnostic, and partial hospitalization services, as well as medical visits. No separate payment is made for packaged services, because the cost of these items is included in the APC payment for the service of which they are an integral part. These costs include, but are not limited to:

(1)Use of operating suite;

(2)use of procedure room or treatment room;

(3)use of recovery room or area;

(4)use of an observation bed;

(5)anesthesia, along with supplies and equipment for administering and monitoring anesthesia or sedation;

(6)certain drugs, biologicals, and other pharmaceuticals;

(7)medical and surgical supplies;

(8)surgical dressings;

(9)devices used for external reduction of fractures and dislocations;

(10)intraocular lenses (IOLs);

(11)capital related costs;

(12)costs incurred to procure donor tissue other than corneal tissue;

(13)incidental services such as venipuncture;

(14)implantable items used in connection with diagnostic laboratory tests, and other diagnostics; and

(15)implantable prosthetic devices (other than dental) which replace all or part of an internal body organ (including colostomy bags and supplies directly related to colostomy care), including replacement of these devices. Payments for packaged services under the OPPS are bundled into the payment providers receive for separately payable services provided on the same day and are identified by the status indicator

(SI)“N”. Hospitals include charges for packaged services on their claims, and the costs associated with these packaged services are bundled into the costs for separately payable procedures in calculating their payment rates. The following criteria are used in determining whether procedures should be packaged:

(1)Whether the service is normally provided separately or in conjunction with other services;

(2)how likely it is for the costs of the packaged code to be appropriately mapped to the separately payable codes with which it was performed;

(3)whether the APC payment to which the services were packaged will offset the hospital's actual costs; and

(4)whether the expected cost of the service is relatively low. Special logic has also been programmed into the OCE which will have the OPPS PRICER automatically assign payment for a special packaged service reported on a claim if there were no other services separately payable under the OPPS claim for the same date. A new status indicator “Q” will be assigned to these special packaged codes to indicate that they are usually packaged, except for special circumstances when they are separately payable. Based on the above packaging criteria, is was felt that certain other expensive items and services which were otherwise considered an integral part of another procedure should not be packaged within that procedure's APC payment rate, since the resulting payment would not offset the costs of those items and services. This could have a potentially negative impact, thereby jeopardizing access to these items and services in a hospital outpatient setting. As a result, the costs associated with these items and services were not packaged within the APC of the primary procedure with which they were normally associated. Instead, separate APCs were developed for payment of these items and services under the following payment provisions: • *Transitional Pass-Through for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals.* Although the costs of drugs, biologicals and pharmaceuticals are generally packaged into the APC payment rate for the primary procedure or treatment with which the drugs are usually furnished, there are special temporary additional payments or “transitional pass-through payments” available under section 1833(t)(6) of the Social Security Act for at least two years, but not more than three years for the following drugs and biologicals:

(1)Current orphan drugs, as designated under section 526 of the Federal Food, Drugs, and Cosmetic Act;

(2)current drugs and biological agents used for treatment of cancer;

(3)current radiopharmaceutical drugs and biological products; and

(4)new drugs and biologic agents in instances where the item was not being paid as a hospital outpatient service as of December 31, 1996, and where the cost of the item is “not insignificant” in relation to the hospital OPPS payment amount. Section 1833(t)(6)(D)(i) of Social Security Act sets the payment rate for pass-through eligible drugs as amounts determined under section 1842(o) of the Act. Section 1847A of the Act establishes the use of average sales price

(ASP)methodology (i.e., the rate equivalent to the payment that would be received in a physician office setting) as the basis for payment for drugs and biologicals described in section 1842(o)(1)(C) of the Act. Section 1883(t)(6)(D)(i) also states if a drug or biological is covered under a competitive acquisition contract under section 1847B of the Act, the payment rate is equal to the average price for the drug or biologicals for all competitive acquisition areas. Thus, drugs and biologicals with pass-through status in CY 2007 will receive payment consistent with the provision of section 1842(o) of the Act, at a rate that is equivalent to the payment they would receive in a physician office setting

(ASP)or the rate that would be paid under the competitive acquisitions program, while pass-through radiopharmaceuticals will be paid the hospital's charge for the radiopharmaceutical adjusted to the cost using the hospital's overall cost-to-charge ratio (CCR). • *Packaging and Payment for Drugs, Biologicals and Radiopharmaceuticals Without Pass-Through Status.* Drugs, biologicals and radiopharmaceuticals that do not have pass-through status are paid in one of two ways: Either packaged into the APC payment rate for the procedure or treatment with which the products are usually furnished, or separately based on a packaging threshold which has been set at $55 for CY 2007. Therefore, for CY 2007 and beyond, drugs, biologicals and radiopharmaceuticals that are not new and do not have pass-through status will be packaged if their calculated per-day cost is equal to or more than $55 for CY 2007 or equal to or more than the updated threshold (i.e., the packaging threshold inflated annually by the Producer Price Index

(PPI)for prescription drugs), with the exception of 5HT3 antiemetics which will continue to be paid separately regardless of their calculated per-day cost. Section 1833(t)(14) of the Act requires special classification of certain separately payable drugs, biologicals and radiopharmaceuticals and mandates payment under section 1833(t)(14)(A)(iii) of the Act for specified covered outpatient drugs in CY 2006 and subsequent years to be equal to the average acquisition cost for the drug subject to any adjustment for overhead costs, which for CY 2007 is a combined rate of ASP + 6 percent. Separately payable drugs and biologicals without ASP-based data will be paid at their mean cost calculated from Medicare CY 2005 hospital claims data. The preadmission-related services associated with intravenous immune globulin

(IVIG)will continue to be paid under a New Technology APC with a rate of $75. Also, payment for blood clotting factors in the outpatient setting will be set at ASP + 6 percent, plus the updated furnishing fee of $0.15. The temporary policy of paying radiopharmaceuticals at charges reduced to costs is also being extended for one additional year since it is still considered the best proxy for radiopharmaceutical acquisition and overhead costs. However, separate payment will only apply to those radiopharmaceuticals with per-day costs greater than $55. • *Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals With HCPC Codes, But Without OPPS Claims Data* . For CY 2007, hospitals will receive payment for nonpass-through radiopharmaceuticals without hospital claims data that have been assigned HCPCS codes as of January 1, 2007, at the hospital's charge for the radiopharmaceutical adjusted to cost using the hospital's overall cost-to-charge ratio, which will be the same methodology used in the payment for pass-through radiopharmaceuticals. For new drugs without pass-through status or hospitals claims data, payment will be made at the lesser of the ASP or competitive acquisition contract price (Part B CAP). In rare instances where a drug does not have a Part B drug CAP rate or data available for use for ASP methodology, payment will be made at 95 percent of the product's most recent AWP. Established drugs without hospital claims data that have been classified as separately payable in CY 2007 will be paid per the ASP-based methodology at a rate of ASP+ 6 percent. New drugs, biologicals and devices which qualify for separate payment under OPPS, but have not yet been assigned to a transitional APC (i.e., assigned to a temporary APC for separate payment of an expensive drug or device) will be reimbursed under the TRICARE standard allowable charge methodology. This allowable charge payment will continue until a transitional APC has been assigned (i.e., until CMS has had the opportunity to assign the new drug, biological or device to a temporary APC for separate payment). • *Drug Administration Coding and Payment.* For CY 2007, hospitals will be expected to report the full set of CPT drug administration codes in a manner consistent with their descriptors, CPT instructions and correct coding principles. They will no longer be able to report the alphanumeric HCPCS codes (C8950, C8951, C8952, C8954, and C8955) that were recognized prior to January 1, 2007. These newly recognized CPT codes will be assigned to six new drug administration APCs, with payment rates based on median costs for the APCs as calculated from Medicare's CY 2005 claims data. • *Payment for Blood and Blood Products* . Since Medicare's implementation of the OPPS in August 1, 2000, separate payments have been made for blood and blood products through APCs rather than packaging them into the procedures with which they were administered. Hospital payment for the costs of blood and blood products, as well as the costs of collecting, processing, and storing blood products, are made through the OPPS payments for specific blood product APCs. For CY 2007, these blood products payments will be based on the unadjusted, simulated median costs for blood and blood products that are derived from CY 2005 Medicare claims data, with the exception of the seven products for which there will be a payment adjustment to smooth their transition to full claims-based payment in the future. • *Other Procedures or Services Costs Not Packaged in APC Payment.* Costs for casting, splinting and strapping services, immunosuppressive drugs for patients following organ transplant, and certain other high-cost drugs that are infrequently administered are not packaged into the costs of the primary procedures with which they are normally associated. Instead, new APC groups have been created for these items and services, which will allow separate payment. • *Corneal Tissue Acquisition Costs.* Corneal tissue acquisition costs will not be packaged with the APC payment for corneal transplant surgical procedures. Instead, separate payment will be made based on the hospital's reasonable costs incurred to acquire corneal tissue. Corneal acquisition costs must be submitted using HCPCS code V2785 (Processing, Preserving and Transporting Corneal Tissue), indicating the actual cost of the acquisition rather than the hospital's charge on the bill. • *Transitional Pass-Through Payment for Devices.* Transitional payments will only apply to new and innovative medical devices meeting the following criteria:

(1)Were not recognized for payment as a hospital outpatient service prior to 1997 ( *i.e.* , payment was not being made as of December 31, 1996) or treated as meeting the time constraints under special prescribed conditions;

(2)have been approved/cleared for use by the Food and Drug Administration (FDA);

(3)are determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part;

(4)are an integral and subordinated part of the procedure performed, are used for one patient only (except for reprocessed single-use devices meeting FDA's most recent regulatory criteria on single-use devices), are surgically implanted or inserted via a natural or surgically created orifice or incision and remain with the patient after the patient is released from the hospital outpatient department;

(5)are not equipment, instruments, apparatus, implements, or such items for which depreciation and financing expenses are recovered as depreciable assets;

(6)are not materials and supplies such as sutures, clips or customized surgical kits furnished incidental to a service or procedure;

(7)are not material such as biologicals or synthetics that are used to replace human skin;

(8)no existing or previously existing device category is appropriated for the device;

(9)associated cost is not insignificant in relation to the APC payment for the service in which the innovative medical equipment is packaged; and

(10)must demonstrate that utilization of the device provides substantial clinical improvement for beneficiaries compared with currently available treatments, including procedures utilizing devices in existing or previously existing device categories. The duration of transitional pass-through payments for devices is for at least two, but not more than three years. This period begins with the first date on which a transitional pass-through payment is made for any medical device that is described by the new medical category. The costs of the devices will be packaged into the costs of the procedures with which they are normally billed once they are no longer eligible for pass-through payment. Device pass-through payments (those procedures designated with a SI “H”) are calculated by applying the statewide cost-to-charge ratio (CCR), which is based on the geographical CBSA (2 digit = rural, 5 digit = urban), to the hospital's charges on the claims and subtracting any appropriate pass-through offset. The offset adjustment only applies when a pass-through device is billed in addition to the primary procedure with which it is normally associated. Provisions are also in place in accordance with 1833(t)(6)(D)(ii) of the Social Security Act for reducing transitional pass-through payments by the estimated portion of each APC payment rate that could reasonably be attributed to the cost of the associated devices that are eligible for pass-through payments. Offsets are calculated by comparing the median APC cost without device packaging to the Median APC cost (including device packaging), developed from claims with device codes, to determine the percentage of median APC costs attributable to the associated pass-through device. These percentages are then applied to the APC payment amounts in order to determine the applicable amounts to be deducted from the pass-through payments, known as the “offset” amounts. Offset amounts are only applied when it can be determined that an APC contained cost is actually associated with the device. Currently, there is only one transitional pass-through payment offset in effect for device category C1820 (generator, neurostimulator (implantable), with rechargeable battery and charging system) with an amount of $8,668.94, which represents 77.65 percent of the CY 2007 payment rate for APC 0222. Two new device categories have been established for pass-through payment starting in 2007:

(1)L8690—auditory osseointegrated device, external sound processor, replacement; and

(2)C1821—interspinous process distraction device (implantable). The offset amounts for both of these new device categories were set to $0 for CY 2007, since there were not identifiable device-related costs associated with their procedure APCs (i.e., APC 0256 for L8690 and APC 0050 for C1821). • *Payment When Devices Are Replaced Without Cost or Where Credit for a Replacement Device Is Furnished to the Hospital.* Payments will be reduced for selected APCs in cases in which an implanted device is replaced without cost to the hospital or with full credit for the removed device in accordance with 42 CFR 419.45. The amount of the reduction to the APC rate will be calculated in the same manner as the offset amount that would be applied if the implanted device assigned to the APC had pass-through status as defined under 42 CFR 419.66. The adjustment would be made under the authority of section 1833(t)(2)(E) of the Social Security Act, which permits equitable adjustments to the OPPS payments contingent on meeting all of the following criteria:

(1)All procedures assigned to the selected APCs must require implantable devices that would be reported if device replacement procedures were performed;

(2)the required devices must be surgically inserted or implanted devices that remain in the patient's body after the conclusion of the procedures, at least temporarily; and

(3)the offset percent for the APC (i.e., the median cost of the APC without device costs divided by the median cost of the APC *with* device costs) must be significant—significant offset percent is defined as exceeding 40 percent. The presence of the modifier “FB” [“Item Provided Without Cost to Provider, Supplier, or Practitioner or Credit Received for Replacement (examples include, but are not limited to: covered under warranty, replaced due to defect, free sample)”] would trigger the adjustment in payment if the procedure code to which modifier “FB” was amended appeared in Table 3 and was also assigned to one of the APCs listed in Table 4 below. Table 3.—Devices for Which the FB Modifier Must Be Reported With the Procedure When Furnished Without Cost or at Full Credit for a Replacement Device Device Description C1721 AICD, dual chamber. C1722 AICD, single chamber. C1764 Event recorder, cardiac. C1767 Generator, neurostim, imp. C1771 Rep dev, urinary, w/sling. C1772 Infusion pump, programmable. C1776 Joint device (implantable). C1777 Lead, AICD, endo single coil. C1778 Lead, neurostimulator. C1779 Lead, pmkr, transvenous VDD. C1785 Pmkr, dual, rate-resp. C1786 Pmkr, single, rate-resp. C1813 Prostheses, penile, inflatab. C1815 Pros, urinary sph, imp. C1820 Generator, neuro, rechg bat sys. C1882 AICD, other than sing/dual. C1891 Infusion pump, non-prog, perm. C1895 Lead, AICD, endo dual coil. C1896 Lead, AICD, non sing/dual. C1897 Lead, neurostim, test kit. C1898 Lead, pmkr, other than trans. C1899 Lead, pmkr/ACID combination. C1900 Lead coronary venous. C2619 Pmkr, dual, non rate-resp. C2620 Pmkr, single, non rate-resp. C2621 Pmkr, other than sing/dual. C2622 Prosthesis, penile, non-inf. C2626 Infusion pump, non-prog, temp. C2631 Rep dev, urinary, w/o sling L8614 Cochlear device/system. Table 4.—Adjustments to APCs in Cases of Devices Reported Without Cost or for Which Full Credit Is Received APC SI APC group title CY 2007 offset amt. (percent) 0039 S Level I Implantation of Neurostimulator 78.85 0040 S Percutaneous Implantation of Neurostimulator Electrodes, Excluding Cranial Nerve 54.06 0061 S Laminectomy or Incision for Implantation of Neurostimulator Electrodes, Excluded 60.06 0089 T Insertion/Replacement of Permanent Pacemaker and Electrodes 77.11 0090 T Insertion/Replacement of Pacemaker Pulse Generator 74.74 0106 T Insertion/Replacement/Repair of Pacemaker and/or Electrodes 41.88 0107 T Insertion of Cardioverter-Defibrillator 90.44 0108 T Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads 77.75 0222 T Implantation of Neurological Device 77.65 0225 S Implantation of Neurostimulator Electrodes, Cranial 79.04 0227 T Implantation of Drug Infusion Devices 80.27 0229 T Transcatheter Placement of Intravascular Shunts 46.17 0259 T Level IV ENT Procedures 84.61 0315 T Level II Implantation of Neurostimulator 76.03 0385 S Level I Prosthetic Urological Procedures 83.19 0386 S Level II Prosthetic Urological Procedures 61.16 0418 T Insertion of Left Ventricular Pacing Elect. 87.32 0654 T Insertion/Replacement of a Permanent Dual Chamber Pacemaker 77.35 0655 T Insertion/Replacement/Conversion of a Permanent Dual Chamber Pacemaker 76.59 0680 S Insertion of Patient Activated Event Recorders 76.40 0681 T Knee Arthroplasty 73.37 If the APC to which the device code (i.e., one of the codes in Table 3 above) is assigned is on the APCs listed in Table 4 above, the unadjusted payment rate for the procedure APC will be reduced by an amount equal to the percent in Table 4 times the unadjusted payment rate. The actual adjustments can be viewed on the CMS Web site. In cases in which the device is being replaced without cost, the hospital will report a token device charge. However, if the device is being inserted as an upgrade, the hospital will report the difference between its usual charge for the device being replaced and the credit for the replacement device. Multiple procedure reductions would also continue to apply even after the APC payment adjustment to remove payment for the device cost, because there would still be the expected efficiencies in performing the procedure if it was provided in the same operative session as another surgical procedure. Similarly, if the procedure was interrupted before administration of anesthesia (i.e., there was a modifier 52 or 73 on the same line as the procedure), a 50 percent reduction would be taken from the adjusted amount. • *Coding and Payment of Emergency Department Visits.* The following five Type B emergency department G-codes have been established for emergency departments meeting the definition of a dedicated emergency department

(DED)under the Emergency Medical Treatment and Labor Act (EMTALA) regulations in 42 CFR § 489.24, but which are not Type A emergency departments (i.e., they may meet the DED definition but are not available 24 hours a day, 7 days a week). Table 5.—CY 2007 Final HCPCS Codes To Be Used To Report Emergency Department Visits Provided in Type B Emergency Departments HCPCS code Short descriptor Long descriptor G0380 Level 1 hosp type B visit Level 1 hospital emergency department visit provided in a Type B emergency department. (The ED must meet at least one of the following requirements:

(1)It is licensed by the State in which it is located under applicable State law as an emergency room or emergency department;

(2)It is held out to the public (by name, posted signs, advertising, or other means) as a place that provides care for emergency medical conditions on an urgent basis without requiring a previously scheduled appointment; or

(1)It is licensed by the State in which it is located under applicable State law as an emergency room or emergency department;

(3)During the calendar year immediately preceding the calendar year in which a determination under this section is being made, based on a representative sample of patient visits that occurred during that calendar year, it provides at least one-third of all of its outpatient visits for the treatment of emergency medical conditions on an urgent basis without requiring a previously scheduled appointment.). The use of these G-codes, along with the following redefinition of a Type A emergency department, will serve as a vehicle to capture median cost and resource differences among visits to Type A emergency departments, Type B emergency departments and clinics. A new G-code (G0390—Trauma response team activation associated with hospital critical care services) was also created (effective January 1, 2007) to be used in addition to CPT codes 99291 and 99292 to address the meaningful cost difference between critical care when billed with and without trauma activation. If critical care is provided without trauma activation, the hospital will bill with either CPT 99291 or 99292, receiving payment for APC 0617 with a median cost of $402.67. However, if trauma activation occurs, the hospital would be allowed to bill one unit of G-code (G0390), reported with revenue code 68x on the same date of service, thereby receiving $491.66 under APC 0618. Hospitals will continue to bill CPT codes for both clinic and Type A Emergency department visits until national guidelines have been established. The above CPT E/M codes and other HCPCS codes currently assigned to the clinic visit APCs have been mapped in Table 6 to eleven new APCs; five for clinic visits; five for emergency department visits; and one for critical care services, based on median costs and clinical consideration. Table 6.—Assignment of CPT E/M Codes and Other HCPCS Codes to New Visit APCs for CY 2007 CY 2007 APC title CY 2007 APC HCPCS Short descriptor Level 1 Hospital Clinic Visits 0604 92012 99201 99211 G0101 G0245 Eye exam, established pat. Office/outpatient visit, new (Level 1). Office/outpatient visit, est (Level 1). CA screen; pelvic/breast exam. Initial foot exam pt lops. G0241 Office consultation (Level 1). G0271 Confirmatory consultation (Level 1). G0264 Assmt otr CHF, CP, asthma. Level 2 Hospital Clinic Visits 0605 92002 92014 99202 99212 99213 Eye exam, new patient. Eye exam and treatment. Office/outpatient visit, new (Level 2). Office/outpatient visit, est (Level 2). Office/outpatient visit, est (Level 3). 99243 Office consultation (Level 3). 99242 Office consultation (Level 2). 99273 Confirmatory consultation (Level 3). 99272 Confirmatory consultation (Level 2). 99431 Initial care, normal newborn. G0246 Follow-up eval of foot pt lop. G0344 Initial preventive exam. Level 3 Hospital Clinic Visits 0606 92004 99203 99214 99274 99244 Eye exam, new patient. Office/outpatient visit, new (Level 3). Office/outpatient visit, est (Level 4). Confirmatory consultation (Level 4). Office consultation (Level 4). Level 4 Hospital Clinic Visits 0607 99204 99215 99245 99275 Confirmatory consultation (Level 1). Office/outpatient visit, est (Level 5). Office consultation (Level 5). Confirmatory consultation (Level 5). Level 5 Hospital Clinic Visits 0608 99205 G0175 Office/outpatient visit, new (Level 5). OPPS service, sched team conf. Level 1 Type A Emergency Visits 0609 99281 Emergency department visit. Level 2 Type A Emergency Visits 0613 99282 Emergency department visit. Level 3 Type A Emergency Visits 0614 99283 Emergency department visit. Level 4 Type A Emergency Visits 0615 99284 Emergency department visit. Level 5 Type A Emergency Visits 0616 99285 Emergency department visit. Critical Care 0617 99291 Critical care, first hour. • *Inpatient Only Procedures.* The inpatient list on TMA's OPPS Web site at *http://www.tricare.mil/opps* specifies those services that are only paid when provided in an inpatient setting because of the nature of the procedure, the need for at least 20 hours of postoperative recovery time or monitoring before the patient can be safely discharged, or the underlying physical condition of the patient. The following criteria will be used when reviewing procedures to determine whether or not they should be moved from the inpatient list and assigned to an APC group for payment under OPPS:

(1)Most outpatient departments are equipped to provide the services to the TRICARE population;

(2)the simplest procedure described by the code may be performed in most outpatient departments;

(3)the procedure is related to codes that have already been removed from the inpatient list;

(4)the procedure is being performed in numerous hospitals on an outpatient basis; and

(5)the procedure can be appropriately and safely performed in an ASC. While it is anticipated that TRICARE will be following the Medicare inpatient listing fairly closely, there may be occasions where, upon medical review, it is found that a particular inpatient procedure can be provided safely in an outpatient setting due to TRICARE's younger, healthier beneficiary population. These procedures will be removed from the TRICARE inpatient listing and will be assigned to either an existing or new APC group based on their median costs. If a patient was not admitted as an inpatient, and the procedure designated as an inpatient-only procedure (by OPPS payment status indicator “C”) was performed to resuscitate or stabilize a patient with an emergency, life-threatening condition and the patient dies before being admitted as an inpatient, the hospital would bill for payment under the OPPS for the services that were furnished on that date and included modifier—“CA” on the line with the HCPCS code for the inpatient procedures. Payment for all services other than the inpatient procedure designated under OPPS by status indicator “C”, furnished on the same date, would be bundled into a single payment under APC 0375 (Ancillary Outpatient Services the Patient Expires) whose CY 2007 median cost is $3,539. • *Partial Hospitalization Services.* Partial hospitalization services are those services furnished by TRICARE-authorized partial hospitalization programs and authorized mental health providers for the active treatment of a mental disorder. All services must follow a medical model and patient care must be under the general direction of a licensed psychiatrist employed by the partial hospitalization program to ensure medication and physical needs of all the patients are considered. The OPPS established per diem payment for both half- and full-day partial hospitalization represents the hospital's costs for overhead, support staff and the services of clinical social workers

(CSWs)and occupational therapists (OTs). For SUDRFs, the cost of alcohol and additional counselor services would also be included in the PHP per diem. However, the OPPS does not include the cost of services for physicians, clinical psychologists, and psychiatric nurse practitioners (NPs), which will continue to be billed separately for covered mental health services. In order to receive payment under OPPS, the hospital must use specific HCPCS and revenue codes and report partial hospitalization services under bill type 13X, along with condition code 41 on the UB-04 (HCFA 1450 claim form). The claim must also include a mental health diagnosis and an authorization on file for each day of service, along with a designated H-code (i.e., either H0035 for half-day PHP or H0037 for full-day PHP) and its accompanying revenue code, prior to assigning a half-or full-day partial hospitalization APC. Specific therapy codes (e.g., coding for family, group and individual psychotherapy) will be reported in addition to the designated partial hospitalization codes H0035 and H0037 and will be packaged into a single PHP code for the same date of service, with the exception of electroconvulsive therapy (ECT). Claims that do not meet the above criteria (e.g., claims filed without condition code 41, appropriate H-coding—H0035 or H0037, and/or revenue code) will undergo further payment review to ensure that outpatient mental health procedures do not exceed the full-day partial hospitalization per diem amount; i.e., the sum of the individual mental health APC amounts on any particular day does not exceed the full-day partial hospitalization per diem amount. The half-day PHP per diem (APC T0001) will be priced at 75 percent of the full-day APC

(0033)amount of $233.37 for CY 2007. Free-standing psychiatric partial hospitalization services will continue to be reimbursed the all-inclusive PHP per diem rates as established under 32 CFR 199.14(a)(2)(ix), subject to their own unique mental health copayment/cost-sharing provisions. • *Separate Payment for Observation Stays.* Observation care is a well-defined set of specific, clinically appropriate services that include short-term treatment, assessment and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients, or if they are able to be discharged from the hospital. The determination of whether or not observation services are separately payable under APC 0339 (observation) has been shifted from the hospital billing department to the OPPS claims processing logic using two HCPCS codes (i.e., G0378—Hospital observation services per hour, and G0379—Direct admission of patient for hospital observation care). These HCPCS codes will be assigned status indicator “Q” (package service subject to separate payment based on criteria) that will trigger the OCE logic during the processing of the claim to determine if the observation service or direct admission service is packaged with the other separately payable hospital services provided, or if a separate APC payment for observation services or direct admission to observation is appropriate. Following are the criteria that must be met in order to receive separate payment under APC 0039:

(1)The beneficiary must have one of four medical conditions—congestive heart failure, chest pain, asthma, or maternity—as documented by specific ICD-9-CM diagnosis codes;

(2)the number of units reported with HCPCS code G0378 must be equal to or exceed 8 hours for observation stays with diagnoses of chest pain, asthma or congestive heart failure and a minimum of 4 hours for maternity observation services;

(3)an emergency department visit, clinic visit, critical care visit, or direct admission to observation services using HCPCS code G037 must be provided on the same day as, or the day before the observation except for maternity observation stays;

(4)ongoing physician evaluation must be provided. The FY 2007 median cost for the observation APC 0339 is $442.81. Direct admissions to observation will continue to be paid at a rate equal to that of a Level 1 Clinic Visit (APC 0604) with a CY 2007 median cost of $50.37 when a beneficiary is seen by a physician in the community and then is directly admitted into a hospital outpatient department for observation care that does not qualify for separate payment under APC 0039, or under T00020. In order to receive separate payment for a direct admission into observation (APC 0604), the claim must show:

(1)Both HCPCS codes G0378 (Hourly Observation) and G0379 (Direct Admit to Observation) with the same date of service;

(2)that there are no services with status indictor “T” or “V” (clinic or emergency department visit) or critical care (APC 0620) provided on the same day of service as HCPCS code G0379; and

(3)that the observation care does not qualify for separate payment under APC 0339. If the period of observation spans more than one calendar day, hospitals should include all of the hours for the entire period of observation on a single line and enter as the date of service for that line the date the patient is admitted to observation. Also, if there are multiple maternity observation stays on the same day without condition code G0 or 27 to indicate that the visits were distinct and independent of each other, the first listed observation stay will be paid and the rest will be denied. • *Payment for Brachytherapy Sources.* In accordance with section 1833(t)(2)(H) of the Social Security Act, brachytherapy sources are being paid separately under their own service groups

(APCs)reflecting the number, isotope, and radioactive intensity of the devices of brachytherapy furnished, including separate groups for palladium-103 and iodine-125 devices. The payment for devices of brachytherapy based on hospitals' charges, adjusted to costs as prescribed under section 1833(t)(16)(C) of the Social Security Act, has been extended under the Tax Relief and Health Care Act of 2006 to January 1, 2008. As a result, brachytherapy sources will continue to be assigned to status indicator “H” and will not be eligible for outlier payments in CY 2007. The codes for the CY 2007 separately paid sources, long descriptors and APCs are listed in Table 7 below: Table 7.—Separately Paid Brachytherapy Sources With Long Descriptors and Assigned APCs CPT/ HCPCS Long descriptor SI APC A9527 Iodine 1-125, sodium iodide solution, therapeutic, per millicurie H 2632 C1716 Brachytherapy source, Gold 198, per source H 1716 C1717 Brachytherapy source, High Dose Rate Iridium 192, per source H 1717 C1718 Brachytherapy source, Iodine 125, per source H 1718 C1719 Brachytherapy source, Non-High Dose Rate Iridium 192, per source H 1719 C1720 Brachytherapy source, Palladium 103, per source H 1720 C2616 Brachytherapy source, Yttrium-90, per source H 2616 C2632 (See note below) D C2633 Brachytherapy source, Cesium-131, per source H 2633 C2634 Brachytherapy source, High Activity, Iodine-125, greater than 1.01 mCi (NIST), per source H 2634 C2635 Brachytherapy source, High Activity, Palladium-103, greater than 2.2 mCi (NIST), per source H 2635 C2636 Brachytherapy linear source, Palladium-103, per 1MM H 2636 C2637 Brachytherapy source, Ytterbium-169, per source H 2637 *Note.—C2632 has been deleted and replaced by A9527, effective January 1, 2007.* • *APC for Vaginal Hysterectomy.* When billing for vaginal hysterectomies, hospitals must use procedure 58260, which will be assigned to APC 0202. • *New Technology APCs.* A process has also been developed that will recognize new technologies that do not otherwise meet the definition of current orphan drugs, or current cancer therapy drugs and biologicals and brachytherapy, or current radiopharmaceutical drugs and biological products, and which are considered a covered benefit under TRICARE. In contrast to the other APC groups, the new technology APC groups do not take into account clinical aspects of the services they are to contain, but only their costs. This process, along with transitional pass-throughs, will provide additional payment for a significant share of new technologies. New items and services will be assigned to new technology APCs when it is determined that they cannot appropriately be placed into existing APC groups. The new technology APC groups have established payment rates based on the midpoint of ranges of possible costs providing a mechanism for initiating payment at an appropriate level within a relatively short timeframe. The cost bands for New Technology APCs range from: $0 to $50, in increments of $10; $50 to $100, in increments of $50; $100 to $2,000, in increments of $100; and $2,000 to $6,000, in increments of $500. These increments which are in two parallel sets of New Technology APCs—one with status indictor “S” and the other with “T,”—allow assignment to the same APC group procedures that are appropriately subject to a multiple procedure payment reduction

(T)with those that should not be discounted (S). • *Coding Requirement for Reimbursement Under TRICARE OPPS.* To receive TRICARE reimbursement under OPPS, providers must follow, and contractors shall enforce, all Medicare specific coding requirements. TRICARE Management Activity

(TMA)will develop specific APCs (those APCs beginning with a “T”) for those services that are unique to the TRICARE beneficiary population (e.g., those TRICARE specific APCs for half-day partial hospitalization program

(PHP)services and maternity observation stays). VI. OPPS Reimbursement Methodology • *General Overview.* Under the TRICARE OPPS, hospital outpatient services are paid on a rate-per-services basis that varies according to the APC group to which the service is assigned. The APC classification system is composed of groups of services that are comparable clinically and with respect to the use of resources. Level 1

(CPT)and Level II HCPCS codes and descriptors are used to identify and group the services within each APC. Costs associated with items or services that are directly related and integral to performing a procedure or furnishing a service have been packaged into each procedure or service within an APC group with the exception of:

(1)New temporary technology APCs for certain approved services that are structured based on cost rather than clinical homogeneity; and

(2)separate APCs for certain medical devices, drugs, biologicals, radiopharmaceuticals and devices of brachytherapy under transitional pass-through provisions. TRICARE is adopting Medicare's classification system, along with its nationally established APC payment amounts as prescribed in section 1833(t) of the Social Security Act and in its accompanying Medicare regulation (42 CFR part 419) for reimbursement of hospital outpatient services, to the extent practicable, in accordance with 10 U.S.C. 1079(j)(2), with the realization that there will be subtle differences occurring between the TRICARE and Medicare OPPS methodologies based on differences in the age and general health of the populations they serve (i.e., it can be assumed that the TRICARE population is younger and healthier than the population being served by Medicare). For example, TRICARE has already found it necessary to develop two new TRICARE specific APCs, one for maternity observation stays (T0002) and the other for a half-day partial hospitalization program

(T001)to accommodate its unique benefit structure and beneficiary population. There may also be subtle differences in the inpatient only procedure listings being maintained by the two programs since some of the Medicare inpatient only procedures may be determined by TRICARE, upon medical review, to be safe for administration in an outpatient setting due to its younger, healthier population. This may require the development of additional APC groups, along with nationally established payment amounts based on their median costs from the previous year's claims history. The payment rate for each APC is calculated by multiplying the APC's relative weight by the conversions factor. Weights are derived based on median hospital costs for services/procedures assigned to the hospital outpatient APC groups. Billed charges for items integral to performing the major procedure or visit; which include packaged HCPCS codes (i.e., codes with SI = “N”) and revenue codes appearing on the same claim, are converted to costs by multiplying each revenue center charge by the appropriate hospital-specific CCR. Centers for Medicare and Medicaid Services

(CMS)currently use a four-tiered hierarchy of cost center CCRs to match a cost center to every possible revenue code appearing in the outpatient claims, with the top tier being the most common cost center and the lowest tier being the default CCR. If a hospital's cost CCR was deleted by trimming, another cost center CCR in the revenue hierarchy can be applied. If no other department CCR can be applied to the revenue code on the claim, CMS uses the hospital's overall CCR for the revenue code. The costs of the above services/procedures are then standardized for geographic wage variations by dividing the labor-related portion of the operating and capital costs (currently estimated at 60 percent on the average for each billed item) by the hospital inpatient prospective payment system

(IPPS)wage index. The standardized labor-related cost and the nonlabor- related cost component for each billed item are summed to derive the total standardized cost for each separately payable HCPCS code. Extreme costs outside three standard deviations from the geometric mean will be eliminated prior to calculating the median cost for each separately payable HCPCS code. The median costs of these procedures will then be mapped to their assigned APCs, and the median costs of those assigned procedures will be used in establishing the overall APC median cost. The relative payment weights are calculated for each APC by dividing the median cost of each APC by the median cost for APC 0606 (Level 3 Clinic Visit), which is $83.88 for CY 2007, as a reconfiguration of the visit APCs. APC 0606 was chosen in order to maintain consistency in using a median for calculating unscaled weights representing the median cost of some of the most frequently provided services. The relative payment weights were further adjusted by 1.364598352 for budget neutrality, based on a comparison of aggregate payments using CY 2006 relative weights to aggregate payments using the CY 2007 final relative weights. The other component used in establishing national APC payment amounts is the conversion factor, updated on an annual basis in accordance with section 1833(t)(3)(C)(iv) of the Social Security Act, which provides for CY 2007 an updated amount equal to the hospital inpatient market basket percentage increase applicable to hospital discharges under section 1886(b)(3)(B)(iii) of the Act. The market basket increase updated factor of 3.4 percent for CY 2007, along with the required wage index budget neutrality adjustment of approximately 0.999331979, the adjustment of 0.04 percent for the difference in the pass-through set-aside, and the adjustment for the rural payment adjustment for rural SCHs (including EACHs) of 0.999975941, resulted in a standard conversion factor for CY 2007 of $61.468. The national unadjusted APC payment rates that were calculated by multiplying the CY 2007 scaled weight for each APC by the final CY 2007 conversion factor apply to all the services that are classified within the APC group. These national rates (i.e., the unadjusted national rates for both APCs and the HCPCS to which OPPS payment was assigned) are listed on TMA's OPPS Web site at *http://www.tricare.mil/opps.* • *Determination of Payment.* A payment SI is provided for every code in the HCPCS to identify how the service or procedure described by the code would be paid under the hospital outpatient prospective payment system (OPPS); i.e., it indicates if a service represented by a HCPCS code is payable under the OPPS or another payment system, and also which particular OPPS payment policies apply. One, and only one, SI is assigned to each APC and to each HCPCS code. Each HCPCS code that is assigned to an APC has the same SI as the APC to which it is assigned. Following are the CY 2007 payment status indicators, along with a description of the particular services each indicator identifies. Table 8.—CY 2007 Payment Status Indicators for Hospital OPPS Indicator Description OPPS payment status A Services paid under some payment method other than OPPS (e.g., payment for non-implantable prosthetic and orthotic devices, DME, ambulance services, and individual professional services) Not paid under OPPS. Paid by contractors under a fee schedule or payment system other than OPPS. B More appropriate code required for TRICARE OPPS Not paid under OPPS. C Inpatient procedures Not paid under OPPS. Admit patient. Bill as inpatient. E Items or services not covered by TRICARE Not paid under OPPS. F Acquisition of corneal tissue, certain CRNA services and Hepatitis B vaccines Not paid under OPPS. Paid on allowable charge basis. G Pass-through drugs and biologicals Paid separate APCs under OPPS. H

(1)Pass-through device categories

(1)Separate cost-based pass-through payment; not subject to cost-share/co-payment.

(2)Brachytherapy sources

(2)Separate cost-based non-pass-through payment.

(3)Radiopharmaceutical agents

(3)Separate cost-based non-pass-through payment. K Non-pass-through drugs and biologicals and blood and blood products Paid separate APCs under OPPS. N Packaged incidental items and services Packaged into the primary procedure APC payment amount to which the incidental item or service is normally associated. P Partial hospitalization Per diem APC payments for both half-day and full-day partial hospitalization programs. Q Services either separately payable or packaged Paid under OPPS; services either packaged or separately payable depending on the specific circumstances of the HCPCS billing. OCE logic will be applied in determining if the services will be packaged or separately payable. S Significant procedures allowed under the OPPS for which multiple procedure reduction does not apply Paid under OPPS; separate APC payment. T Surgical services allowed under OPPS with multiple procedure payment reduction Paid under OPPS; separate APC payment. V Medical visits (including clinic or emergency department visits) Paid under OPPS; separate APC payment. W Invalid HCPCS or invalid revenue code with blank HCPCS Not paid under OPPS. X Ancillary services Paid under OPPS; separate APC payment. Z Valid revenue code with blank HCPCS and no other SI assigned Not paid under OPPS. • *Adjustments for Specific Hospital Payment.* The hospital DRG wage adjustment factor will be used to adjust the portion of the payment rate that is attributable to labor-related costs for relative differences in labor and labor-related costs across geographic regions, with the exception of APCs with SIs “K” and “G” because of the inseparable, subordinate status of the outpatient department within the overall hospital setting. The OPPS will also adhere to the same wage index changes as the TRICARE-DRG based payment system, except the effective date for changes will be January 1 of each year instead of October 1. This way only one wage index file will have to be maintained for both the OPPS and DRG-based payment systems. Following are the steps taken in achieving this adjustment for APCs in which multiple procedure discounting is not applied: *Step 1.* Calculate 60 percent (labor-related portion) of the national unadjusted payment rate. *Step 2.* Determine the wage index area in which the hospital is located and identify the wage index that applies to the specified hospital. The wage index values assigned to each hospital reflect the new geographic statistical areas as a result of revised OMB standards (urban and rural) to which hospitals are assigned for FY 2007 under the IPPS. *Step 3.* Adjust the wage index of hospitals located in certain qualifying counties that have a relatively high percentage of hospital employees who reside in the county, but who work in a different county with a higher wage index. *Step 4.* Multiply the applicable wage index determined under Steps 2 and 3 by the amount determined in Step 1 that represents the labor-related portion of the national unadjusted payment rate. *Step 5.* Calculate 40 percent (the nonlabor-related portion) of the national unadjusted payment rate and add the amount to the resulting product in step 4. The result is the wage index adjusted payment rate for the relevant wage index area in which the hospital is located. *Step 6.* If the provider is a Sole Community Hospital (SCH), multiply the wage adjusted payment rate by 1.071 to calculate the total payment. This adjustment will apply to all services and procedures paid under the OPPS (i.e., SIs “P,” “S,” “T,” “V,” and “X”), excluding drugs, biologicals and services paid subject to pass-through payment (i.e., SIs “G,” “H,” and “K”). Applicable deductibles and/or cost-sharing/copayment amounts will be subtracted from the wage adjusted APC payment rate based on the eligibility status of the beneficiary at the time outpatient services were rendered (i.e., those deductibles and cost-sharing/copayment amounts applicable to Prime, Extra, and Standard beneficiary categories). TRICARE will retain its current hospital outpatient deductibles, cost-sharing/copayment amounts (refer to Tables 1 and 2 above) and catastrophic loss protection under the OPPS. The ASC cost-sharing provision (i.e., assessment of a single copayment for both the professional and facility charge for a Prime beneficiary) will be adopted as long as it is administratively feasible. This will not apply to Extra and Standard beneficiaries since their cost-sharing is based on a percentage of the total allowed amount. • *Additional APC Payment Adjustments.* OPPS payment amounts are discounted when more than one surgical procedure (SI = T) is performed during a single operative session. Under these circumstances, TRICARE will reimburse the full payment and the beneficiary will pay the full cost-share/copayment for the procedure having the highest payment rate, while the remaining surgical procedure payments will be reduced by 50 percent along with the beneficiary associated cost-share/copayment to reflect the savings associated with having to prepare the patient only once and the incremental costs associated with anesthesia, operating and recovery room use, and other services required for the second and subsequent procedures. A 50 percent discount will also be applied to the OPPS payment amounts and beneficiary copayments/cost-shares for procedures terminated before anesthesia is induced, as identified by modifiers −73 (Discounted Outpatient Procedure Prior to Anesthesia Administration) and −52 (Reduced Services). Full payment will be received for a procedure that is started but discontinued after the induction of anesthesia as reported by modifier −74 (Discounted Procedure). In this case, payment would recognize the costs incurred by the hospital to prepare the patient for surgery and the resources expended in the operating room and recovery room of the hospital. Discounting will also be applied to conditional, inherent and independent bilateral procedures. An additional payment is provided for outpatient services for which a hospital's charges, adjusted to cost, exceed the sum of the wage adjusted APC rate plus a fixed dollar threshold and a fixed multiple of the wage adjusted APC rate. Only line item services with SIs “P,” “S,” “T,” “V,” or “X” will be eligible for outlier payment under OPPS. No outlier payments will be calculated for line item services with SIs “G,” “H,” “K,” and “N,” with the exception of blood and blood products. For CY 2007, the outlier threshold is met when the cost of furnishing a service or procedure exceeds 1.75 times the APC payment amount *and* exceeds the APC payment rate plus the $1,825 fixed-dollar threshold. The fixed-dollar threshold was added to better target outliers to those high cost and complex procedures where a very costly service could present a hospital with significant financial loss. If a provider meets both of these conditions (i.e., the multiple threshold and the fixed-dollar threshold), the outlier payment is calculated at 50 percent of the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment rate. The hospital would receive the normal APC payment rate along with the additional outlier amount. For example, suppose a hospital charges $26,000 for a procedure for which the APC adjusted amount is $3,000 and the overall facility CCR is 0.30. The estimated cost to the hospital is $7,800 (0.30 × $26,000). In order to determine whether the procedure is eligible for outlier payment, it first must be determined whether the cost for the service exceeds both the APC multiple outlier cost threshold of $5,250 (1.75 × $3,000) and the fixed-dollar threshold of $4,825 ($3,000 + $1,825). Since the estimated cost to the hospital ($7,800) exceeds both threshold amounts, the hospital would be eligible for 50 percent of the difference, which in this case would be $1,275 ($7,800−$5,250/2). • *Payment Hierarchy for Non-OPPS Procedures.* If the outpatient procedure is not assigned an APC payment amount (i.e., is not assigned SI “G,” “H,” “K,” “P,” “S,” “T,” “V,” or “X”), but may be reimbursed under an existing TRICARE fee schedule or other prospectively determined rate (i.e., procedures assigned to SI “A”), the following hierarchy will be used in pricing the procedure. The PRICER will first look to see if there is an appropriate CMAC available for pricing. If a CMAC cannot be found, it will then look to the Durable Medical Equipment Claims: Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule for pricing. If a DMEPOS fee schedule rate is not available for pricing, it will turn to statewide prevailings. If a statewide prevailing cannot be found, the PRICER will reimburse the procedure at the billed charge. VII. Limitations on Administrative and Judicial Review There can be no administrative or judicial review under sections 1869 and 1878 of the Social Security Act for any of the following data elements used in the development of the APC system:

(1)Establishment of the groups and relative payment weights;

(2)wage adjustment factors and other adjustments;

(3)calculation of base amounts described in section 1833(t)(3) of the Social Security Act;

(4)periodic adjustments described in section 1833(t)(9) of the Social Act,

(5)the establishment of a separate conversion factor for hospitals described in section 1886(d)(1)(B)(v) of the Social Security Act;

(6)the determination of the fixed multiple, or a fixed dollar cutoff amount;

(7)the marginal cost of care, or applicable percentage under 42 CFR 419.43(d) or the determination of insignificance of cost;

(8)the duration of the additional payment;

(9)the determination of initial and new categories under 42 CFR 419.66;

(10)the portion of the hospital outpatient fee schedule amount associated with particular devices, drugs, or biologicals; and

(11)the application of any pro rata reduction under 42 CFR 419.62(c). VIII. Military Readiness/Contingency Options for Payment Under OPPS In recognition of the Department's requirement to support military readiness and contingency operations, and in response to recent congressional concerns regarding the same, the agency has developed two options for implementation of OPPS. The first option involves a three-year transitional implementation of payment adjustments that may be utilized to limit the decline in payments under OPPS for TRICARE network hospitals that are in close proximity to military bases and treat a disproportionate share of military family members and/or hospitals that provide essential network specialty care. These temporary payment adjustments would target TRICARE network hospitals that are most vulnerable to OPPS revenue reductions and that are essential for continued military readiness and support of contingency operations. This adjustment would increase payment for primary care and emergency room visits to hospital outpatient departments (HOPDs) over a 3-year transitional period. Primary care and emergency room visits to HOPDs are categorized into 10 APC categories (APC codes 604-609 and 613-616) which represent over 600,000 hospital visits annually. On average, about one quarter of the revenues from TRICARE for HOPD services are for these 10 codes, representing the biggest payment reduction under OPPS. Under this transitional payment adjustment, the APC payment levels for network hospitals for the 5 clinical visit APCs would be set at 130 percent of the Medicare APC level, while the 5 emergency room

(ER)visit APCs would be increased by 150 percent in the first year of OPPS implementation. In the second year, the APC payment levels would be set at 120 percent of the Medicare APC level for clinic visits and at 130 percent for ER APCs. In the third year, the APC visit amounts would be set at 110 and 120 percent, respectively, and in the fourth year, the TRICARE and Medicare payment levels for the 10 APC visit codes would be identical. Two sets of adjustment factors (i.e., one for clinic visits and the other for ER visits) are being used since revenue cuts for ER visits are generally greater than those associated with clinic visits. Transitional payment adjustments for these 10 visit codes would buffer the initial revenue reductions which will be experienced upon implementation of TRICARE's OPPS, providing hospitals with sufficient time to adjust and budget for potential revenue reductions for hospitals most vulnerable to implementation of OPPS. The second option involves authority for the Director, TRICARE Management Activity, or a designee, under provisions of this rule to adopt, modify and/or extend temporary adjustments to OPPS payments for TRICARE network hospitals deemed essential for military readiness and support during contingency operations. Upon a determination by the TMA Director, or designee, at any time following implementation that it is impracticable to support military readiness or contingency operations by making OPPS payments in accordance with the same reimbursement rules implemented by Medicare, a temporary deviation may be granted. This will ensure the availability of adequate civilian healthcare resources necessary to meet all ongoing military readiness and contingencies. The criteria for adopting, modifying and/or extending temporary adjustments to OPPS payments under this authority shall be issued through TRICARE policies, instructions, procedures and guidelines as deemed appropriate by the Director, TRICARE Management Activity, or a designee, for those network hospitals essential for continued military readiness and deployment in a time of contingency operations. IX. Regulatory Procedures This interim final rule has been examined for its impact under Executive Order

(EO)13132 and its does not have policies that have federalism implications that would 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; therefore, consultation with State and local officials is not required. Section 801 of title 5, United States Code, and Executive Order 12866 requires certain regulatory assessments and procedures for any major rule or significant regulatory action, defined as one that would result in an annual effect of $100 million or more on the national economy or which would have other substantial impacts. The Regulatory Flexibility Act

(RFA)requires that each Federal agency prepare, and make available for public comment, a regulatory flexibility analysis when the agency issues a regulation which would have a significant impact on a substantial number of small entities. This is not a major rule under 5 U.S.C. 801 since the projected reduction in TRICARE payments to affected hospitals would be below the $100 million threshold. The estimates of reduction are based on historical TRICARE costs and an assessment of potential users times average benefit costs per person for implementation of the new prospective payment system. However, it is a significant regulatory action which has been reviewed by the Office of Management and Budget as required under the provisions of EO 12866. In addition, it has been certified that this interim final rule will not significantly affect a substantial number of small entities. The rule also does not require a regulatory flexibility analysis as the significant policy action was taken by Congress and the rule merely puts it into effect. The policy of the Regulatory Flexibility Act that agencies adequately evaluate all potential options for an action does not apply when Congress has already dictated the action. This rule will not impose significant additional information collection requirements on the public under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3511). Existing information collection requirements of the TRICARE and Medicare programs will be utilized. List of Subjects in 32 CFR part 199 Claims, Dental health, Health care, Health insurance, Individuals with disabilities, Military personnel. Accordingly, 32 CFR part 199 is amended as follows: PART 199—[AMENDED] 1. The authority citation for part 199 continues to read as follows: Authority: 5 U.S.C. 301; 10 U.S.C. Chapter 55. 2. Paragraph 199.2(b) is amended by adding definitions for “Ambulatory Payment Classifications (APCs)” and “TRICARE Outpatient Prospective Payment System (OPPS)” and placing them in alphabetical order to read as follows: § 199.2 Definitions.

(b)* * * *Ambulatory Payment Classifications (APCs).* Payment of services under the TRICARE OPPS is based on grouping outpatient procedures and services into ambulatory payment classification groups based on clinical and resource homogeneity, provider concentration, frequency of service and minimal opportunities for upcoding and code fragmentation. Nationally established rates for each APC are calculated by multiplying the APC's relative weight derived from median costs for procedures assigned to the APC group, scaled to the median cost of the APC group representing the most frequently provided services, by the conversion factor. *TRICARE Outpatient Prospective Payment System (OPPS).* OPPS is a hospital outpatient prospective payment system, based on nationally established APC payment amounts and standardized for geographic wage differences that includes operating and capital-related costs that are directly related and integral to performing a procedure or furnishing a service in a hospital outpatient department. 3. Section 199.4 is amended by removing paragraph (c)(3)(i)(C)(1) and redesignating paragraphs (c)(3)(i)(C)(2) and (c)(3)(i)(C)(3) as (c)(3)(i)(C)(1) and (c)(3)(i)(C)(2). 4. Section 199.14 is amended by revising paragraphs (a)(2)(ix)(A); redesignating paragraphs (a)(5)(i) through (a)(5)(xii) as (a)(5)(i)(A) through (a)(5)(i)(L); adding followed by new paragraphs (a)(5)(i) introductory text and (a)(5)(ii); and revising paragraph (d)(1) to read as follows: § 199.14 Provider reimbursement methods.

(a)* * *

(2)* * *

(ix)* * *

(A)*In general.* Psychiatric and substance use disorder rehabilitation partial hospitalization services authorized by § 199.4(b)(10) and (e)(4) and provided by institutional providers authorized under § 199.6 (b)(4)(xii) and (b)(4)(xiv) are reimbursed on the basis of prospectively determined, all-inclusive per diem rates pursuant to the provisions of paragraph (a)(2)(ix)(C) of this section, with the exception of hospital-based psychiatric and substance use disorder rehabilitation partial hospitalization services which are reimbursed in accordance with provisions of paragraph (a)(5)(ii) of this section. The per diem payment amount must be accepted as payment in full for all institutional services provided, including board, routine nursing service, ancillary services (includes music, dance, occupational and other such therapies), psychological testing and assessment, overhead and any other services for which the customary practice among similar providers is included as part of the institutional charges.

(5)* * *

(i)*Outpatient Services Not Subject to Hospital Outpatient Prospective Payment System (OPPS).* The following are payment methods for outpatient services that are either provided in an OPPS exempt hospital or paid outside the OPPS payment methodology under an existing fee schedule or other prospectively determined rates in a hospital subject to OPPS reimbursement.

(ii)*Outpatient Services Subject to OPPS.* Outpatient services provided in hospitals subject to Medicare OPPS as specified in 42 CFR 413.65 and 42 CFR 419.20 will be paid in accordance with the provisions outlined in sections 1833(t) of the Social Security Act and its implementing Medicare regulation (42 CFR part 419). Under the above governing provisions, CHAMPUS will recognize to the extent practicable, in accordance with 10 U.S.C. 1079(j)(2), Medicare's OPPS reimbursement methodology to include specific coding requirements, ambulatory payment classifications (APCs), nationally established APC amounts and associated adjustments (e.g., discounting for multiple surgery procedures, wage adjustments for variations in labor-related costs across geographical regions and outlier calculations). During the transition to OPPS, temporary deviations from Medicare's statutory and/or regulatory requirements and future changes arising from its continuing experience with OPPS may be granted for any TRICARE network hospital by the Director, TRICARE Management Activity, or a designee, to accommodate CHAMPUS' unique benefit structure and beneficiary population. In addition, the Director, TMA, or a designee, may at any time after implementation adopt, modify and/or extend temporary adjustments to OPPS payments for TRICARE network hospitals deemed essential for military readiness and deployment in time of contingency operations. Any temporary adjustment to OPPS payments shall be made only on the basis of a determination that it is impracticable to support military readiness or contingency operations by making OPPS payments in accordance with the same reimbursement rules implemented by Medicare. The criteria for adopting, modifying, and/or extending deviations and/or adjustments to OPPS payments shall be issued through TRICARE policies, instructions, procedures and guidelines as deemed appropriate by the Director, TMA, or a designee.

(d)* * *

(1)*In general.* CHAMPUS pays institutional facility costs for ambulatory surgery on the basis of prospectively determined amounts, as provided in this paragraph, with the exception of ambulatory surgery procedures performed in hospital outpatient departments, which are to be reimbursed in accordance with the provisions of paragraph (a)(5)(ii) of this section. This payment method is similar to that used by the Medicare program for ambulatory surgery. This paragraph applies to payment for freestanding ambulatory surgical centers. It does not apply to professional services. A list of ambulatory surgery procedures subject to the payment method set forth in the paragraph shall be published periodically by the Director, TMA. Payment to freestanding ambulatory surgery centers is limited to these procedures. Dated: August 8, 2007. L.M. Bynum, Alternate OSD Federal Register Liaison Officer, Department of Defense. [FR Doc. E7-15924 Filed 8-13-07; 8:45 am] BILLING CODE 5001-06-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R10-OAR-2006-1013; FRL-8447-2] Approval and Promulgation of Air Quality Implementation Plan; Alaska AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: In this action EPA is approving numerous revisions to the State of Alaska State Implementation Plan (SIP). The Commissioner of the Alaska Department of Environmental Conservation

(ADEC)submitted two requests to EPA dated May 6, 2005 and June 30, 2006 to revise the Alaska SIP to include certain sections of ADEC's revised air quality regulations. The revisions were submitted in accordance with the requirements of section 110 of the Clean Air Act (hereinafter the Act or CAA). Although EPA is approving most of the submitted revisions, EPA is not approving in this rulemaking a number of submitted rule provisions which are inappropriate for EPA approval. DATES: This final rule is effective on September 13, 2007. ADDRESSES: EPA has established a docket for this action under Docket #R10-OAR-2006-1013. All documents in the docket are listed on the *www.regulations.gov* Web site. Although listed in the index, some information may not be publicly available, e.g. confidential business information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through *www.regulations.gov* or in hard copy at EPA Region 10, Office of Air Waste and Toxics (AWT-107), 1200 Sixth Avenue, Seattle, WA. EPA requests that if possible you contact the contact listed in the FOR FURTHER INFORMATION CONTACT section, to schedule an appointment. Region 10 official business hours are 8:30 a.m. to 4:30 p.m. Monday through Friday, excluding legal holidays. FOR FURTHER INFORMATION CONTACT: David Bray, Office of Air, Waste and Toxics (AWT-107), EPA Region 10, 1200 Sixth Avenue, Seattle, WA 98101; telephone number:

(206)553-4253; fax number:

(206)553-0110; e-mail address: *bray.dave@epa.gov* . SUPPLEMENTARY INFORMATION: Throughout this document, whenever “we”, “us”, or “our” is used, we mean the EPA. Information is organized as follows: Table of Contents I. Background of Submittal II. Response to Comments III. Final Action A. Provisions Approved by EPA and Incorporated by Reference B. Provisions Approved by EPA into the SIP, But Not Incorporated by Reference C. Provisions Not Approved by EPA D. Provisions Removed from the SIP IV. Geographic Scope of SIP Approval V. Statutory and Executive Order Reviews I. Background of Submittal On Monday February 5, 2007, EPA solicited public comment on a proposal to approve for inclusion in the Alaska SIP numerous revisions to the State of Alaska Implementation Plan. EPA also proposed not to approve into the SIP a number of submitted rule provisions which are inappropriate for EPA approval. A detailed description of our action was published in the **Federal Register** on February 5, 2007. The reader is referred to the proposed rulemaking (72 FR 5232, February 5, 2007) for details. II. Response to Comments EPA provided a 30-day review and comment period and solicited comments on our proposal published in the February 5, 2007, **Federal Register** . No adverse comments were received on the proposed rulemaking. EPA did receive one letter during the public comment period from the Alaska Oil and Gas Association (AOGA). The letter noted that EPA had proposed not to approve the version of Alaska's excess emission rule, 18 AAC 50.240, as amended by ADEC in 2004. The letter further stated that AOGA had no comment on EPA's proposal not to approve the 2004 version of 18 AAC 50.240 based on the understanding that EPA's action did not affect the SIP-approved status of the version of 18 AAC 50.240 adopted by ADEC in 1997 and approved into the SIP by EPA in 1999. EPA confirms that our decision not to approve the 2004 amendments to 18 AAC 50.240 does not affect the approval status of the 1997 version of that regulation. III. Final Action A. Provisions Approved by EPA and Incorporated by Reference EPA is taking final action to approve as part of the Alaska SIP the following new and revised sections of Alaska's regulations submitted May 6, 2005 and June 30, 2006: 18 AAC 50.080 Ice Fog Standards, State effective January 18, 1997; 18 AAC 50.025 Visibility and Other Special Protection Areas; and 18 AAC 50.070 Marine Vessel Visible Emission Standards, State effective June 21, 1998; 18 AAC 50.050 Incinerator Emission Standards, State effective May 3, 2002; 18 AAC 50.005 Purpose of Chapter; 18 AAC 50.010 Ambient Air Quality Standards [except

(7)and (8)]; 18 AAC 50.015 Air Quality Designations, Classifications, and Control Regions; 18 AAC 50.020 Baseline Dates and Maximum Allowable Increases, 18 AAC 50.045 Prohibitions; 18 AAC 50.055 Industrial Processes and Fuel-Burning Equipment [except (d)(2)(B)]; 18 AAC 50.100 Nonroad Engines; 18 AAC 50.200 Information Requests; 18 AAC 50.201 Ambient Air Quality Investigation; 18 AAC 50.205 Certification; 18 AAC 50.215 Ambient Air Quality Analysis Methods [except (a)(3)]; 18 AAC 50.220 Enforceable Test Methods [except (c)(2)]; 18 AAC 50.245 Air Episodes and Advisories; 18 AAC 50.250 Procedures and Criteria for Revising Air Quality Classifications; 18 AAC 50.301 Permit Continuity; 18 AAC 50.302 Construction Permits; 18 AAC 50.306 Prevention of Significant Deterioration

(PSD)Permits [except (b)(2) and (b)(3)]; 18 AAC 50.311 Nonattainment Area Major Stationary Source Permits; 18 AAC 50.345 Construction and Operating Permits: Standard Permit Conditions [except (b), (c)(3), and (l)]; 18 AAC 50.508 Minor Permits Requested by the Owner or Operator [except

(1)and (2)]; 18 AAC 50.546 Minor Permits: Revisions [except (b)]; 18 AAC 50.560 General Minor Permits; and 18 AAC 50.900 Small Business, State effective October 1, 2004; 18 AAC 50.542 Minor Permit: Review and Issuance [except (b)(2), (f)(4), (f)(5), and (g)(1) but only with respect to clean units and pollution control projects], State effective December 1, 2004; 18 AAC 50.225 Owner-Requested Limits; 18 AAC 50.230 Preapproved Emission Limits [except (d)]; and 18 AAC 50.544 Minor Permits: Content [except (e)], State effective January 29, 2005; 18 AAC 50.035 Documents, Procedures, and Methods Adopted By Reference [except (b)(4)]; 18 AAC 50.040 Federal Standards Adopted by Reference [except (a), (b), (c), (d), (e), (g), (h)(17), (h)(18), (h)(19), (i)(7), (i)(8), (i)(9), and (j)]; 18 AAC 50.502 Minor Permits for Air Quality Protection [except (g)(1) and (g)(2)]; 18 AAC 50.540 Minor Permit: Application [except

(f)and (g)]; and 18 AAC 50.990 Definitions [except (21), and (77)], State effective December 3, 2005. B. Provisions Approved by EPA Into the SIP, But Not Incorporated by Reference EPA is also approving the following new and revised section as part of the SIP, but is not incorporating it by reference into Federal law because it does not regulate air emissions, but rather, describes general authorities such as procedural and enforcement authorities: 18 AAC 50.030 State Air Quality Control Plan, State effective October 1, 2004. C. Provisions Not Approved by EPA EPA is not approving in this rulemaking the following sections of Alaska's regulations submitted May 6, 2005 and June 30, 2006 which are inappropriate for EPA approval: 18 AAC 50.010(7) and (8); 18 AAC 50.055(d)(2)(B); 18 AAC 50.215(a)(3); 18 AAC 50.220(c)(2); 18 AAC 50.240; 18 AAC 50.306(b)(2) and (b)(3); 18 AAC 50.345(b), (c)(3) and (l); 18 AAC 50.346(a); 18 AAC 50.508(1) and (2); 18 AAC 50.509; and 18 AAC 50.546(b), State effective October 1, 2004; 18 AAC 50.316; and 18 AAC 50.542(b)(2), (f)(4), (f)(5), and, with respect to the reference to clean units and pollution control projects only, (g)(1), State effective December 1, 2004; 18 AAC 50.544(e), State effective January 29, 2005; 18 AAC 50.035(b)(4); 18 AAC 50.040(a), (b), (c), (d), (e), (g), (h)(17), (h)(18), (h)(19), (i)(7), (i)(8), (i)(9) and (j); 18 AAC 50.502(g)(1) and (g)(2); 18 AAC 50.540(f) and (g); and 18 AAC 50.990(21) and (77), State effective December 3, 2005. D. Provisions Removed From the SIP EPA is approving removal of the following provisions from the Alaska SIP because they have been previously repealed by ADEC, have been replaced by more recent versions of the ADEC's regulations, or because they are not required elements of a SIP under title I of the CAA: 18 AAC 50.030 State Air Quality Control Plan, State effective September 21, 2001; 18 AAC 50.035(b)(4) Documents, Procedures and Methods Adopted by Reference, State Effective January 18, 1997; 18 AAC 50.090 Ice Fog Limitations, State effective May 26, 1972; 18 AAC 50.220(c)(2) Enforceable Test Methods, State effective January 18, 1997; 18 AAC 50.300 Permit to Operate and 18 AAC 50.400 Application Review & Issuance of Permit to Operate, State effective July 21, 1991 and April 23, 1994; 18 AAC 50.520 Emissions and Ambient Monitoring, State effective July 21, 1991; 18 AAC 50.530 Circumvention, State effective June 7, 1987; 18 AAC 50.310 Revocation or Suspension of Permit, State effective May 4, 1980; 18 AAC 50.400 Permit Administration Fees, 18 AAC 50.420 Billing Procedures, and 18 AAC 50.430 Appeal Procedures, State effective January 18, 1997; 18 AAC 50.600 Reclassification Procedures & Criteria, State effective November 1, 1982; 18 AAC 50.620 State Air Quality Control Plan, State effective January 4, 1995; and 18 AAC 50.900 Definitions, State effective July 21, 1991 and January 4, 1995. IV. Geographic Scope of SIP Approval The SIP approval does not extend to sources or activities located in Indian Country, as defined in 18 U.S.C. 1151. EPA will continue to implement the CAA in Indian Country in Alaska because ADEC has not adequately demonstrate authority over sources and activities located within the exterior boundaries of the Annette Island Reserve and other areas of Indian Country in Alaska. V. 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, 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 Clean Air Act. This rule also is not subject to Executive Order 13045 A, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), because it is not economically significant. In reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air 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 Clean Air 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 Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 15, 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 t be challenged later in proceedings to enforce its requirements. (See CAA section 307(b)(2).) List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds. Dated: July 19, 2007. Elin D. Miller, Regional Administrator, Region 10. Part 52, chapter I, title 40 of the Code of Federal Regulations 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 C—Alaska 2. Section 52.70 is amended by adding paragraph (c)(36) to read as follows: § 52.70 Identification of plan.

(c)* * *

(36)On May 6, 2005 and June 30, 2006, the Alaska Department of Environmental Conservation

(ADEC)submitted amendments to ADEC's air quality regulations, as revision to the State of Alaska Implementation Plan.

(i)Incorporation by reference.

(A)The following new and revised sections of ADEC's air quality regulations: ( *1* ) 18 AAC 50.080 Ice Fog Standards; State effective January 18, 1997. ( *2* ) 18 AAC 50.025 Visibility and Other Special Protection Areas; 18 AAC 50.070 Marine Vessel Visible Emission Standards. All provisions in this paragraph are State effective June 21, 1998. ( *3* ) 18 AAC 50.050 Incinerator Emission Standards; State effective May 3, 2002. ( *4* ) 18 AAC 50.005 Purpose of Chapter; 18 AAC 50.010 Ambient Air Quality Standards [except

(1)and (2)]; 18 AAC 50.546 Minor Permits: Revisions [except (b)]; 18 AAC 50.560 General Minor Permits; 18 AAC 50.900 Small Business. All provisions in this paragraph are State effective October 1, 2004. ( *5* ) 18 AAC 50.542 Minor Permit: Review and Issuance [except (b)(2), (f)(4), (f)(5), and (g)(1) but only with respect to clean units and pollution control projects]; State effective December 1, 2004. ( *6* ) 18 AAC 50.225 Owner-Requested Limits; 18 AAC 50.230 Preapproved Emission Limits [except (d)]; 18 AAC 50.544 Minor Permits: Content [except (e)]. All provisions in this paragraph are State effective January 29, 2005. ( *7* ) 18 AAC 50.035 Documents, Procedures, and Methods Adopted By Reference [except (b)(4)]; 18 AAC 50.040 Federal Standards Adopted by Reference [except (a), (b), (c), (d), (e), (g), (h)(17), (h)(18), (h)(19), (i)(7), (i)(8), (i)(9), and (j)]; 18 AAC 50.502 Minor Permits for Air Quality Protection [except (g)(1) and (g)(2)]; 18 AAC 50.540 Minor Permit: Application [except

(f)and (g)];18 AAC 50.990 Definitions [except (21), and (77)]. All provisions in this paragraph are State effective December 3, 2005.

(B)Remove the following provisions from the current incorporation by reference: ( *1* ) 18 AAC 50.030 State Air Quality Control Plan; State effective September 21, 2001. ( *2* ) 18 AAC 50.035 (b)(4) Documents, Procedures and Methods Adopted by Reference; State Effective January 18, 1997. ( *3* ) 18 AAC 50.090 Ice Fog Limitations; State effective May 26, 1972. ( *4* ) 18 AAC 50.220(c)(2) Enforceable Test Methods; State effective January 18, 1997. ( *5* ) 18 AAC 50.300 Permit to Operate and 18 AAC 50.400 Application Review & Issuance of Permit to Operate. The provisions in this paragraph were State effective July 21, 1991 and April 23, 1994. ( *6* ) 18 AAC 50.520 Emissions and Ambient Monitoring; State effective July 21, 1991. ( *7* ) 18 AAC 50.530 Circumvention; State effective June 7, 1987. ( *8* ) 18 AAC 50.310 Revocation or Suspension of Permit; State effective May 4, 1980. ( *9* ) 18 AAC 50.400 Permit Administration Fees; 18 AAC 50.420 Billing Procedures; and 18 AAC 50.430 Appeal Procedures. The provisions of this paragraph were State effective January 18, 1997. ( *10* ) 18 AAC 50.600 Reclassification Procedures & Criteria; State effective November 1, 1982. ( *11* ) 18 AAC 50.620 State Air Quality Control Plan; State effective January 4, 1995. ( *12* ) 18 AAC 50.900 Definitions; State effective July 21, 1991 and January 4, 1995.

(ii)Additional Material.

(A)The following section of ADEC's air quality regulations: 18 AAC 50.030 State Air Quality Control Plan, State effective October 1, 2004. § 52.75 [Reserved] 3. Section 52.75 is removed and reserved. 4. Section 52.96 is revised to read as follows: § 52.96 Significant deterioration of air quality.

(a)The State of Alaska Department of Environmental Conservation Air Quality Control Regulations as in effect on December 3, 2005 (specifically 18 AAC 50.010 except

(7)and (8); 50.015; 50.020; 50.030(6) and (7); 50.035(a)(4) and (5); 50.040(h) except (17), (18), and (19); 50.215 except (a)(3); 50.250; 50.306 except (b)(2) and (b)(3); 50.345 except (b), (c)(3) and (l); and 50.990 except

(21)and (77)) are approved as meeting the requirements of part C for preventing significant deterioration of air quality.

(b)The requirements of sections 160 through 165 of the Clean Air Act are not met for Indian reservations since the plan does not include approvable provisions for preventing the significant deterioration of air quality on Indian reservations and, therefore, the provisions of § 52.21 except paragraph (a)(1) are hereby incorporated and made part of the applicable plan for Indian reservations in the State of Alaska. [FR Doc. E7-15669 Filed 8-13-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 300 [EPA-HQ-SFUND-1986-0005; FRL-8454-1] National Oil and Hazardous Substance Pollution Contingency Plan; National Priorities List Update AGENCY: Environmental Protection Agency. ACTION: Direct final notice of deletion of the Bailey Waste Disposal Superfund Site from the National Priorities List. SUMMARY: The Environmental Protection Agency

(EPA)Region 6 is publishing a direct final notice of deletion of the Bailey Waste Disposal Superfund Site (Site), located near Bridge City, Texas, from the National Priorities List (NPL). The NPL, promulgated pursuant to Section 105 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended, is appendix B of 40 CFR Part 300, which is the National Oil and Hazardous Substances Pollution Contingency Plan (NCP). This direct final deletion is being published by EPA with the concurrence of the State of Texas, through the Texas Commission on Environmental Quality (TCEQ), because EPA has determined that all appropriate response actions under CERCLA have been completed and, therefore, further remedial action pursuant to CERCLA is not appropriate. DATES: This direct final notice of deletion will be effective October 15, 2007 unless EPA receives adverse comments by September 13, 2007. If adverse comments are received, EPA will publish a timely withdrawal of the direct final notice of deletion in the **Federal Register** informing the public that the deletion will not take effect. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-SFUND-1986-0005, by one of the following methods: *http://www.regulations.gov* (Follow the on-line instructions for submitting comments). *E-mail: walters.donn@epa.gov* . *Fax:* 214-665-6660. *Mail:* Donn Walters, Community Involvement, U.S. EPA Region 6 (6SF-TS), 1445 Ross Avenue, Dallas, TX 75202-2733,

(214)665-6483 or 1-800-533-3508. *Instructions:* Direct your comments to Docket ID No. EPA-HQ-SFUND-1986-0005. EPA 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, disclosure of which is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected. The *http://www.regulations.gov* Web site is an “anonymous access” system, which means 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 automatically be 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 and with any disk or CD-ROM you submit. 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, any form of encryption and be free of any defects or viruses. *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 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 at *http://www.regulations.gov* or in hard copy at the information repositories. *Information Repositories:* Comprehensive information about the Site is available for viewing and copying during central standard time at the Site information repositories located at: U.S. EPA Online Library System at *http://www.epa.gov/natlibra/ols.htm* ; U.S. EPA Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733,

(214)665-6617, by appointment only Monday through Friday 9 a.m. to 12 p.m. and 1 p.m. to 4 p.m.; Marion and Ed Hughes Public Library, 2712 Nederland Avenue, Nederland, Texas 77627,

(409)722-1255, Monday 1 p.m. to 9 p.m., Tuesday through Friday 10 a.m. to 6 p.m. and closed Saturday-Sunday; City of Orange Public Library, 220 N. 5th Street, Orange, Texas 77630,

(409)883-1086, Saturday and Monday 10 am to 2 p.m., Tuesday 12 p.m. to 8 p.m., Wednesday through Friday 10 a.m. to 5 p.m. and closed Sunday; Texas Commission on Environmental Quality (TCEQ), Central File Room Customer Service Center, Building E, 12100 Park 35 Circle, Austin, Texas 78753,

(512)239-2900, Monday through Friday 8 a.m. to 5 p.m. FOR FURTHER INFORMATION CONTACT: Scott Harris, PhD, Remedial Project Manager (RPM), U.S. EPA Region 6 (6SF-RA), 1445 Ross Avenue, Dallas, TX 75202-2733,

(214)665-7114 or 1-800-533-3508 or *harris.scott@epa.gov* . SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction II. NPL Deletion Criteria III. Deletion Procedures IV. Basis for Site Deletion V. Deletion Action I. Introduction The EPA Region 6 office is publishing this direct final notice of deletion of the Bailey Waste Disposal Superfund Site from the NPL. The EPA identifies sites that appear to present a significant risk to public health or the environment and maintains the NPL as the list of those sites. As described in 300.425(e)(3) of the NCP, sites deleted from the NPL remain eligible for remedial actions if conditions at a deleted site warrant such action. Because EPA considers this action to be noncontroversial and routine, EPA is taking it without prior publication of a notice of intent to delete. This action will be effective October 15, 2007 unless EPA receives adverse comments by September 13, 2007 on this document. If adverse comments are received within the 30-day public comment period on this document, EPA will publish a timely withdrawal of this direct final notice of deletion before the effective date of the deletion, and the deletion will not take effect. The EPA will, as appropriate, prepare a response to comments and continue with the deletion process on the basis of the notice of intent to delete and the comments already received. There will be no additional opportunity to comment. Section II of this document explains the criteria for deleting sites from the NPL. Section III discusses procedures that EPA is using for this action. Section IV discusses the Bailey Waste Disposal Superfund Site, and demonstrates how it meets the deletion criteria. Section V discusses EPA actions to delete the Site from the NPL unless adverse comments are received during the public comment period. II. NPL Deletion Criteria Section 300.425(e) of the NCP provides that releases may be deleted from the NPL where no further response is appropriate. In making a determination to delete a Site from the NPL, EPA shall consider, in consultation with the State, whether any of the following criteria have been met: i. Responsible parties or other persons have implemented all appropriate response actions required; ii. All appropriate Fund-financed (Hazardous Substance Superfund Response Trust Fund) response under CERCLA has been implemented, and no further response action by responsible parties is appropriate; or iii. The remedial investigation has shown that the release poses no significant threat to public health or the environment and, therefore, the taking of remedial measures is not appropriate. Even if a site is deleted from the NPL, where hazardous substances, pollutants, or contaminants remain at the deleted site above levels that allow for unlimited use and unrestricted exposure, CERCLA Section 121(c), 42 U.S.C. 9621(c) requires that a subsequent review of the site be conducted at least every five years after the initiation of the remedial action at the deleted site to ensure that the action remains protective of public health and the environment. If new information becomes available that indicates a need for further action, EPA may initiate remedial actions. Whenever there is a significant release from a site deleted from the NPL, the deleted site may be restored to the NPL without application of the hazard ranking system. III. Deletion Procedures The following procedures apply to deletion of the Site:

(1)The EPA consulted with TCEQ on the deletion of the Site from the NPL prior to developing this direct final notice of deletion.

(2)TCEQ concurred with deletion of the Site from the NPL.

(3)Concurrent with publication of this direct final notice of deletion, a notice of availability of the parallel notice of intent to delete published today in the “Proposed Rules” section of the **Federal Register** is being published in a major local newspaper of general circulation at or near the Site, and is being distributed to appropriate federal, state and local government officials and other interested parties. The newspaper notice announces the 30-day public comment period concerning the notice of intent to delete the Site from the NPL.

(4)The EPA placed copies of documents supporting the deletion in the Site information repositories identified above.

(5)If adverse comments are received within the 30-day public comment period on this document, EPA will publish a timely notice of withdrawal of this direct final notice of deletion before its effective date and will prepare a response to comments and continue with the deletion process on the basis of the notice of intent to delete and the comments already received. Deletion of a site from the NPL does not itself create, alter or revoke any individual's rights or obligations. Deletion of a site from the NPL does not in any way alter EPA's right to take enforcement actions as appropriate. The NPL is designed primarily for informational purposes and to assist EPA management. Section 300.425(e)(3) of the NCP states that the deletion of a site from the NPL does not preclude eligibility for future response actions should future conditions warrant such actions. IV. Basis for Site Deletion The following information provides EPA's rationale for deleting this Site from the NPL. Site Location The Bailey Waste Disposal Site is located approximately three

(3)miles southwest of Bridge City in Orange County, Texas, and was originally part of a tidal marsh near the confluence of the Neches River and Sabine Lake. The total site area includes two rectangular ponds and occupies approximately 280 acres. However, numerous investigations provided data to minimize the areas of the site that required remediation. These areas include the North Marsh Area (approximately four acres), the North Dike Area (approximately 7.8 acres) and the East Dike Area (approximately 7.6 acres). Site History The Site is situated in a sparsely populated marsh area, surrounded by primarily industrial land use. Two ponds, A and B, were constructed on the property by the landowner, Mr. Joe Bailey, as part of the Bailey Fish Camp in the early 1950s by dredging the marsh and piling the sediments to form levees, which surrounded the ponds. The fish camp was active until September 1961, when it was destroyed by Hurricane Carla, which introduced saline waters into the ponds, killing the freshwater fish. Mr. Bailey operated the site pursuant to his ownership and leasehold interests from the early 1950s through March or April 1971. Following the hurricane, Mr. Bailey allowed the disposal of industrial and municipal waste within the levees along the north and east margins of Pond A (the North Dike Area and the East Dike Area, respectively). In addition to the waste located within the North Dike Area, which includes waste contained in Pits A-l, A-2, A-3, and B, and the East Dike Area, waste was also present in the North Marsh Area. Major contaminants within the waste included ethyl benzene, styrene, benzene, chlorinated hydrocarbons and polynuclear aromatic hydrocarbons. Waste disposal operations at the Site ceased in 1971, and it was purchased by Gulf State Utilities. The North Dike Area is currently managed as a Texas Prairie Wetlands Project in cooperation with the Texas Parks & Wildlife, Ducks Unlimited, the U.S. Department of Agriculture Natural Resources Conservation Service and the U.S. Fish and Wildlife Service. There is little likelihood of additional development. Remedial Investigation and Feasibility Study (RI/FS) In December 1984 the state of Texas entered into a cooperative agreement with EPA to conduct an RI/FS. Based on results from preliminary assessments, the Site was placed on the NPL on May 20, 1986, with the Texas Water Commission

(TWC)as the lead agency. The TWC completed Rl activities at the Site in October 1987, concluding: The Site has had no impact on drinking water and it would take over 800 years to reach potable groundwater, but that existing site conditions could degrade through a flood or other natural occurrences, releasing the contaminants contained in the dikes into the surrounding marsh. At the time of the RI, there had been no development in the immediate vicinity of the Site, nor was it likely to be suitable for future development due to prohibitions against development in wetland areas. Upon completion of the RI, EPA assumed the role of lead agency and, under the terms of an administrative order on consent, a group of potentially responsible parties (PRPs), the Bailey Site Settlors Committee (BSSC), completed a feasibility study

(FS)in April 1988. Characterization of Risk Data collected during the RI indicated that should hazardous substances be released from the Site that might endanger public health, welfare, or the environment, the most significant risks to human health and the environment included: Direct contact with organic compounds and heavy metals determined to be carcinogens via absorption through the skin or other routes of inadvertent intake; air emissions of volatile organic compounds; surface waters (marsh) directly contacted by the waste, including organic compounds and heavy metals; and shallow groundwater directly beneath the waste contaminated with organic compounds and heavy metals. Record of Decision Findings Based on the FS, EPA selected an in-situ stabilization and capping remedy, issuing the site ROD in June 1988. In July 1988 EPA, pursuant to section 122 of CERCLA, issued special notice letters to the PRPs providing them an opportunity to enter into an agreement to perform the remedial action. In September 1988 the BSSC submitted to EPA its “Good Faith Offer,” and an agreement to conduct the remedial action was reached. This agreement provided that the Settlors, as defined in the Consent Decree, would carry out the remedy selected by EPA, and that EPA would reimburse the Settlors for a portion of the costs to implement the remedy. However, because of demonstrated difficulties in achieving in-situ stabilization specifications and the finding that successful implementation of the original remedy would, if possible at all, be significantly more difficult, more time-consuming and more costly to implement than was contemplated at the time the original Record of Decision

(ROD)was issued, EPA requested that the BSSC conduct a Focused Feasibility Study (FFS). FFS activities commenced in June 1995, and were completed in October 1996. The Revised Remedial Action was developed as a result of the FFS, and the ROD was amended in December 1996 consistent with the conclusions of the FFS. The amended ROD replaced the in-situ stabilization component of the original remedy with lightweight composite caps and the removal of certain wastes. February 8, 1996 and May 1, 1996 Explanations of Significant Difference

(ESDs)documented the removal and offsite disposal of wastes, which was not specified in the original remedy. Cleanup Standards The remedial action objectives were to minimize the potential for waste migration, protect human health and the environment, prevent future contamination of surface water and groundwater and minimize short-term air emissions resulting from remedial activities. Response Actions After numerous in-situ stabilization attempts, subsequent investigations and a stabilization field pilot study, it was determined that the waste stabilization performance standards established in the ROD and the remedial design would, if possible at all, be significantly more difficult, more time-consuming, and more costly to implement than was contemplated at the time the original ROD was issued. Due to these difficulties, outlined in the Amended ROD (1996), implementation of the original remedy was not completed. Before that determination was made, the original action accomplished: Waste/soil interface evaluation; consolidation and relocation of shallow wastes; construction of clay dikes; construction of access roads; stabilization of approximately one-third of the East Dike Area; south drum disposal area remediation; and construction of a wastewater treatment plant. Between February and May 1996, additional actions taken included excavation of approximately 20,000 cubic yards of waste and affected sediments and transportation of this material to an off-site industrial landfill for disposal, excavation and onsite relocation of waste and affected sediments and placement of interim soil covers. Final removal activities included: Relocation and consolidation of wastes within the limits of the area to be capped; installation of a temporary water collection system to intercept and remove groundwater; construction of lightweight composite caps; installation of riprap along the cap perimeter for erosion and scour protection; installation of storm water management controls; construction of maintenance roads; and installation of a passive gas venting system. The EPA and the Texas Natural Resource Conservation Commission (TNRCC) conducted a pre-final site inspection on July 31, 1997, and on August 20, 1997 the EPA conducted a final site inspection. All items noted in the pre-final site inspection were found to have been satisfactorily addressed with the exception of the removal of the silt fences, which were left in place until the establishment of vegetative growth on the cap surface. During the third quarterly site inspection conducted on May 29, 1998, EPA noted that the silt fences had been removed. The Preliminary Close Out Report signed on September 14, 1998 notes that the remedy had been constructed in accordance with the remedial design plans and specifications and was operational and functional. On May 4, 1998, the EPA approved the Final Remedial Action Report for the Site. The final report documents that the remedial action for the site was completed in accordance with the ROD, Explanations of Significant Differences and the ROD Amendment for the site, and that the final site inspection had been conducted for construction activities. This action initiated the Operation and Maintenance phase under EPA oversight, with site O&M activities required of the BSSC. Operation and Maintenance (O&M) In September 1997 EPA approved the Final Inspection, Maintenance and Monitoring Plan

(IMMP)for the Site. The purpose of the IMMP is to document procedures to be used to assess and maintain the long-term protectiveness of the remedy while minimizing adverse natural or man-made impacts on the Site. The Plan requires of the BSSC

(1)regular inspection of the Site, including grounds, fencing, signs, access roads, bridge, vegetative cover, erosion control (riprap), evidence of erosion, gas vents, free movement of water and soil depression or settlement,

(2)visits to the Site as needed to check site security and evaluate damage from severe weather events such as hurricanes,

(3)maintenance, including regular mowing and clearance of trees and weeds from the capped and riprapped areas, repair of animal burrow damage, clearance of gas vent obstructions, silt removal if impeding the free flow of water within the diked area, repair or replacement of fences and signs, road and bridge repairs and periodic bridge recertification and

(4)regular reporting of these activities to EPA through a formal Site Inspection Report. These reports are reviewed by the Remedial Program manager

(RPM)when received, and are one component of the ongoing five-year reviews. Institutional controls

(ICs)are a necessary component of maintaining the long-term protectiveness of the remedy. ICs are legal and administrative measures that prevent exposure to contaminants that may remain at a site at concentrations above health-based risk levels. They are typically designed to limit activities at or near the Site, and include requirements for providing notice (i.e., deed recordation) in the real property records for properties where residual contamination will remain. For this Site, the ICs include a deed recordation with a notice that buried contaminants remain on the property, and a prohibition against any reuse, development or other activities that might disturb or damage the affected areas without the approval of EPA, TCEQ and the property owner. The requirement for institutional controls was met through the August 2, 2006 deed recordation in the Official Public Records of Real Property of Orange County, Texas for each of the two capped areas. Five-Year Review Hazardous substances remain at the Site above levels that allow for unlimited use and unrestricted exposure. Therefore, the EPA must conduct a statutory five-year review of the remedy no less than every five years after the initiation of the remedial action pursuant to CERCLA Section 121(c), and as provided in the current guidance on Five Year Reviews (OSWER Directive 9355.7-03B-P, Comprehensive Five-Year Review Guidance, June 2001). Based on the five-year reviews, EPA will determine whether human health and the environment continue to be adequately protected by the implemented remedy. Five-year reviews for this Site were completed in September 2000 and September 2005. The reviews found that the remedy remains protective of human health and the environment, and that the Site appears to have been properly maintained during the period between reports. The next five-year review will occur no later than September 2010. Community Involvement Public participation activities required in CERCLA Section 113(k), 42 U.S.C. 9613(k), and CERCLA Section 117, 42 U.S.C. 9617, have been satisfied, and documents which EPA generated and/or relied on are available to the public in these information repositories. V. Deletion Action The EPA, with concurrence of the State of Texas, has determined that all appropriate responses under CERCLA have been completed, and that no further response actions under CERCLA, other than O&M and five-year reviews, are necessary. Therefore, EPA is deleting the Site from the NPL. Because EPA considers this action to be noncontroversial and routine, EPA is taking it without prior publication. This action will be effective October 15, 2007 unless EPA receives adverse comments by September 13, 2007. If adverse comments are received within the 30-day public comment period, EPA will publish a timely withdrawal of this direct final notice of deletion before the effective date of the deletion and it will not take effect. The EPA will prepare a response to comments and continue with the deletion process on the basis of the notice of intent to delete and the comments already received. There will be no additional opportunity to comment. List of Subjects in 40 CFR Part 300 Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply. Dated: July 19, 2007. Richard E. Greene, Regional Administrator, EPA Region 6. For the reasons set out in this document, 40 CFR part 300 is amended as follows: PART 300—[AMENDED] 1. The authority citation for part 300 continues to read as follows: Authority: 33 U.S.C. 1321(c)(2); 42 U.S.C. 9601-9657; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p.351; E.O. 12580, 52 FR 2923, 3 CFR, 1987 Comp., p.193. Appendix B—[Amended] 2. Table 1 of Appendix B to Part 300 is amended under Texas (“TX”) by removing the entry for “Bailey Waste Disposal.” [FR Doc. E7-15891 Filed 8-13-07; 8:45 am] BILLING CODE 6560-50-P DEPARTMENT OF TRANSPORTATION Surface Transportation Board 49 CFR Part 1243 [STB Ex Parte No. 661 (Sub-No. 1)] Rail Fuel Surcharge Reporting AGENCY: Surface Transportation Board, Department of Transportation. ACTION: Final rule. SUMMARY: The Surface Transportation Board is amending its regulations to require Class I railroads to report certain data concerning fuel costs and fuel surcharges billed. The data reported pursuant to this rule will provide an overall picture of the use of fuel surcharges and will permit the Board to monitor the fuel surcharge practices of Class I carriers. The new rule will be codified as 49 CFR 1243.3. The reporting form can be found in an Appendix to this section. DATES: This rule is effective November 12, 2007. ADDRESSES: Comments and material received from the public, as well as documents referred to herein, are part of the Board's docket in STB Ex Parte No. 661 (Sub-No. 1) and are available for inspection or copying at the Board's Public Docket Room, Room 131, 395 E Street, SW., Washington, DC 20423-0001, are posted on the Board's Web site, at *http://www.stb.dot.gov* , and are available from the Board's contractor, ASAP Document Solutions (mailing address: Suite 103, 9332 Annapolis Rd., Lanham, MD 20706; e-mail address: *asapdc@verizon.net* ; telephone number: 202-306-4004). FOR FURTHER INFORMATION, CONTACT: Joseph H. Dettmar at 202-245-0395. [Assistance for the hearing impaired is available through the Federal Information Relay Service

(FIRS)at 1-800-877-8339.] SUPPLEMENTARY INFORMATION: The Board instituted this proceeding, in conjunction with our decision in *Rail Fuel Surcharges* , STB Ex Parte No. 661 (STB served Jan. 26, 2007), to solicit comments, pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501 *et seq.*

(PRA)and Office of Management and Budget

(OMB)regulations at 5 CFR 1320.8(d)(3), regarding the Board's proposal to require all Class I (large) railroads to submit a monthly report containing the following information:

(1)Total monthly fuel cost;

(2)gallons of fuel consumed during the month;

(3)increased or decreased cost of fuel over the previous month; and

(4)total monthly revenue from fuel surcharges. In *Rail Fuel Surcharges* , STB Ex Parte No. 661 (Sub-No. 1) (STB served Jan. 26, 2007) (published at 72 FR 4676 on Feb. 1, 2007), the Board sought comments regarding:

(1)Whether the particular collection of information described above is necessary for the proper performance of the functions of the Board, including whether the collection has practical utility;

(2)the accuracy of the Board's burden estimates;

(3)ways to enhance the quality, utility, and clarity of the information collected; and

(4)ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology, when appropriate. Comments The Board received comments on the proposed rules from the following shipper interests: Edison Electric Institute (EEI); National Grain and Feed Association (NGFA); North Dakota Grain Dealers Association (NDGDA); Snavely King Majoros O'Connor & Lee, Inc. (Snavely); Total Petrochemicals, USA, Inc. (Total). The Board also received comments from the following rail carriers: Canadian National Railway Company (CN); CSX Transportation, Inc. (CSX); Norfolk Southern Railway Company (NS); and Union Pacific Railroad Company (UP). All but NS support the reporting requirement. Railroads suggest several ways to minimize their reporting burden. In contrast, shippers suggest additional data that they assert should be collected to increase the report's utility. No comments were received on burden estimates. CN, CSXT, and UP suggest that the report be submitted quarterly, rather than monthly, to reduce the degree to which the data might be misinterpreted and to be consistent with reporting periods used by the Securities and Exchange Commission (SEC), as well as periods used by the STB for other reports. CSXT and UP also suggest that the deadline for submitting a report should be 30 days after the end of the reporting period (rather than 20 days, as proposed) to be more consistent with other STB reporting deadlines. CN, CSXT, and UP also ask the Board to clarify whether the report is intended to include data on both regulated and unregulated traffic. CN and CSXT argue that it would be difficult to segregate revenue by tariff, exempt, or contract traffic, while UP states that aggregated reporting (at least as to revenue derived from its numerous separate/distinct fuel surcharge programs) may be more burdensome and may lead to confusion and misinterpretation. In addition, CSXT asks the Board to clarify whether reported rail fuel surcharge revenue should include all revenue earned/billed during the time period or only revenue collected, and whether reported fuel costs should include state fuel taxes. NS opposes this reporting requirement, arguing that Class I railroads must already submit extensive financial reports to the SEC. NS also argues that a carrier that does not impose a fuel surcharge on STB-regulated traffic should be exempt from this reporting requirement because its report would have no relation to any Board function. Shippers are generally concerned that the proposed Fuel Surcharge Report would not provide sufficient transparency to enable the Board and the public to monitor the fairness of the rail fuel-cost recovery practices. Additional data requested includes: Fuel consumption per the same unit (whether mile, ton-mile, car-mile, etc.) used by the carrier to assess the fuel surcharge; total ton-miles and/or car-miles; total recovery of fuel costs, whether by fuel surcharge or any other means; commodity-specific data; and data that distinguishes between freight that is subject to fuel surcharges and freight that is not. 1 1 WCTL would further separate the data between interchange and non-interchange traffic and would require data on mis-aligned surcharge threshold recovery (i.e., when the base rate for the fuel surcharge is below the fuel cost in the underlying rail rate, so that the carrier is “double-dipping”), as well as the amount of fuel surcharge credits provided to shippers for months in which fuel costs fall below the level at the time the existing rate was established. Snavely argues that additional reporting would not burden carriers because they already submit fuel cost data to the Association of American Railroads as part of the Rail Cost Adjustment Factor. In addition, EEI and TOTAL ask the Board to direct that the report reference a single fuel index and a single, objective source of railroad miles. Snavely asks the Board to direct that the fuel surcharge data also be reported in the Waybill Sample (in the accessorial field) and to clarify that “total fuel cost” should exclude gains or losses from fuel hedging. The proposed rule was submitted to OMB for review as required under the PRA, 5 U.S.C. 3507(d) and 5 CFR 1320.11. No comments were received from OMB, which has tentatively approved the reporting requirement, pending publication and review of the final rule. OMB has 60 days to review the final rule. The Board will publish a separate notice of OMB's final action. This collection has been assigned Control Number 2140-0014. 2 2 Unless reapproved, OMB approval for this report expires 3 years after the date of approval of the final rules. The Final Rule Under 49 U.S.C. 10702, the Board has authority to address the reasonableness of a rail carrier's practices. The Board also has specific authority under 49 U.S.C. 11145(a)(1) to require regulated rail carriers to file annual, periodic, and special reports with the Board. This rule to require the Report of Fuel Cost, Consumption, and Surcharge Revenues will provide an overall picture of the use of fuel surcharges and will permit the Board to monitor the current fuel surcharge practices of Class I carriers. Scope of the Report The four line items originally proposed are intended to reflect aggregate data on fuel costs and fuel surcharge revenue. Although the underlying ruling adopted in STB Ex Parte No. 661—that the use of rate-based calculations to determine a fuel surcharge is an unreasonable practice—is applicable only to regulated traffic, several carriers argue that it would be unduly burdensome to require railroads to segregate the fuel costs and revenue for regulated traffic. We can discern no practical method for allocating fuel costs for regulated traffic alone. Therefore, we will not require railroads to segregate fuel costs. However, upon further reflection and review of the comments received, we believe that carriers should be required to segregate and separately report the total fuel-surcharge revenue collected from regulated traffic. Our decision to require these data is consistent with our concerns, as detailed in our decisions in STB Ex Parte No. 661, regarding the potentially disparate impact of fuel surcharges on regulated shippers. Requiring these additional data, as urged by several commenters, will increase the utility of the report as a tool for monitoring the use of these surcharges on regulated traffic and should not unduly burden reporting railroads. This information should be readily available to reporting railroads because railroads bill shippers on an individual basis. If in practice this added requirement is more burdensome for a carrier than we anticipate, that carrier may bring that to our attention by seeking an individual exemption. We also clarify that the costs reported in lines 1 and 3 should include state fuel taxes, and that the revenue reported in line 4 should be the revenue billed in that period rather than the revenue collected in that period. Who Must Report All Class I carriers, even those that impose no fuel surcharges on regulated traffic, will be required to submit this report. This approach will better enable the Board to monitor industry-wide fuel surcharge practices. Moreover, unregulated traffic includes traffic that has been exempted under 49 U.S.C. 10502. Were these reports to suggest that a carrier was imposing fuel surcharges that over-recovered for its actual fuel costs, a shipper could file a complaint asking the Board to investigate and revoke an exemption under section 10502(d). Frequency and Due Date of Reports Based on the comments received, we will require these reports to be submitted on a quarterly basis, due 30 days after the end of the reporting period. As the railroads point out, these changes will make this reporting requirement more consistent with other financial reporting to the Board and to the SEC. These changes will decrease the reporting burden on carriers while retaining the utility of the reports. The aggregated nature of the data, combined with the longer reporting interval, will provide a more useful and reliable regulatory tool for monitoring the relationship between changes in revenues and costs. Suggestions To Require Additional Data With the one exception noted above, we will not require carriers to submit additional data in this report. 3 The Fuel Surcharge Report is intended to provide an overall picture of the use of fuel surcharges. It is not intended as a substitute for evidence brought in an individual case. 3 Any suggestion to add information on fuel surcharge data into the Waybill Sample would be more properly addressed in a petition for a rulemaking involving the Waybill Sample. Regulatory Flexibility Analysis The Board concludes that this action will not have a significant economic effect on a substantial number of small entities within the meaning of the Regulatory Flexibility Act. This action will not significantly affect either the quality of the human environment or the conservation of energy resources. List of Subjects in 49 CFR Part 1243 Railroads, Reporting and recordkeeping requirements. Authority: 49 U.S.C. 721, 49 U.S.C. 11145. Decided: August 8, 2007. By the Board, Chairman Nottingham, Vice Chairman Buttrey, and Commissioner Mulvey. Vernon A. Williams, Secretary. For the reasons set forth in the preamble, the Surface Transportation Board amends part 1243 of title 49, chapter X, of the Code of Federal Regulations as follows: PART 1243—QUARTERLY OPERATING REPORTS—RAILROADS 1. The authority citation for part 1243 continues to read as follows: Authority: 49 U.S.C. 721, 49 U.S.C. 11145. 2. Add a new § 1243.3 to read as follows: § 1243.3 Report of fuel cost, consumption, and surcharge revenue. Commencing with reports for the 3 months beginning October 1, 2007, all Class I railroads are required to file quarterly a Report of Fuel Cost, Consumption, and Surcharge Revenue, in accordance with the Board's reporting form. Such reports shall be filed, in duplicate, with the Office of Economics, Environmental Analysis, and Administration, Surface Transportation Board, Washington, DC 20423-0001, within 30 days after the end of the quarter reported. Appendix to Section 49 CFR 1243.3 OMB Control No. 2140-0014 Expires ____, 2010 Railroad Name ______ Quarterly Report of Fuel Cost, Consumption, and Surcharge Revenue for the Quarter Ending ____, 20__ [Instructions: The report shall contain data only for the reported quarter. Cost and revenue are defined as accrued or earned that quarter. The report shall be filed with the Surface Transportation Board on or before 30 days after the end of that quarter.] Line No. Data

(a)Amount (in thousands)

(b)1 Total fuel cost 1 2 Total gallons of fuel consumed 1 3 Total increase or decrease in cost of fuel 2 4 Total revenue from fuel surcharges 3 5 Revenue from fuel surcharges on regulated traffic 1 Include fuel for freight, yard and work train locomotives. Include fuel charged to train and yard service (function 67—Locomotive Fuels). Include all other fuel used for railroad operations and maintenance, including motor vehicles and power equipment not charged to function 67—Locomotive Fuels. 2 Show the total increase or decrease in fuel cost over previous quarter. 3 Show Fuel surcharges billed for all traffic (line 4) and for only regulated traffic (line 5). I, the undersigned, ______, Title: ______, state that this report was prepared by me or under my supervision and that I have carefully examined it and on the basis of my knowledge, belief, and verification declare it to be full, true and correct. Supplemental Information About the Fuel Surcharge Report The following information is provided in compliance with OMB requirements, pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 *et seq.:* Information in this report is intended to permit the Board to monitor the fuel surcharge practices of Class I carriers. The estimated annual hourly, per respondent burden for filing this report is 12 hours. This report is mandatory for Class I carriers. Information collected through this report is published on the Board's website and is maintained by the agency for at least 2 years. The display of a currently valid OMB control number for this collection is required by law. Under 5 CFR 1320.5(b), persons are not required to respond to this collection of information unless it displays a currently valid OMB control number. [FR Doc. E7-15863 Filed 8-13-07; 8:45 am] BILLING CODE 4915-01-P 72 156 Tuesday, August 14, 2007 Proposed Rules OFFICE OF SPECIAL COUNSEL 5 CFR Part 1830 Privacy Act of 1974; Implementation AGENCY: U.S. Office of Special Counsel. ACTION: Proposed rule. SUMMARY: The U.S. Office of Special Counsel

(OSC)proposes to revise its regulations at 5 C.F.R. Part 1830, dealing with the agency's implementation of the Privacy Act, at 5 U.S.C. 552a. The regulation, as revised, would provide additional information about access to OSC records under the Privacy Act. DATES: Comments on the proposed rule must be received by September 13, 2007. FOR FURTHER INFORMATION CONTACT: Kathryn Stackhouse, General Law Counsel, in writing at: U.S. Office of Special Counsel, Legal Counsel and Policy Division, 1730 M Street, N.W., Suite 218, Washington, DC 20036-4505; by telephone at

(202)254-3690; or by facsimile at

(202)653-5151. SUPPLEMENTARY INFORMATION: OSC proposes to revise its regulations governing implementation of the Privacy Act, primarily by:

(1)revising and updating contact information for requests and appeals to OSC, adding fax delivery as a means by which they may be sent, and specifying the OSC point of receipt for such matters;

(2)modifying the description of information needed for effective processing of requests and appeals;

(3)revising the description of proof of identity information needed by OSC (including by deletion of the requirement that all requests must include a date and place of birth and a Social Security number, while retaining the option for OSC to request some or all of that data if needed to confirm a requester's identity);

(4)clarifying that Privacy Act requests for records may also be processed under the Freedom of Information Act;

(5)extending the appeal period for requests and revising the description of the response time for appeals;

(6)clarifying that exempt material in OSC case files includes all matters within OSC's jurisdiction (including alleged violations of the Uniformed Services Employment and Reemployment Rights Act) and information included in background investigations conducted for OSC employees and others;

(7)adding two new sections (on general provisions and other rights and services), moving updated information about fees to a new section, and revising section headings throughout the regulation. Procedural Determinations *Congressional Review Act (CRA):* OSC has determined that these revisions are non-major under the Congressional Review Act, and will submit a report on this final rule to Congress and the Government Accountability Office pursuant to the act. *Regulatory Flexibility Act

(RFA)Certification (5 U.S.C. 605):* I certify that this regulation will not have a significant economic impact on a substantial number of small entities. The OSC primarily handles matters involving individuals who are current or former Federal government employees, applicants for federal employment, certain state or local government employees, and representatives of these individuals. These revised regulations affect only the implementation of the Privacy Act at OSC. These proposed revisions will not cause significant additional impact. *Unfunded Mandates Reform Act (UMRA):* This proposed revision does not impose any Federal mandates on State, local, or tribal governments, or on the private sector within the meaning of the UMRA. *Paperwork Reduction Act (PRA):* This revision does not impose any new recordkeeping, reporting or other information collection requirements on the public. *Executive Order 12866 (Regulatory Planning and Review):* While OSC is not required to do so, OSC has reviewed this revision under Executive Order 12866 and anticipates that the economic impact of this revision will be insignificant. Thus this proposed revision is not a significant regulatory action under §3(f) of Executive Order 12866, and does not require an assessment of potential costs and benefits under § 6(a)(3) of the order. *Executive Order 13132 (Federalism):* This proposed revision does not have new federalism implications under Executive Order 13132. The Hatch Act, at title 5 of the U.S. Code, chapter 15, prohibits certain political activities of covered state and local government employees. OSC has jurisdiction to issue advisory opinions on political activity by those employees, and to bring an enforcement action before the Merit Systems Protection Board for prohibited activity by a covered state or local government employee. These revised regulations affect only the implementation of the Privacy Act at OSC and do not significantly change the rights of state and local government employees. *Executive Order 12988 (Civil Justice Reform):* This proposed rule meets applicable standards of §§ 3(a) and 3(b)(2) of Executive Order 12988. List of Subjects in 5 CFR Part 1830 Administrative practice and procedure, Government employees, Privacy. For the reasons stated in the preamble, OSC proposes to revise 5 CFR Part 1830 to read as follows: PART 1830—PRIVACY Sec. 1830.1 General provisions. 1830.2 Requirements for making Privacy Act requests. 1830.3 Medical records. 1830.4 Requirements for requesting amendment of records. 1830.5 Appeals. 1830.6 Exemptions. 1830.7 Fees. 1830.8 Other rights and services. Authority: 5 U.S.C. 552a(f), 1212(e). § 1830.1 General provisions. This part contains rules and procedures followed by the Office of Special Counsel

(OSC)in processing requests for records under the Privacy Act (PA), at 5 U.S.C. 552a. Further information about access to OSC records generally is available on the agency's web site (http://www.osc.gov/foia.htm). § 1830.2 Requirements for making Privacy Act requests. *(a) How made and addressed.* A request for OSC records under the Privacy Act should be made by writing to the agency. The request should be sent by regular mail addressed to: Privacy Act Officer, U.S. Office of Special Counsel, 1730 M Street, N.W. (Suite 218), Washington, DC 20036-4505. Such requests may also be faxed to the Privacy Act Officer at the number provided on the FOIA/PA page of OSC's web site (see 1830.1). For the quickest handling, both the request letter and envelope or any fax cover sheet should be clearly marked “Privacy Act Request.” A Privacy Act request may also be delivered in person at OSC's headquarters office in Washington, DC. Whether sent by mail or by fax, or delivered in person, a Privacy Act request will not be considered to have been received by OSC until it reaches the Privacy Act Officer. *(b) Description of records sought.* Requesters must describe the records sought in enough detail for them to be located with a reasonable amount of effort. Whenever possible, requests should describe any particular record sought, such as the date, title or name, author, recipient, and subject matter. *(c) Proof of identity.* Requests received by mail, fax, or personal delivery should contain sufficient information to enable OSC to determine that the requester and the subject of the record are one and the same. To assist in this process, an individual should submit his or her name and home address, business title and address, and any other known identifying information such as an agency file number or identification number, a description of the circumstances under which the records were compiled, and any other information deemed necessary by OSC to properly process the request. An individual delivering a request in person may be required to present proof of identity, preferably a government-issued document bearing the individual's photograph. *(d) Freedom of Information Act processing.* OSC also processes all Privacy Act requests for access to records under the Freedom of Information Act, 5 U.S.C. 552, following the rules contained in part 1820 of this chapter, which gives requesters the benefit of both statutes. § 1830.3 Medical records. When a request for access involves medical records that are not otherwise exempt from disclosure, the requesting individual may be advised, if it is deemed necessary by OSC, that the records will be provided only to a physician designated in writing by the individual. Upon receipt of the designation, the physician will be permitted to review the records or to receive copies by mail upon proper verification of identity. § 1830.4 Requirements for requesting amendment of records. *(a) How made and addressed.* Individuals may request amendment of records pertaining to them that are subject to amendment under the Privacy Act and this part. The request should be sent by regular mail addressed to: Privacy Act Officer, U.S. Office of Special Counsel, 1730 M Street, N.W. (Suite 218), Washington, DC 20036-4505. Such requests may also be faxed to the Privacy Act Officer at the number provided on the FOIA/PA page of OSC's web site (see 1830.1). For the quickest handling, both the request letter and envelope or any fax cover sheet should be clearly marked “Privacy Act Amendment Request.” Whether sent by mail or by fax, a Privacy Act amendment request will not be considered to have been received by OSC until it reaches the Privacy Act Officer. A Privacy Act amendment request may also be delivered by person at OSC's headquarters office in Washington, DC. *(b) Description of amendment sought.* Requests for amendment should include identification of records together with a statement of the basis for the requested amendment and all available supporting documents and materials. Requesters must describe the amendment sought in enough detail for the request to be evaluated. *(c) Proof of identity.* Rules and procedures set forth in 1830.2(c) apply to requests made under this section. *(d) Acknowledgement and response.* Requests for amendment shall be acknowledged by OSC not later than 10 days (excluding Saturdays, Sundays, and legal holidays) after receipt by the Privacy Act Officer and a determination on the request shall be made promptly. § 1830.5 Appeals. *(a) Appeals of adverse determinations.* A requester may appeal a denial of a Privacy Act request for access to or amendment of records to the Legal Counsel and Policy Division, U.S. Office of Special Counsel, 1730 M Street, N.W. (Suite 218), Washington, DC 20036-4505. The appeal must be in writing, and sent by regular mail or by fax. The appeal must be received by the Legal Counsel and Policy Division within 45 days of the date of the letter denying the request. For the quickest possible handling, the appeal letter and envelope or any fax cover sheet should be clearly marked “Privacy Act Appeal.” An appeal will not be considered to have been received by OSC until it reaches the Legal Counsel and Policy Division. The appeal letter may include as much or as little related information as the requester wishes, as long as it clearly identifies the OSC determination (including the assigned request number, if known) being appealed. An appeal ordinarily will not be acted on if the request becomes a matter of litigation. *(b) Responses to appeals.* The agency decision on an appeal will be made in writing. A final determination will be issued within 30 days (excluding Saturdays, Sundays, and legal holidays), unless, for good cause shown, OSC extends the 30-day period. § 1830.6 Exemptions. OSC will claim exemptions from the provisions of the Privacy Act at subsections (c)(3) and

(d)as permitted by subsection

(k)for records subject to the act that fall within the category of investigatory material described in paragraphs

(2)and

(5)and testing or examination material described in paragraph

(6)of that subsection. The exemptions for investigatory material are necessary to prevent frustration of inquiries into allegations in prohibited personnel practice, unlawful political activity, whistleblower disclosure, Uniformed Services Employment and Reemployment Rights Act, and other matters under OSC's jurisdiction, and to protect identities of confidential sources of information, including in background investigations of OSC employees, contractors, and other individuals conducted by or for OSC. The exemption for testing or examination material is necessary to prevent the disclosure of information which would potentially give an individual an unfair competitive advantage or diminish the utility of established examination procedures. OSC also reserves the right to assert exemptions for records received from another agency that could be properly claimed by that agency in responding to a request. OSC may also refuse access to any information compiled in reasonable anticipation of a civil action or proceeding. § 1830.7 Fees. Requests for copies of records shall be subject to duplication fees set forth in part 1820 of this chapter. § 1830.8 Other rights and services. Nothing in this part shall be construed to entitle any person, as of right, to any service or to the disclosure of any record to which such person is not entitled under the Privacy Act. Dated: August 8, 2007. Scott J. Bloch, Special Counsel. [FR Doc. E7-15839 Filed 8-13-07; 8:45 am] BILLING CODE 7405-01-S FARM CREDIT ADMINISTRATION 12 CFR Part 620 RIN 3052-AC37 Disclosure to Shareholders—Annual Report to Shareholders AGENCY: Farm Credit Administration. ACTION: Proposed rule. SUMMARY: The Farm Credit Administration (FCA, Agency, we), proposes to amend § 620.4 of our regulations to allow Farm Credit System (System) institutions 90 calendar days to prepare and distribute annual reports to shareholders, while retaining the 75 calendar day requirement for electronic reporting and distribution to the FCA. DATES: You may send comments on or before September 13, 2007. ADDRESSES: We offer a variety of methods to receive your comments. For accuracy and efficiency reasons, commenters are encouraged to submit comments by e-mail or through the Agency's Web site or the Federal eRulemaking Portal. As faxes are difficult for us to process and achieve compliance with section 508 of the Rehabilitation Act, please consider another means to submit your comment if possible. Regardless of the method you use, please do not submit your comment multiple times via different methods. You may submit comments by any of the following methods: • *E-mail:* Send us an e-mail at *reg-comm@fca.gov* . • *Agency Web site: http://www.fca.gov* . Select “Legal Info,” then “Pending Regulations and Notices.” • *Federal eRulemaking Portal: http://www.regulations.gov* . Follow the instructions for submitting comments. • *Mail:* Gary K. Van Meter, Deputy Director, Office of Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090. • *Fax:*

(703)883-4477. Posting and processing of faxes may be delayed. Please consider another means to comment, if possible. You may review copies of all comments we receive at our office in McLean, Virginia, or from our Web site at *http://www.fca.gov* . Once you are in the Web site, select “Legal Info,” and then select “Public Comments.” We will show your comments as submitted, but for technical reasons we may omit items such as logos and special characters. Identifying information you provide, such as phone numbers and addresses, will be publicly available. However, we will attempt to remove electronic-mail addresses to help reduce Internet spam. FOR FURTHER INFORMATION CONTACT: Christopher D. Wilson, Policy Analyst, Office of Regulatory Policy, Farm Credit Administration, McLean, VA 22102-5090,

(703)883-4414, TTY

(703)883-4434; or Bob Taylor, Attorney Advisor, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090,

(703)883-4020, TTY

(703)883-4020; or Jane Virga, Senior Attorney, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090,

(703)883-4020, TTY

(703)883-4020. SUPPLEMENTARY INFORMATION: I. Objectives Our objectives in this proposed rule are to: • Extend the time for System institutions to prepare and distribute their annual reports to shareholders from 75 calendar days to 90 calendar days; and • Promote high quality and timely reporting and disclosure by System institutions to shareholders and the FCA. II. Background A. Annual Report Distribution Under FCA Regulations Part 620, Disclosure to Shareholders, establishes the requirements for financial reports for Farm Credit banks and associations. In pertinent part, § 620.4 establishes the time requirements for System institutions to prepare and provide to their shareholders an annual report. On March 14, 2006, the FCA proposed to amend our regulations at part 620. Among other things, we proposed to amend § 620.4(a) so that all annual reports would be filed within 75 calendar days of the end of an institution's fiscal year. At that time, institutions had a 90-day deadline. The FCA stated that significant technological advances had occurred in the last 10 years that both increased the market's demand for more timely information and improved the ability of institutions to capture, process, and disseminate this information. Additionally, the FCA stated that accelerating the time to report the financial condition of a System institution to shareholders, investors, and the general public would improve information flow and facilitate shareholder and investor decisionmaking. Finally, the FCA stated that the proposed timeframes were a reasonable compromise between industry practices and the unique cooperative structure of the System. Our amendments to part 620 were published as a final rule on December 20, 2006, and became effective on February 16, 2007. However, the final rule provided that compliance with all provisions of the rule must be achieved by the start of the fiscal year immediately following the effective date of the rule. Thus, the 2007 annual report would be the first annual report distributed under the accelerated filing guidelines. B. System's Concerns During the past few months, System institutions have raised concerns regarding the new 75-day filing requirement. System institutions have stated that they believed the 75-day requirement adopted in December 2006 only applied to the electronic filing of the report with FCA, similar to the accelerated electronic filings of reports of public companies with the Securities and Exchange Commission. System institutions have also raised concerns regarding the report sent to shareholders. Typically, System institutions send hard copy annual reports to their shareholders and electronic reports to the FCA. Based on the System's current processes and requirements for preparation and distribution of their annual reports, they have indicated that they would not be able to comply with the 75-calendar-day accelerated distribution requirement to their shareholders and still meet the objectives of providing them timely, accurate, and high quality disclosures. Specifically, System institutions have collectively stated that it will be extremely onerous for them to comply with the 75-calendar-day accelerated distribution requirement for the annual report to shareholders because of the prohibitive costs and time needed for:

(1)The external audit process;

(2)the audit committee review; and

(3)printing and distribution of the report. Due to the perceived ambiguity of the prior rulemaking and the difficulties involved in producing high quality annual reports to shareholders, System institutions have requested that FCA require the annual report be sent to shareholders within 90 days rather than 75 days. C. FCA Response FCA has reviewed the System's concerns and is proposing an amendment to § 620.4(a). The amended rule would allow System institutions 90 calendar days after the end of a fiscal year to provide their annual reports to shareholders, while retaining the 75-calendar-day requirement to send an electronic copy of the report to us. To ensure accelerated disclosure, the FCA would require that each System institution:

(1)Publish a copy of its annual report on its Web site when it sends the report to us electronically, and

(2)provide prior written notification to its shareholders and other interested persons that the institution will publish its annual report on the institution's Web site when the report is sent electronically to the FCA. A System institution must develop procedures to ensure that prior written notification to the shareholders is prominent and conspicuous so that there is effective shareholder notice that the annual report will be published on its Web site and that shareholders will be provided a copy of such report within 90 calendar days of the end of its fiscal year. The notification can be at the time a loan is made to the shareholder, when the annual meeting information notice is sent to each shareholder, by a postcard to all shareholders, or at any other time before the annual report is published. After effective notice is provided to a shareholder, further notification to that shareholder is not required. In addition, the reports filed with the FCA and posted on the institutions' Web sites would be available for public inspection as required by § 620.2(b). This would allow shareholders and other interested persons to have access to the annual report at that time. We believe that this bifurcated approach resolves any ambiguity from the prior rulemaking and fully addresses the System's logistical issues of providing an attractive, high quality annual report to shareholders, while meeting the goal of accelerated filing and disclosure. Additionally, the copy of the annual report sent to the FCA electronically and the annual report provided to the shareholders must be substantively identical. The FCA realizes that the annual report sent electronically to the FCA may lack photographs or other “glossy” pictures, graphs, or covers. The FCA also realizes that System institutions may want to simplify the format of the annual reports sent to shareholders and not use photographs or other elaborate graphics. D. Methods of Accelerated Reporting To achieve accelerated reporting to both the FCA and shareholders, System institutions can provide electronic annual reports to their shareholders, as they do to the FCA. Under E-SIGN, 1 electronic reports have the same legal effect as paper reports. Part 609 of the FCA regulations summarizes the pertinent provisions of E-SIGN. 1 E-SIGN stands for the “Electronic Signatures in Global and National Commerce Act” (Pub. L. 106-229) which became effective October 1, 2000. Electronic contracts, signatures, and recordkeeping, in most instances, have the legal effect of their paper counterparts. In order to provide electronic notices to a customer, both the System institution and the customer must agree to electronic reporting. E-SIGN establishes different technological and other standards for a System institution conducting E-commerce with a “business” or a “consumer”. 2 Some System loans qualify as consumer transactions, while others are business transactions. Thus, System institutions must determine whether a loan qualifies as a consumer transaction or a business transaction to comply with E-SIGN. 2 A “consumer” is an individual who obtains, through a transaction, products or services that are used primarily for personal, family, or household purposes. In order to effectively use electronic disclosures, if they so choose, System institutions must begin planning now on how to achieve compliance with E-SIGN and the FCA's regulations. A System institution cannot decide to send electronic disclosures to a shareholder without the shareholder's consent, nor can an institution institute electronic disclosures to all shareholders on the basis of a majority vote of the shareholders. We intend to provide further guidance on electronic disclosures in an informational memorandum or similar communication. For additional background information on the delivery of electronic communications, see our informational memoranda dated October 23, 2001 regarding electronic communications on our Web site. E. Technical Amendment We are also proposing a technical amendment to § 620.2(c). We are proposing to omit the second sentence of that paragraph to avoid duplication with § 620.2(d). III. Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ), the FCA hereby certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities. Each of the banks in the System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. Therefore, System institutions are not “small entities” as defined in the Regulatory Flexibility Act. List of Subjects in 12 CFR Part 620 Accounting, Agriculture, Banks, banking, Reporting and recordkeeping requirements, Rural areas. For the reasons stated in the preamble, part 620 of Chapter VI, title 12 of the Code of Federal Regulations is proposed to be amended as follows: PART 620—DISCLOSURE TO SHAREHOLDERS 1. The authority citation for part 620 continues to read as follows: Authority: Secs. 4.19, 5.9, 5.17, 5.19, 8.11 of the Farm Credit Act (12 U.S.C. 2207, 2243, 2252, 2254, 2279aa-11); sec. 424 of Pub. L. 100-233, 100 Stat. 1568, 1656. Subpart A—General § 620.2 [Amended] 2. Amend § 620.2(c) by removing the second sentence. Subpart B—Annual Report to Shareholders 3. Revise § 620.4(a) to read as follows: § 620.4 Preparing and providing the annual report.

(a)Each institution of the Farm Credit System must:

(1)Prepare and send to the Farm Credit Administration an electronic copy of its annual report within 75 calendar days of the end of its fiscal year;

(2)Publish a copy of its annual report on its Web site when it sends the report electronically to the Farm Credit Administration;

(3)Provide prior written notification to its shareholders and other interested persons that the institution will publish its annual report on the institution's Web site when the report is sent electronically to the Farm Credit Administration; and,

(4)Within 90 calendar days of the end of its fiscal year, prepare and provide to its shareholders an annual report substantively identical to the copy of the report sent to the Farm Credit Administration under paragraph (a)(1) of this section. Dated: August 8, 2007. Roland E. Smith, Secretary, Farm Credit Administration Board. [FR Doc. E7-15842 Filed 8-13-07; 8:45 am] BILLING CODE 6705-01-P COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 3 RIN 3038-AC45 Termination of Associated Persons and Principals of Futures Commission Merchants, Introducing Brokers, Commodity Trading Advisors, Commodity Pool Operators and Leverage Transaction Merchants AGENCY: Commodity Futures Trading Commission. ACTION: Proposed rules. SUMMARY: The Commodity Futures Trading Commission (“Commission” or “CFTC”) is proposing to amend Commission Regulations 3.12 and 3.31 (“Proposed Amendments”) to extend the period during which a registered futures commission merchant (“FCM”), introducing broker (“IB), commodity trading advisor (“CTA”), commodity pool operator (“CPO”) or leverage transaction merchant (“LTM”) must file a notice with the National Futures Association (“NFA”) to report the termination of any associated person (“AP”) or principal of the registered intermediary. Under existing regulations, such intermediaries must file notices within 20 days after the termination of the AP or principal. The Commission's proposal (“Proposal”) would provide 30, rather than 20, days for the filing of a termination notice. DATES: Comments must be received on or before September 13, 2007. ADDRESSES: Comments on the Proposal should be sent to David A. Stawick, Secretary, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. Comments may be sent by facsimile transmission to

(202)418-5521, or by e-mail to *secretary@cftc.gov* . Reference should be made to “Proposal Regarding the Termination of Associated Persons and Principals of Futures Commission Merchants, Introducing Brokers, Commodity Trading Advisors, Commodity Pool Operators and Leverage Transaction Merchants.” Comments also may be submitted by connecting to the Federal eRulemaking Portal at *http://www.regulations.gov* and following the comment submission instructions. FOR FURTHER INFORMATION CONTACT: Helene D. Schroeder, Special Counsel, Compliance and Registration Section, Division of Clearing and Intermediary Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581, telephone number:

(202)418-5450; facsimile number:

(202)418-5528; and electronic mail: *hschroeder@cftc.gov* . SUPPLEMENTARY INFORMATION: I. Background Section 4k of the Commodity Exchange Act (“Act”) 1 makes it unlawful for persons to be associated in certain specified capacities with an FCM, IB, CPO or CTA unless the person is registered with the entity or intermediary as an AP thereof. 2 Section 19 of the Act grants the Commission plenary authority over leverage transactions, and this authority includes the registration of APs of an LTM. 3 1 7 U.S.C. 1 *et seq.* (2000). The Act can be accessed at *http://www.access.gpo.gov/uscode/title7/chapter1_.html* . 2 7 U.S.C. 6k(1)-(3). 3 7 U.S.C. 23. Commission Regulation 3.12(a) makes it unlawful for any person to be associated with an FCM, IB, CTA, CPO or LTM in the capacity of an AP unless the person has registered under the Act as an AP of that sponsoring intermediary. 4 Pursuant to Commission Regulation 3.12(c), application for registration as an AP must be on a Form 8-R and accompanied by the applicant's fingerprints as well as a sponsor certification that meets the requirements set forth in that Regulation. 4 17 CFR 3.12(a). The Commission's regulations can be accessed at *http://www.access.gpo.gov/nara/cfr/waisidx_06/17cfrv1_06.html* . Commission Regulations 3.12(b) and 3.31(c)(1) provide for the termination of an AP's registration. Specifically, Section 3.31(c)(1) requires the sponsoring FCM, IB, CPO, CTA or LTM to file a Form 8-T notice 5 with NFA within 20 days of either of the following events:

(1)The person fails to become associated with the sponsoring FCM, IB, CTA, CPO or LTM; or

(2)the association with the sponsoring firm is otherwise terminated. Commission Regulation 3.31(c)(2) provides for the termination of any principal of an FCM, IB, CPO, CTA or LTM, and it also requires the filing of a Form 8-T within 20 days after the termination of the principal's affiliation. 5 Commission Regulation 3.31(c)(3) permits the filing of a Uniform Termination Notice for Securities Industry Registration (Form U-5) in lieu of a Form 8-T to report the termination of any AP or principal of the sponsoring intermediary. NFA Registration Rule 214(a) likewise specifies that such termination notices must be filed within 20 days after the termination of the affiliation of the AP or principal, and it imposes a $100 fee upon sponsoring firms that fail to file termination notices on a timely basis. By contrast, Article V, Section 3(a) of the Bylaws of the National Association of Securities Dealers, Inc. (“NASD”) specifies that NASD members must file termination notices with respect to registered persons, including varied securities representatives and principals thereof, within 30, rather than 20, days. 6 6 The termination notice filed by NASD members is the Form U-5. II. NFA's Petition NFA recently sought input from its members regarding possible enhancements to its online registration process. Several large NFA members that are dually registered as FCMs or IBs and securities broker-dealers (“BDs”) identified as a particular problem the aforementioned disparate regulatory timelines for filing termination notices. The dual registrants asserted that it is an undue regulatory burden for them to file within the 20-day period for some APs, while for the majority of their APs the NASD allows a 30-day period. The dual registrants also maintained that the 20-day period is difficult to comply with when a termination notice contains disclosure information that must be reviewed at the branch office level and then by the legal and/or registration departments of a firm. They also stated that, on occasion, an attorney representing an AP will review the notice prior to filing. In light of the difficulties identified by dual registrants, NFA petitioned the Commission to amend Regulation 3.31(c)(1) to increase the number of days in which a firm must file a termination notice from 20 to 30 days. NFA claims that such an extension will provide sponsoring firms the time needed to properly review the termination notices and will conform the futures industry requirements to the securities industry's time allowance. Given the disparate regulatory requirements applicable to firms that are dual registrants and the burden that complying with the 20-day period presents, the Commission believes it is appropriate to propose amendments to the relevant regulatory requirements. III. Proposal In accordance with the foregoing, the Proposed Amendments would extend the period of time in which a registered FCM, IB, CPO, CTA or LTM must file a notice with NFA to report the termination of any AP or principal of the registered intermediary. Under existing regulations, such intermediaries must file notices within 20 days after the termination of the AP or principal. The Proposed Amendments would allow termination notices to be filed within 30 days after the AP or principal is terminated. These Proposed Amendments are intended to conform the futures industry requirements to the securities industry's time allowance. IV. Related Matters A. Regulatory Flexibility Act The Regulatory Flexibility Act (“RFA”) 7 requires that agencies, in proposing regulations, consider the impact of those regulations on small businesses. The Proposed Amendments would affect persons that are registered as FCMs, IBs, CPOs, CTAs and LTMs. The Commission has previously established certain definitions of “small entities” to be used by the Commission in evaluating the impact of its regulations on such entities in accordance with the RFA. 8 The Commission previously determined that registered FCMs, CPOs and LTMs are not small entities for the purpose of the RFA. 9 With respect to the remaining persons, CTAs and IBs, the Commission does not believe that the Proposed Amendments would place any additional burdens upon such persons inasmuch as these registrants already are subject to the requirement to file termination notices. Moreover, because the Proposed Amendments would provide these intermediaries with additional time in which to file termination notices, the Amendments actually would lessen the relevant regulatory burden. Accordingly, and based on Section 3(a) of the RFA, 10 the Acting Chairman, on behalf of the Commission, certifies that the Proposed Amendments would not have a significant economic impact on a substantial number of small entities. However, the Commission invites the public to comment on this certification. 7 5 U.S.C. 601 *et seq.* 8 47 FR 18618 (Apr. 30, 1982). 9 47 FR 18618, 18619. 10 5 U.S.C. 605(b). B. Cost-Benefit Analysis Section 15(a) of the Act 11 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) does not require the Commission to quantify the costs and benefits of a new regulation or to determine whether the benefits of the proposed regulation outweigh its costs. Rather, Section 15(a) simply requires the Commission to “consider the costs and benefits” of its action. 11 7 U.S.C. 19(a). Section 15(a) further specifies that costs and benefits shall be evaluated in light of five broad areas of market and public concern:

(1)Protection of market participants and the public;

(2)efficiency, competitiveness, and financial integrity of futures markets;

(3)price discovery;

(4)sound risk management practices; and

(5)other public interest considerations. The Commission, in its discretion, may choose to give greater weight to any one of the five enumerated areas and determine that, notwithstanding its costs, a particular regulation is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the Act. The Proposed Amendments concern the filing of termination notices by registered intermediaries, in particular, FCMs, IBs, CPOs, CTAs and LTMs. Specifically, the Proposed Amendments would extend the period during which these registered intermediaries must file a notice with NFA to report the termination of any AP or principal of the sponsoring intermediary. The Proposed Amendments should have no effect on the protection of market participants and the public because they would not alter or modify the type or nature of information that must be filed with the Commission. Rather, they would provide registrants with additional time in which to file information that is already required to be filed and would conform the futures industry requirements to the securities industry's time allowance for filing termination notices. The Proposed Amendments should enhance the efficiencies experienced by intermediaries because they would lessen burdens that make it difficult for intermediaries to comply with the time allowance provided for futures firms filing termination notices. The Proposed Amendments should have no effect on the following three enumerated areas:

(1)Competitiveness or the financial integrity of futures markets;

(2)price discovery; and

(3)sound risk management practices. After considering these factors, the Commission has determined to publish the Proposed Amendments discussed above. 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 Proposed Amendments with their comment letters. C. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (“PRA”) imposes certain obligations on federal agencies, including the Commission, in connection with their conducting or sponsoring any collection of information as defined by the PRA. 12 The Proposed Amendments will not require a new collection of information on the part of any entities subject to the Proposed Amendments. Specifically, the Proposed Amendments will modify existing regulatory requirements by extending the period during which registered intermediaries are required to file notices with NFA to report the termination of APs and principals of the registered intermediary. Although the Proposed Amendments would alter the timeframe during which information is required to be collected, the estimated burden associated with the collection is not expected to increase or decrease as a result. All affected entities already must comply with a requirement to file termination notices. Accordingly, for purposes of the PRA, the Commission certifies that the Proposed Amendments will not impact the total annual reporting or recordkeeping burden associated with the above-referenced collection of information, which has been approved previously by OMB. 12 44 U.S.C. 3501 *et seq.* Pursuant to the PRA, the Commission has submitted a copy of this certification to the Office of Management and Budget (“OMB”) for its review. 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 in 17 CFR Part 3 Administrative practice and procedure, Brokers, Commodity futures, Reporting and recordkeeping requirements. For the reasons discussed in the preamble, the Commission proposes to amend 17 CFR part 3 as follows: PART 3—REGISTRATION 1. The authority citation for part 3 continues to read as follows: Authority: 5 U.S.C. 522, 522b; 7 U.S.C. 1a, 2, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 8, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21, 23. 2. Section 3.12 is proposed to be amended by revising paragraph

(b)to read as follows: § 3.12 Registration of associated persons of futures commission merchants, introducing brokers, commodity trading advisors, commodity pool operators and leverage transaction merchants.

(b)*Duration of registration.* A person registered in accordance with paragraphs (c), (d), (f), (i), or

(j)of this section and whose registration has not been revoked will continue to be so registered until the revocation or withdrawal of the registration of each of the registrant's sponsors, or until the cessation of the association of the registrant with each of his sponsors. Such person will be prohibited from engaging in activities requiring registration under the Act or from representing himself to be a registrant under the Act or the representative or agent of any registrant during the pendency of any suspension of his or his sponsor's registration. In accordance with § 3.31(c) of this part, each of the registrant's sponsors must file a notice with the National Futures Association on Form 8-T or on a Uniform Termination Notice for Securities Industry Registration reporting the termination of the association of the associated person within thirty days thereafter. 3. Section 3.31 is proposed to be amended by revising paragraphs (c)(1) introductory text and (c)(2) to read as follows: § 3.31 Deficiencies, inaccuracies, and changes, to be reported. (c)(1) After the filing of a Form 8-R or a Form 3-R by or on behalf of any person for the purpose of permitting that person to be an associated person of a futures commission merchant, commodity trading advisor, commodity pool operator, introducing broker, or a leverage transaction merchant, that futures commission merchant, commodity trading advisor, commodity pool operator, introducing broker or leverage transaction merchant must, within thirty days after the occurrence of either of the following, file a notice thereof with the National Futures Association indicating:

(2)Each person registered as, or applying for registration as, a futures commission merchant, commodity trading advisor, commodity pool operator, introducing broker or leverage transaction merchant must, within thirty days after the termination of the affiliation of a principal with the registrant or applicant, file a notice thereof with the National Futures Association. Issued in Washington, DC, on August 8, 2007, by the Commission. David A. Stawick, Secretary of the Commission. [FR Doc. E7-15869 Filed 8-13-07; 8:45 am] BILLING CODE 6351-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 301 [REG-116215-07] RIN 1545-BG60 Public Inspection of Material Relating to Tax-Exempt Organizations AGENCY: Internal Revenue Service, Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: This document contains proposed regulations that amend existing regulations issued under sections 6104 and 6110 of the Internal Revenue Code. The purpose of the proposed regulations is to clarify rules relating to information that is made available by the IRS for public inspection under section 6104(a) and materials that are made publicly available under section 6110. The changes reflect IRS practice as well as the United States Court of Appeals for the District of Columbia Circuit's decision in *Tax Analysts* v. *IRS* , 350 F.3d 100 (D.C. Cir. 2003). The *Tax Analysts* decision invalidated the portions of §§ 301.6104(a)-1(i) and 301.6110-1(a) that excepted rulings that denied or revoked an organization's tax exempt status from the public disclosure provisions of both sections 6104 and 6110. The proposed regulations will affect organizations exempt from Federal income tax under section 501(a) or 527, organizations that were exempt but are no longer exempt from Federal income tax, and organizations that were denied tax-exempt status. DATES: Written or electronic comments and requests for a public hearing must be received by November 13, 2007. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-116215-07), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-116215-07), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC, or sent electronically via the Federal eRulemaking Portal at *www.regulations.gov* (IRS REG-116215-07). FOR FURTHER INFORMATION CONTACT: Concerning submission of comments, Kelly Banks,

(202)622-7180 (not a toll-free number); concerning the proposed regulations, Mary Ellen Keys,

(202)622-4570 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background Since 1950, the Internal Revenue Code has provided for the public inspection of information that is submitted to the IRS by certain exempt organizations and certain trusts. Under section 6104(a), the IRS makes available for public inspection approved applications for exemption from Federal income tax for organizations described in section 501(c) or

(d)and exempt under section 501(a), notices of status filed under section 527(i) by political organizations exempt from taxation under section 527, and certain related documents. Section 6104(a) also permits the IRS to disclose whether an organization is currently recognized as exempt and the subsection and paragraph number of section 501 under which it is recognized. Section 6104(b) imposes an additional obligation on the IRS to make available for public inspection annual information returns filed by organizations exempt from Federal income tax. Section 6104(c) governs when the IRS may disclose certain information about charitable and certain other exempt organizations to state officials. Section 6104(d) imposes a parallel obligation on organizations and trusts to make available for public inspection annual returns, applications for exemption and notices of status. The proposed regulations do not address the obligations imposed by subsections (b),

(c)and (d). The decision in *Tax Analysts* v. *IRS* , 350 F.3d 100 (D.C. Cir. 2003), invalidated the portions of existing § 301.6104(a)-1(i)(1), (2), and

(3)and § 301.6110-1(a) that excluded rulings that denied or revoked an organization's tax exempt status from the public disclosure provisions of both sections 6104 and 6110. Sections 301.6104(a)-1(i)(1),

(2)and

(3)excluded from disclosure by the IRS unfavorable rulings or determination letters in response to exemption applications, rulings or determination letters that make or modify a favorable determination letter, and technical advice memoranda that relate to a disapproved exemption application or the revocation or modification of a favorable determination letter. Thus, because § 301.6110-1(a) provided that the disclosure of such rulings, determination letters and technical advice memoranda is to be determined under section 6104, they also were not available under section 6110. The IRS has already modified its administrative practice to follow the court's holding by making these documents available to the public. See AOD 2004-02, 2004-29 IRB 42, § 601.601(d)(2)(ii)(a). The Treasury Department and IRS now propose to revise the existing regulations at § 301.6104(a)-1 and § 301.6110-1(a) to conform to the court's holding in *Tax Analysts* . Explanation of Provisions The proposed regulations remove existing § 301.6104(a)-1(i) and portions of § 301.6110-1(a), in light of the holding in *Tax Analysts* . The proposed regulations clarify that the term “application” includes information submitted to the IRS relating to group exemption applications. The proposed regulations provide that notices of status filed under section 527(i) and the documents comprising the notices are available for public inspection under section 6104(a). The proposed regulations also add to the material that is available for public inspection the letters or documents filed with or issued by the IRS relating to an organization's status as an organization described in sections 509(a), 4942(j)(3), or 4943(f), including a final determination letter that the organization is or is not a private foundation. The proposed regulations clarify that the IRS may disclose, in response to or in anticipation of a request, the subsection and paragraph number of section 501 under which an organization or group has been determined, on the basis of its application, to qualify for exemption from Federal income tax, and whether an organization or group is currently recognized as exempt. Section 6104(a) applies to the publication of certain information related to organizations that are exempt from Federal income taxation under section 501(a). The information covered by section 6104(a) includes material for any taxable year during which the organization was exempt. Under the proposed regulations, written determinations issued by the IRS, including, for example, unfavorable rulings or determination letters issued in response to applications for tax exemption and rulings or determination letters revoking or modifying a favorable determination letter, are made available for public inspection under section 6110. Other Changes to the Existing Regulations The proposed regulations reorganize or revise certain provisions of the existing regulations to eliminate redundancy and/or to provide greater clarity. First, § 301.6104(a)-1(a) is revised to clarify that applications for exemption from Federal income tax and supporting documents shall be open for public inspection, even if the IRS subsequently revokes the organization's exempt status. Second, new § 301.6104(a)-1(b) is added to clarify that notices of status filed by political organizations described in section 527 are open for public inspection. Third, § 301.6104(a)-1(c) (formerly § 301.6104(a)-1(b)) is revised to clarify that group exemption letters are included among the information that is available for public inspection under section 6104(a). Fourth, § 301.6104(a)-1(d) (formerly § 301.6104(a)-1(c)) is revised to clarify that, where an organization is determined to be exempt for any taxable year, material shall not be withheld on the basis that the organization is determined not to be exempt for any other taxable year. Fifth, § 301.6104(a)-1(g) (formerly § 301.6104(a)-1(e)), which defines the term “supporting document” with respect to an application for exemption from Federal income tax, is revised to clarify that there are no supporting documents with respect to notices of status filed by political organizations. Sixth, new § 301.6104(a)-1(h) is added to clarify that the IRS may disclose, in response to or anticipation of a request, the subsection and paragraph number of section 501 under which an organization or group has been determined to be exempt from Federal income taxation, whether an organization or group is exempt, or whether the IRS has revoked an organization's or group's exemption under section 501(c)(3). Finally, new § 301.6104(a)-1(i) is added to refer the reader to section 6033(j), added to the Code by the Pension Protection Act of 2006, Pub. L. 109-280, 120 Stat. 780, which is an additional statutory provision that requires disclosure of information by the IRS regarding organizations formerly exempt from Federal income tax. Section 6033(j) governs the publication and maintenance of a list of organizations whose tax exempt status was revoked for failure to file required returns or notices for three consecutive years. Likewise, this paragraph cross-references section 7428(c), which relates to the revocation of a determination of exempt status, and section 501(p), added to the Code by the Military Family Tax Relief Act of 2003, Pub. L. 108-121, 117 Stat. 1335, which relates to suspension of the tax-exempt status of terrorist organizations, including public notice of suspensions. Special Analyses It has been determined that the proposed regulations are not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to the regulations, and, therefore, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comments on its impact on small businesses. Comments and Requests for a Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and 8 copies) or electronic comments that are submitted timely to the IRS. The IRS and Treasury Department request comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the **Federal Register** . Drafting Information The principal author of the regulations is Mary Ellen Keys, Office of the Associate Chief Counsel (Procedure & Administration). List of Subjects in 26 CFR Part 301 Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 301 is proposed to be amended as follows: PART 301—PROCEDURE AND ADMINISTRATION **Paragraph 1.** The authority citation for part 301 continues to read as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** § 301.6104(a)-1 is revised to read as follows: § 301.6104(a)-1 Public inspection of material relating to tax-exempt organizations.

(a)*Applications for exemption from Federal income tax, applications for a group exemption letter and supporting documents.* If the Internal Revenue Service determines that an organization described in section 501(c) or

(d)is exempt from Federal income tax for any taxable year, the application upon which the determination is based, together with any supporting documents, shall be open to public inspection. Such applications and supporting documents shall be open for public inspection even after any revocation of the Internal Revenue Service's determination that the organization is exempt from Federal income tax. Some applications have been destroyed and therefore are not available for inspection. For purposes of determining the availability for public inspection, a claim for exemption from Federal income tax filed to reestablish exempt status after denial thereof under the provisions of section 503 or 504 (as in effect on December 31, 1969), or under the corresponding provisions of any prior revenue law, is considered an application for exemption from Federal income tax.

(b)*Notices of status filed by political organizations.* If, in accordance with section 527(i), an organization notifies the Internal Revenue Service that it is a political organization as described in section 527, exempt from Federal income tax for any taxable year, the notice of status filed by the political organization shall be open to public inspection.

(c)*Letters or documents issued by the Internal Revenue Service with respect to an application for exemption from Federal income tax.* If an application for exemption from Federal income tax is filed with the Internal Revenue Service after October 31, 1976, and is open to public inspection under paragraph

(a)of this section, then any letter or document issued to the applicant by the Internal Revenue Service that relates to the application is also open to public inspection. For rules relating to when a letter or document is issued, see § 301.6110-2(h). Letters or documents to which this paragraph applies include, but are not limited to—

(1)Favorable rulings and determination letters, including group exemption letters, issued in response to applications for exemption from Federal income tax;

(2)Technical advice memoranda issued with respect to the approval, or subsequent approval, of an application for exemption from Federal income tax;

(3)Letters issued in response to an application for exemption from Federal income tax (including applications for a group exemption letter) that propose a finding that the applicant is not entitled to be exempt from Federal income tax, if the applicant is subsequently determined, on the basis of that application, to be exempt from Federal income tax; and

(4)Any letter or document issued by the Internal Revenue Service relating to an organization's status as an organization described in sections 509(a), 4942(j)(3), or 4943(f), including a final determination letter that the organization is or is not a private foundation.

(d)*Requirement of exempt status.* An application for exemption from Federal income tax (including applications for a group exemption letter), supporting documents, and letters or documents issued by the Internal Revenue Service that relate to the application shall not be open to public inspection before the organization is determined, on the basis of that application, to be exempt from Federal income tax for any taxable year. If an organization is determined to be exempt from Federal income tax for any taxable year, these materials shall not be withheld from public inspection on the basis that the organization is subsequently determined not to be exempt for any other taxable year.

(e)*Documents included in the term “application for exemption from Federal income tax.* ” For purposes of this section—

(1)*Prescribed application form.* If a form is prescribed for an organization's application for exemption from Federal income tax, the application includes the form and all documents and statements that the Internal Revenue Service requires to be filed with the form, any amendments or revisions to the original application, or any resubmitted applications where the original application was submitted in draft form or was withdrawn. An application submitted in draft form or an application submitted and later withdrawn is not considered an application.

(2)*No prescribed application form.* If no form is prescribed for an organization's application for exemption from Federal income tax, the application includes the submission by letter requesting recognition of tax exemption and any statements or documents as prescribed by Revenue Procedure 2007-52, 2007-30 IRB 222, and any successor guidance. (See § 601.201(n)(7)(i) of the Statement of Procedural Rules, 26 CFR part 601.)

(3)*Application for a Group Exemption Letter.* The application for a group exemption letter includes the letter submitted by or on behalf of subordinate organizations that seek exempt status pursuant to a group exemption letter and any statements or documents as prescribed by Revenue Procedure 80-27, 1980-1 CB 677, and any successor guidance. (See § 601.201(n)(8)(i) of the Statement of Procedural Rules, 26 CFR part 601.)

(4)*Notice of status filed under section 527(i).* For purposes of this section, documents included in the term “notice of status filed under section 527(i)” include—

(i)Form 8871, Political Organization Notice of Section 527 Status;

(ii)Form 8453-X, Declaration of Electronic Filing of Notice of Section 527 Status; and

(iii)Any other additional forms or documents that the Internal Revenue Service may prescribe.

(f)*Material open to public inspection under section 6110.* Under section 6110, certain written determinations issued by the Internal Revenue Service are made available for public inspection. Section 6110 does not apply, however, to material that is open to public inspection under section 6104. See section 6110(l)(1).

(g)*Supporting documents defined.* For purposes of this section, “supporting documents,” with respect to an application for exemption from Federal income tax, means any statement or document not described in paragraph

(e)of this section that is submitted by the organization or group in support of its application prior to a determination described in paragraph

(c)of this section. Items submitted in connection with an application in draft form, or with an application submitted and later withdrawn, are not supporting documents. There are no supporting documents with respect to Notices of Status filed by political organizations.

(h)*Statement of exempt status.* For efficient tax administration, the Internal Revenue Service may publish, in paper or electronic format, the names of organizations currently recognized as exempt from Federal income tax, including organizations recognized as exempt from Federal income tax under particular paragraphs of section 501(c) or section 501(d). In addition to having the opportunity to inspect material relating to an organization exempt from Federal income tax, a person may request a statement, or the Internal Revenue Service may disclose, in response to or in anticipation of a request, the following information—

(1)The subsection and paragraph of section 501 (or the corresponding provision of any prior revenue law) under which the organization or group has been determined, on the basis of an application open to public inspection, to qualify for exemption from Federal income tax; and

(2)Whether an organization or group is currently recognized as exempt from Federal income tax.

(i)*Publication of non-exempt status.*

(1)For publication of the notice of the revocation of a determination that an organization is described in section 501(c)(3), see section 7428(c).

(2)For publication of a list including any organization the tax exemption of which is revoked for failure to file required returns or notices for three consecutive years, see section 6033(j).

(3)For publication of notice of suspension of tax exemption of terrorist organizations, see section 501(p).

(j)*Withholding of certain information from public inspection.* For rules relating to certain information contained in an application for exemption from Federal income tax and supporting documents that will be withheld from public inspection, see § 301.6104(a)-5(a).

(k)*Procedures for inspection.* For rules relating to procedures for public inspection of applications for exemption from Federal income tax and supporting documents, see § 301.6104(a)-6.

(l)*Effective/applicability date.* The rules of this section apply to taxable years ending on or after the date of publication of the Treasury decision adopting these rules as final regulations in the **Federal Register** . **Par. 3.** § 301.6110-1 is amended by: 1. Revising paragraph (a). 2. Adding paragraph (d). The addition and revision read as follows: § 301.6110-1 Public inspection of written determinations and background file documents.

(a)*General rule.* Except as provided in § 301.6110-3, relating to deletion of certain information, § 301.6110-5(b), relating to actions to restrain disclosure, paragraph (b)(2) of this section, relating to technical advice memoranda involving civil fraud and criminal investigations, and jeopardy and termination assessments, and paragraph (b)(3) of this section, relating to general written determinations relating to accounting or funding periods and methods, the text of any written determination (as defined in § 301.6110-2(a)) issued pursuant to a request postmarked or hand delivered after October 31, 1976, shall be open to public inspection in the places provided in paragraph (c)(1) of this section. The text of any written determination issued pursuant to a request postmarked or hand delivered before November 1, 1976, shall be open to public inspection pursuant to section 6110(h) and § 301.6110-6, when funds are appropriated by Congress for such purpose. The procedures and rules set forth in §§ 301.6110-1 through 301.6110-5 and § 301.6110-7 do not apply to written determinations issued pursuant to requests postmarked or hand delivered before November 1, 1976, unless § 301.6110-6 states otherwise. There shall also be open to public inspection in each place of public inspection an index to the written determinations subject to inspection at such place. Each such index shall be arranged by section of the Internal Revenue Code, related statute or tax treaty and by subject matter description within such section in such manner as the Commissioner may from time to time provide. The Commissioner shall not be required to make any written determination or background file document open to public inspection pursuant to section 6110 or refrain from disclosure of any such documents or any information therein, except as provided by section 6110 or with respect to a discovery order made in connection with a judicial proceeding. The provisions of section 6110 shall not apply to material that is open to public inspection under section 6104. See section 6110(l)(1).

(d)*Effective/applicability date.* The rules of paragraph

(a)of this section apply to taxable years ending on or after the date of publication of the Treasury decision adopting these rules as final regulations in the **Federal Register** . Kevin M. Brown, Deputy Commissioner for Services and Enforcement. [FR Doc. E7-15952 Filed 8-13-07; 8:45 am] BILLING CODE 4830-01-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 49 [Docket No. EPA-R02-OAR-2004-TR-0001, FRL-8453-9] Approval and Promulgation of Saint Regis Mohawk's Tribal Implementation Plan AGENCY: Environmental Protection Agency. ACTION: Proposed rule. SUMMARY: The Environmental Protection Agency

(EPA)is proposing to approve portions of the proposed St. Regis Mohawk Tribe's (SRMT or the Tribe) tribal implementation plan

(TIP)to improve air quality within the exterior boundaries of the St. Regis Mohawk Reservation (the Reservation) that are in accordance with federal requirements. EPA previously approved the Tribe for treatment-in-the-same-manner-as-a-state

(TAS)under the Clean Air Act

(Act)for purposes of administering a TIP on March 5, 2003. The proposed TIP establishes Tribal ambient air quality standards; includes an emissions inventory; provides regulations for permitting, source surveillance, open burning and enforcement; and defines the Tribe's program for review of state permits and regional haze planning. This action will make federally enforceable the approvable portions of the SRMT's proposed TIP. DATES: Comments must be received on or before September 13, 2007. ADDRESSES: Submit your comments, identified by Docket No. EPA-R02-OAR-2004-TR-0001, by one of the following methods: • *http://www.regulations.gov:* Follow the on-line instructions for submitting comments. • *E-mail: Werner.Raymond@epa.gov.* • *Fax:* 212-637-3901. • *Mail:* Raymond Werner, Chief, Air Programs Branch, Environmental Protection Agency, Region 2 Office, 290 Broadway, 25th Floor, New York, New York 10007-1866. • *Hand Delivery:* Raymond Werner, Chief, Air Programs Branch, Environmental Protection Agency, Region 2 Office, 290 Broadway, 25th Floor, New York, New York 10007-1866. Such deliveries are only accepted during the Regional Office's normal hours of operation. The Regional Office's official hours of business are Monday through Friday, 8:30 to 4:30 excluding Federal holidays. *Instructions:* Direct your comments to Docket No. EPA-R02-OAR-2004-TR-0001. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *www.regulations.gov,* including any personal information provided, unless the comment includes information claimed to be Confidential Business Information

(CBI)or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through *www.regulations.gov* or e-mail. The *www.regulations.gov* Web site is an “anonymous access” system, which means 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 *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 and with any disk or CD-ROM you submit. 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 or any form of encryption, and 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.* FOR FURTHER INFORMATION CONTACT: Gavin Lau, Air Programs Branch, Environmental Protection Agency, 290 Broadway, 25th Floor, New York, New York 10007-1866,

(212)637-3708 or *Lau.Gavin@epa.gov.* SUPPLEMENTARY INFORMATION: Table of Contents I. EPA Action Being Proposed Today II. Introduction III. Background A. What is the Clean Air Act and its relationship to Indian tribes? 1. What is an implementation plan? 2. How do Tribal Implementation Plans compare to State Implementation Plans? IV. Tribal Implementation Plan Requirements What is required for the approval of a Tribal Implementation Plan? V. St. Regis Mohawk Tribe's TIP Submittal A. What did EPA determine in finding the St. Regis Mohawk Tribe Eligible for TAS? B. What authority does the St. Regis Mohawk Tribe Environment Division have? C. What role does EPA have in criminal enforcement? D. When did SRMT adopt the Tribal Implementation Plan under Tribal Law? E. What is included in the SRMT TIP submittal? 1. Ambient Air Quality Standards 2. Emissions Inventory 3. Permits 4. Source Surveillance 5. Open Burning 6. Enforcement 7. Review of State Permits 8. Regional Haze Planning VI. What EPA action is being taken today? I. EPA Action Being Proposed Today EPA is proposing approval of the St. Regis Mohawk Tribe's TIP submission which contains programs to address: Ambient air quality standards for sulfur dioxide (SO 2 ), particulate matter (PM), nitrogen dioxide (NO 2 ), ozone (O 3 ), fluoride, and heavy metals; Emissions Inventory; Permitting; Synthetic Minor Facilities; Source Surveillance; Open Burning; Enforcement; Review of State Permits; and Regional Haze Planning. II. Introduction The St. Regis Mohawk Tribe

(SRMT)is an Indian tribe federally recognized by the U.S. Secretary of the Interior. See 70 FR 71194, 71196 (November 25, 2005). Beginning in 2001, the SRMT, with assistance from EPA, began developing a draft TIP and its various elements with the goal of eventually submitting the TIP to EPA for approval. On December 10, 2001, the SRMT requested that EPA find the Tribe eligible for TAS, pursuant to section 301(d) of the Clean Air Act and Title 40 part 49 of the Code of Federal Regulations (CFR), for the purpose of developing and carrying out a TIP. On March 5, 2003, EPA determined that the Tribe is eligible for TAS for that purpose. Having found that the SRMT is eligible for TAS, EPA is now proposing approval of the Tribe's TIP. The Tribe did not apply for TAS eligibility for the area known as the Hogansburg Triangle, and EPA made no determination with respect to that area. Therefore, the proposed TIP would not apply to the Hogansburg Triangle. The St. Regis Mohawk Tribe Tribal Implementation Plan, revision 003, was formally submitted to EPA on February 26, 2004. The SRMT's TIP has been developed to protect the Reservation populace from air pollution by controlling or abating existing and new sources. The TIP includes ambient air quality standards for SO 2 , PM, NO 2 , O 3 , fluoride, and heavy metals. Other programs in the TIP include emissions inventory, permitting, synthetic minor facilities, source surveillance, open burning, enforcement, review of state permits, and regional haze planning. III. Background A. What is the Clean Air Act and its Relationship to Indian tribes? The Clean Air Act

(Act)was originally passed in 1970 and has been the subject of substantial amendments, most recently in 1990. Among other things, the Act: Requires the EPA to establish National Ambient Air Quality Standards (NAAQS) for certain pollutants; requires the EPA to develop programs to address specific air quality problems; establishes the EPA's enforcement authority; and provides for air quality research. As part of the 1990 amendments, Congress added section 301(d) to the Act authorizing EPA to treat eligible Indian tribes in the same manner as states and directing EPA to promulgate regulations specifying those provisions of the Act for which TAS is appropriate. In February of 1998, EPA implemented this requirement by promulgating the Tribal Authority Rule

(TAR)(63 FR 7254 (February 12, 1998), codified at 40 CFR part 49). EPA included relevant provisions relating to implementation plans among the provisions for which TAS is appropriate (exceptions are identified in 40 CFR 49.4). Under the provisions of the Act and EPA's regulations, Indian tribes must demonstrate that they meet the eligibility criteria in section 301(d) of the Act and the TAR in order to be treated in the same manner as a state. The eligibility criteria are:

(1)The Indian tribe is federally-recognized;

(2)the Indian tribe has a governing body carrying out substantial governmental duties and powers;

(3)the functions the Indian tribe is applying to carry out pertain to the management and protection of air resources within the exterior boundaries of the reservation (or other areas within the Indian tribe's jurisdiction); and,

(4)the Indian tribe is reasonably expected to be capable of performing the functions the Indian tribe is applying to carry out in a manner consistent with the terms and purposes of the Act and all applicable regulations. 1. What is an implementation plan? An implementation plan is a set of programs and regulations developed by the appropriate regulatory agency in order to assure healthy air quality through the attainment and maintenance of the NAAQS. These plans can be developed by states, eligible Indian tribes, or the EPA, depending on the entity with jurisdiction and EPA approval in a particular area. For states, such plans, once approved by EPA, are referred to as State Implementation Plans or SIPs. Similarly, for eligible Indian tribes these plans, once approved, are called Tribal Implementation Plans or TIPs. Occasionally, EPA will develop an implementation plan for a specific area or source. This is referred to as a Federal Implementation Plan or a FIP. Once final approval is published in the **Federal Register** , the provisions of an implementation plan become federally enforceable. An applicable implementation plan may be comprised of both TIPs and FIPs and/or SIPs and FIPs. The contents of a typical implementation plan may fall into three categories:

(1)Agency-adopted control measures, which consist of rules, regulations or source-specific requirements ( *e.g.* , orders, consent decrees or permits);

(2)agency-submitted “non-regulatory” components ( *e.g.* , attainment plans, rate of progress plans, emission inventories, transportation control measures, statutes demonstrating legal authority, monitoring programs); and

(3)additional requirements promulgated by the EPA (in the absence of a commensurate agency provision) to satisfy a mandatory Clean Air Act section 110 or part D requirement. The implementation plan is a living document which can be revised by the state or eligible Indian tribe as necessary to address air pollution problems. Accordingly, the EPA from time to time must take action on implementation plan revisions which may contain new and/or revised regulations that will become part of the implementation plan. Upon submittal to EPA, the Agency reviews implementation plans for conformance with federal policies and regulations. If the implementation plan conforms, the State's or eligible Indian tribe's regulations become federally enforceable upon EPA approval. The codification is usually accomplished by first announcing the EPA's findings in the **Federal Register** through a Proposed Rulemaking, with an appropriate public comment period. After evaluating comments received on the proposal, a Final Rulemaking Action will be published by EPA, which will incorporate the implementation plan, if approved, into the CFR. 2. How do Tribal Implementation Plans compare to State Implementation Plans? The Act requires each state to develop, adopt, and submit an implementation plan for EPA approval into the SIP. Several sections of Title I of the Act provide structured schedules and mandatory requirements for SIP preparation and contents. These are further developed in 40 CFR part 51. The SIP program reflects each state's particular needs and air quality issues. At a minimum, SIPs must meet minimum federal standards. If a state fails to submit an approvable SIP within the schedules provided in the Act, sanctions can be imposed on the state, and if the state still does not submit an approvable implementation plan, the EPA is required to develop and enforce a FIP to implement the applicable Act requirements for that state. Sections 110 and 301(d) of the Act and EPA's implementing regulation at 40 CFR part 49 provide for tribal implementation of various Act programs including TIPs. Eligible Indian tribes can choose to implement certain Act programs by developing and adopting a TIP and submitting the TIP to EPA for approval. TIPs:

(1)Are optional;

(2)may be modular;

(3)have flexible submission schedules; and

(4)allow for joint tribal and EPA management as appropriate. • Optional—The Act requires each state to develop, adopt and submit a proposed SIP for EPA approval. Unlike states, Indian tribes are not required to adopt an implementation plan. In the TAR, the EPA recognized that not all Indian tribes will have the need or the desire for an air pollution control program, and EPA specifically determined that it was not appropriate to treat tribes in the same manner as states for purposes of plan submittal and implementation deadlines. See 40 CFR 49.4. • Modular—The TAR offers eligible Indian tribes the flexibility to include in a TIP only those implementation plan elements that address their specific air quality needs and that they have the capacity to manage. Under this modular approach, the TIP elements the eligible Indian tribe adopts must be “reasonably severable” from the package of elements that can be included in a whole TIP. “Reasonably severable” means that the parts or elements selected for the TIP are not necessarily connected or interdependent to parts that are not included in the TIP, and are consistent with applicable Act and regulatory requirements. TIPs are fundamentally different than SIPs because while the Act requires States to prepare an implementation plan that meets all of the requirements of section 110 of the Act, an Indian tribe may adopt TIP provisions that address only some elements of section 110. • Have Flexible Submission Schedules—Neither the Act nor the TAR requires Indian tribes to develop TIPs. Therefore, unlike states, Indian tribes are not required to meet the implementation plan submission deadlines or attainment dates specified in the Act. Indian tribes can establish their own schedules and priorities for developing TIP elements ( *e.g.* , regulations to limit emissions of a specific air pollutant) and submitting them to the EPA. Indian tribes will not face sanctions for failing to submit or for submitting incomplete or deficient implementation plans. See 40 CFR 49.4. • Allow for Joint Tribal and EPA Management—Consistent with the Act and the TAR, eligible Indian tribes can revise a TIP to include appropriate new programs or return programs to EPA for Federal implementation as necessary or appropriate based on changes in tribal need or capacity. The EPA may regulate emission sources that the Indian tribe chooses not to include in a TIP if it is necessary or appropriate to adequately protect air quality. This type of joint management is expected to result in a program fully protective of tribal air resources. IV. Tribal Implementation Plan Requirements What is required for the approval of a Tribal Implementation Plan? For a tribe to receive EPA approval of a TIP, the tribe must, among other things: • Obtain a determination from EPA that the tribe is eligible for TAS for purposes of the TIP; • Submit to EPA a TIP that satisfies requirements of the Act and relevant regulations that apply to the plan elements and functions the tribe seeks to carry out. To be found eligible for TAS for the purpose of carrying out an implementation plan under the Act, the tribe must meet the requirements of section 301(d) of the Act and 40 CFR 49.6: • The Indian tribe must be federally recognized; • The Indian tribe must have a governing body carrying out substantial governmental duties and powers over a defined area; • The functions to be exercised by the tribe must pertain to the management and protection of air resources within the exterior boundaries of the tribe's reservation or other areas within the tribe's jurisdiction; • The Indian tribe must be reasonably expected to be capable, in the EPA Regional Administrator's judgment, of carrying out the functions to be exercised in a manner consistent with the terms and purposes of the Act and all applicable regulations. The following technical elements may be included in a TIP: • A list of regulated pollutants affected by the plan; • Locations of affected sources and the air quality designation ( *i.e.* , attainment, unclassifiable, nonattainment) of the source location; • Projected estimates of changes in current actual emissions from affected sources; • Modeling information ( *i.e.* , input and output data, justification of models used, data and assumptions used); • Documentation that the plan contains emission limitations, work practice standards, and recordkeeping/reporting requirements; • Regulations. The TAR allows tribes to develop, adopt, and submit an implementation plan for approval as a TIP in a modular fashion, so it may not be necessary to meet all of the requirements identified above. The EPA has the authority, under the Act, to enforce the regulations in an approved TIP. The EPA will work cooperatively with the Indian tribe in exercising its enforcement authority. The EPA recognizes that, in certain circumstances, eligible Indian tribes have limited criminal enforcement authority. The TAR specifically provides that such limitations on an Indian tribe's criminal enforcement authority do not prevent a TIP from being approved. Where implementation of the TIP requires criminal enforcement authority, and to the extent a tribe is precluded from asserting such authority, the federal government will exercise primary criminal enforcement responsibility. A memorandum of agreement between an Indian tribe and the EPA is an appropriate way to address circumstances in which the tribe is incapable of exercising applicable enforcement requirements as described in 40 CFR 49.7(a)(6) and 40 CFR 49.8. The memorandum of agreement shall include a process by which the tribe will provide potential investigative leads to EPA and/or other appropriate federal agencies in an appropriate and timely manner. V. St. Regis Mohawk Tribe's TIP Submittal A. What did EPA determine in finding the St. Regis Mohawk Tribe Eligible for TAS? On December 10, 2001, SRMT requested an EPA determination under the provisions of 40 CFR 49.7 that the Tribe is eligible for TAS for the purpose of developing a TIP for air quality. On March 5, 2003, EPA determined that the Tribe meets the eligibility requirements of section 301(d) of the Act and 40 CFR 49.6 for the purposes of developing and carrying out an implementation plan under the Act. As noted above, the Tribe did not request an eligibility determination for the area known as the Hogansburg Triangle, and EPA made no determination with respect to that area. This proposed TIP approval pertains only to lands within the exterior boundaries of the St. Regis Mohawk Reservation covered by the March 3, 2003 determination and thus does not apply to the Hogansburg Triangle. The TAS determination fully addressed the four criteria of 49 CFR 49.6. In summary:

(1)The Indian tribe must be federally recognized: The U.S. Secretary of the Interior has recognized SRMT. See 70 FR 71194, 71196 (November 25, 2005);

(2)The Indian tribe must have a governing body carrying out substantial governmental duties and powers over a defined area: The SRMT governing body is embodied in its Tribal Council. The Tribal government enacts laws and legislation within the jurisdiction of the SRMT Reservation. The Tribal government administers health, education, environmental, and welfare programs. EPA determined that the Tribe has a governing body carrying out substantial duties and powers under the provisions of 40 CFR 49.6 and made a similar determination in a previous TAS eligibility determination for the purposes of section 105 and section 505(a)(2) of the Act;

(3)The functions to be exercised by the tribe must pertain to the management and protection of air resources within the exterior boundaries of the tribe's reservation or other areas within the tribe's jurisdiction: The SRMT applied for TAS, and EPA found the Tribe eligible, for lands within the exterior boundaries of the St. Regis Mohawk Reservation, excluding the area known as the Hogansburg Triangle. New York State was given the opportunity to review the TAS application and to provide any comments on the Reservation boundaries, pursuant to 40 CFR 49.7. The Reservation is located in the northern portion of New York adjacent to the St. Lawrence River. The specific Reservation boundaries, and the exclusion of the Hogansburg Triangle area, were described in the Tribe's December 10, 2001 application and referenced in EPA's TAS eligibility determination; and,

(4)The Indian tribe must be reasonably expected to be capable, in the EPA Regional Administrator's judgment, of carrying out the functions to be exercised in a manner consistent with the terms and purposes of the Act and all applicable regulations: SRMT's TAS application contains substantial information regarding the Tribe's capability to carry out the functions in the proposed TIP. As discussed fully in the TAS decision, EPA considered this information in determining that the Tribe meets this requirement for TAS eligibility. In particular, SRMT's Air Quality Program has staff with degrees ranging from an Associates Science to a Masters Degree. They have received extensive training including but not limited to training in TIP development and permit issuance. The staff has also demonstrated considerable capabilities in the programmatic, administrative, and legal spheres since 1990. The TIP will be implemented by Air Quality Program staff, Conservation Officers, Environmental Lawyers, and an on-site legal advisor, with technical support through EPA Region 2 and EPA's Tribal Air Monitoring center in Las Vegas. All SRMT agencies, including but not limited to the Tribal Police Force, will assist in compliance activities and (as appropriate) the enforcement of the TIP in accordance with applicable law. Based on information submitted by the Tribe, summarized above, other relevant information, and our knowledge of the Tribe's programs, EPA determined that the SRMT met all requirements for TAS eligibility. The determination and cover letter were sent to the Tribal Council with a courtesy copy to New York State. In addition to the approval for TAS for the purpose of developing a TIP for air quality, the Tribe was deemed eligible for the purpose of establishing a minor source permitting program in a separate determination on March 25, 2001. B. What authority does the St. Regis Mohawk Tribe Environment Division have? The SRMT Tribal Council gave the SRMT Environment Division Clean Air Quality Program authority to administer Clean Air Act programs on behalf of the Tribe in a Tribal Council Resolution (TCR 99-43) dated December 3, 1999. This Resolution authorizes the Air Quality Program to submit applications for Federal assistance and to administer Clean Air Act programs, as allowed under the Act and EPA's regulations. C. What role does EPA have in criminal enforcement? Consistent with 49 CFR 49.7(a)(6) and 49 CFR 49.8, on November 20, 2003, the SRMT entered into a Memorandum of Agreement

(MOA)with the EPA Region 2 and EPA's Criminal Investigations Division concerning criminal enforcement of air pollution rules and regulations. Under the terms of this agreement, the SRMT and its agencies would refer to the appropriate EPA or U.S. Department of Justice Office alleged criminal violations of the Act where the alleged violator is a non-Indian as well as all alleged criminal activity where the potential fine is greater than $5,000 or the penalty would require imprisonment for more than one year in accordance with 25 U.S.C. 1302. Criminal enforcement issues relating to implementation of the TIP outside of this agreement may be pursued, as appropriate, by SRMT's Environmental Conservation Officers and Tribal Officers. D. When did SRMT adopt the Tribal Implementation Plan under Tribal Law? The SRMT developed and proposed rules comprising the proposed TIP to its Tribal community in 2002. A public notice announcing availability of the proposed TIP and inviting public comments was published in the local newspaper (Watertown Daily Times on June 29, 2002). In addition, the SRMT has posted the proposed TIP on the Tribe's Web site and for public review at the Tribal environmental health center. The comments received from the public review on the proposed TIP were minor. Based on the comments received, revisions were made to the proposed TIP. The St. Regis Tribal Council adopted the rules comprising the proposed TIP on October 3, 2002 (TCR 2002-183) as part of Tribal Law, and it became effective under Tribal Law 30 days thereafter. In order to satisfy the public hearing requirements of 40 CFR 51.102, the Tribe offered the opportunity for a public hearing upon request. The notice of opportunity was published on April 5, 2007 in the Indian Times and the proposed TIP was made available at the SRMT Environmental Division and on their Web site. The notice indicated that a public hearing would be held on May 16, 2007, upon request. EPA and New York State Department of Environmental Conservation (NYSDEC) were notified of the opportunity for a public hearing by the Tribe on April 11, 2007. SRMT provided EPA a package, dated May 16, 2007, which included copies of the public notice of the availability of the proposed TIP for comment, e-mails reserving and confirming a location for the public hearing, and a letter notifying NYSDEC of the opportunity for a public hearing. No requests for a public hearing were made nor were any comments received. All comments and responses made concerning the proposed TIP during the comment periods are on file with the SRMT Environmental Division

(ED)and EPA. EPA found that the Tribe satisfied public hearing requirements. E. What is included in the SRMT TIP submittal? The SRMT TIP submittal includes ambient air quality standards for sulfur dioxide, particulate matter, nitrogen dioxide, ozone, fluoride, and heavy metals, and provisions for emissions inventory, permitting for major sources and for synthetic minor facilities, source surveillance, open burning, enforcement, review of state permits, and regional haze planning. 1. Ambient Air Quality Standards EPA has established primary and secondary National Ambient Air Quality Standards (NAAQS) for six common air pollutants: CO, lead, NO 2 , ozone, particulate matter, and SO 2 . Most pollutants regulated by the NAAQS have two limits. The “primary” standard is designed to protect the public—including children, people with asthma, and the elderly—from health risks. The “secondary” standard is to prevent unacceptable effects on the public welfare, *e.g.* , damage to crops and vegetation, buildings and property, and ecosystems. SRMT established ambient threshold standards and measuring methods in section 9 of the proposed TIP for the following air pollutants: Pollutant Threshold Measuring method SO 2 primary standard Annual 0.030 ppm 24-hr 0.14 ppm. 40 CFR part 50 App A or 40 CFR part 53. SO 2 secondary standard 3-hr 0.5 ppm 40 CFR part 50 App A or 40 CFR part 53. PM 10 primary and secondary standard Annual 50 μg/m 3 24 hr 150 μg/m 3 . 40 CFR part 50 App J or 40 CFR part 53. PM 2.5 primary and secondary standard Annual mean 15.0 μg/m 3 24 hr 65 μg/m 3 . 40 CFR part 50 App L. NO 2 primary and secondary standard Annual mean 0.053 ppm 40 CFR part 50 App F or 40 CFR part 53. O 3 1 hr primary and secondary standard 0.12 ppm 40 CFR part 50 App D or 40 CFR part 53. O 3 8 hr primary and secondary standard 0.08 ppm annual 4th highest daily maximum 40 CFR part 50 App D or 40 CFR part 53. Fluoride forage standard Growing season—10 ppm 60 day—15 ppm. 30 day—20 ppm. None. Fluoride ambient standard 12 hr—1.13 ppb 24 hr—0.88 ppb. 1 wk—0.50 ppb. 1 mo—0.25 ppb. Methods set by SRMT Environment Division. Heavy Metals standard 40 CFR part 50 App B. Beryllium 4.2×10 − 4 μg/m 3 . Cadmium 2.4×10 − 2 μg/m 3 . Chromium 1.2 μg/m 3 . Lead 7.5×10 − 1 μg/m 3 . Nickel 4.0×10 − 3 μg/m 3 . Zinc 50.0 μg/m 3 . The Act requires the NAAQS to be met everywhere. Accordingly, the SRMT standards and measuring methods for SO 2 , PM, NO 2 , and O 3 , which are the same as the EPA standards, are approvable for incorporation into the TIP. The EPA is proposing to approve the SRMT air quality standards and measurement methods included in the proposed TIP for these pollutants. The standards for fluoride, beryllium, cadmium, chromium, nickel and zinc in the SRMT's proposed TIP are unique. These pollutants are listed in the Act as hazardous air pollutants. While EPA has standards regulating the emissions of these pollutants from stationary sources, the Agency has not established ambient standards for hazardous air pollutants. Consequently, EPA is not proposing to incorporate the fluoride and heavy metal standards into the federally approved TIP. EPA is also not proposing to approve the SRMT standard for lead, as the standard in the proposed SRMT TIP are not equivalent to EPA's ambient air quality standard. EPA is proposing to approve into the proposed TIP the other ambient air quality standards and test methods. Measurements for approvable standards will be made in accordance with the techniques listed in 40 CFR part 50, appendix A, D, F, J, L, or by equivalent methods designated in accordance with 40 CFR part 53. 2. Emissions Inventory An emissions inventory is a quantitative list of the amounts and types of pollutants that are entering the air from each source in a given area. The inventory may be comprehensive, looking at all pollutants, or focused on only selected pollutants of concern. The fundamental elements in an emissions inventory are the characteristics and locations of the air emissions sources, as well as the amounts and types of pollutants emitted. Periodic inventories are used to track changes in emissions over time, estimate the effectiveness of emission reduction strategies, and track the progress of air quality. The SRMT has chosen periodic emission inventories as its approach to listing the pollutants emitted by sources. An initial emissions inventory titled Emission Inventory Report was submitted to EPA on December 30, 1999 utilizing a baseline year of 1995 and including sources within the St. Regis Mohawk Reservation's exterior boundaries. The boundaries for the emissions inventory did not include the area known as the Hogansburg Triangle. There is currently no timetable for updating the emissions inventory. The EPA finds that the method used by SRMT to produce the emissions inventory is acceptable and is proposing to approve the emissions inventory. The SRMT emissions inventory and the Tribe's process are based on guidance established in EPA's Procedures for Emission Inventory Preparation Volumes I-V, U.S. EPA Air Pollution-42 (AP-42), Emissions Inventory Improvement Program Volumes I-VII, and MOBILE 5/6. 3. Permits Owners and/or operators of existing or proposed sources of air contaminants within the exterior boundaries of SRMT are required to submit applications and obtain permits from the SRMT Air Quality Program for the operation of such sources. However, owners and/or operators of major stationary sources subject to 40 CFR part 71 and located within the area covered by this proposed TIP must continue to obtain a title V permit from the EPA, in accordance with part 71. Permitting procedures for minor sources are specified in sections 11 and 12 of the SRMT proposed TIP. Applications for construction and operating permits for minor sources must be obtained from the SRMT ED. The SRMT Air Quality Program will make a determination of facility status within 60 days of receipt of a complete application. A 30-day period for public comment and EPA review will be provided prior to final action by SRMT. The Air Quality Program will publish a notice of complete applications. Minor sources are required to seek renewal of the SRMT permit every 5 years from the date of original issuance. Owners or operators of affected facilities must submit their applications for renewal no later than 180 days before the date of expiration. The issuance of construction permits follows the procedures listed in 40 CFR 51.160-51.163. Construction permits require that proposed facilities or activities do not lead to any subsequent exceedence of SRMT ambient air quality standards or NAAQS. Air quality modeling, in accordance to 40 CFR part 51, appendix W, is required for facilities or activities that will emit more than 20 tons per year

(tpy)of PM 10 , or 40 tpy of SO 2 , NO X , or O 3 . Permits will be issued if the SRMT Air Quality Program determines that Reasonably Available Control Technology will be applied and the applicant has adequately demonstrated that reasonable further progress toward the attainment of air quality standards is not impaired. The Air Quality Program may modify the production/process rate, hours of operation, or other permit conditions in order to create enforceable permit conditions. Violations of permit conditions will lead to enforcement penalties that include permit revocation. EPA is proposing to approve the conditions and procedures the SRMT has established for its minor source permitting program. Section 13 of the proposed TIP provides for permits to synthetic minor sources. Owners or operators of stationary sources that would otherwise be major sources but whose permits limit operation or emissions with pollution control devices to less than major source thresholds may request and accept Tribally- and Federally-enforceable emission limits sufficient to allow the source to be considered “synthetic minor sources.” A synthetic minor source is not subject to the Clean Air Act Title V—Federal Operating Permit Program, unless it is subject to that rule for any reason other than being a major source. EPA is proposing approval of the SRMT's synthetic minor source permit program. 4. Source Surveillance Section 14 of the SRMT TIP addresses source surveillance. Source surveillance includes:

(1)Emission reports and recordkeeping;

(2)testing;

(3)enforcement, inspection and complaints;

(4)continuous emissions monitoring; and

(5)quality assurance/quality control plans. In summary, the proposed TIP requires the following: Emission reports and recordkeeping—Emission reports are to include facility, emission point, and process level information. These reports should be submitted on March 1 each year based on one of the following methods: Stack samples or other emission measurements; material balance using knowledge of the process; AP-42 emission factors; or best engineering judgment (including manufacturer's guarantees). All required records must be maintained on-site for a period of five years, and the owners or operators must make them available to representatives of the SRMT Air Quality Program upon request. Testing—For the purpose of ascertaining compliance or non-compliance with any air pollution control plan, rule or regulation, the Air Quality Program requires the source owner or operator to report results of testing within 30 days of testing. A source owner or operator shall notify the Air Quality Program in writing, not less than 30 days prior to the test, of the time and date of the test. The notification should include procedures for stack test sampling and analytical procedures. Acceptable methods of testing are in 40 CFR part 60, appendix A and 40 CFR part 61, appendix B. For the purpose of ascertaining compliance or non-compliance with any air pollution control regulation, the Air Quality Program may conduct separate or additional emission tests on behalf of the SRMT. A source owner or operator shall provide sampling ports, scaffolding and other pertinent equipment required for emission testing. Enforcement—Enforcement of these rules and regulations is performed by St. Regis Mohawk Conservation Officers, with EPA exercising certain primary criminal enforcement authorities as described in the November 20, 2003 Memorandum of Agreement between the Tribe and EPA. The Conservation Officers are also responsible for inspecting facilities based on any complaints received. Findings shall be recorded and a copy given to both the facility and the Air Quality Program. The Air Quality Program representative is responsible for annual facility inspections and any unannounced audits. As noted earlier, the TIP provisions approved by EPA are also federally enforceable, and therefore EPA may also exercise its civil enforcement authorities, as appropriate, and in consultation with the SRMT. Continuous emissions monitoring requirements are provided in Section 14.3 of the proposed TIP. The owners and operators of any source conducting source surveillance shall be required to install and operate Continuous Emission Monitors on each affected unit at the source, and to assure the quality of data for sulfur dioxide, nitrogen oxides, opacity and volumetric flow at each such unit. All units over 25 megawatts and new units under 25 megawatts that use fuel with a sulfur content greater than 0.05 percent by weight are required to measure and report emissions. New units under 25 megawatts using clean fuels are required to certify their eligibility for an exemption every five years. Quality assurance/quality control—The owner or operator must develop and implement a written quality assurance/quality control plan for each system. The quality control plan must include complete, step-by-step procedures and operations for calibration checks and adjustments, preventive maintenance, audits, and record keeping and reporting. The quality assurance plan must include procedures for conducting periodic performance tests. EPA is proposing to approve the methods, requirements and procedures for source surveillance in the SRMT's proposed TIP. 5. Open Burning Section 15 of the proposed TIP contains the open burning program. The SRMT incorporated the Tribal Burn Regulation into Tribal Council Resolution 2002-59 (appendix I of the proposed TIP) and reaffirmed it in Tribal Council Resolution 2003-06 (appendix K of the proposed TIP) on January 13, 2003. The Tribal Burn Regulation is located in appendix J of the proposed TIP. The regulation prohibits burning of solid waste, food garbage, municipal solid waste, hazardous waste, household hazardous waste, refuse, rubbish from salvage, land clearing, or generated by residential or commercial activities as a means of on-site disposal, field fires, and tires. Some types of burning (land clearing, community burning, burning in specifically designated areas) may be allowed by a permit issued by the Air Quality Program, if it is not contrary to other Tribal laws. This may include burning, at appropriate designated sites, of toxic, explosive, or dangerous materials for a specific period. Permits for planned burning are required for the purposes of weed abatement, prevention of fire hazard, and disease and pest prevention. Permits are not required for fires for the cooking of food, providing of warmth for human beings, recreational purposes, religious or ceremonial purposes, orchard heaters for the purpose of frost protection in farming or nursery operations, fire department and criminal enforcement training, and emergency control fires. All burning permits are valid for the date specified on the permit. Violators of open burning regulations are subject to financial penalties, fines, and/or other forms of penalties which will be levied by the Tribal Court. EPA is proposing approval of the proposed SRMT TIP's open burning regulations. 6. Enforcement Through the Safety and Civil Obedience Plan (appendices L, M, and N of the proposed TIP), the St. Regis Mohawk Tribal Police respond to complaints, requests for assistance, reports of problems and/or any other type of inquiry reasonably related to their official duties as police officers. The St. Regis Mohawk Tribal Police and Conservation Officers will assume enforcement activities for the purpose of air regulations compliance. Individuals or owners of sources of air contaminants will be advised of their activities and issued a summons which will detail the exact provision of the TIP that was allegedly violated and the date and time of violation. The Peacemakers Court-Civil Disobedience Division (Court) shall be the arbiter of all summons and complaints filed by tribal authorities under this proposed TIP. Air contamination sources may be sealed if they have not complied within the time period allotted by the Court. Sealing a source means labeling or tagging a source in order to notify any person that operating the source is prohibited and includes physical means of preventing the source from operating. The physical means are non-destructive and include, but are not limited to, bolting, chaining, and wiring shut control panels. Sources that are sealed will not be operated until modifications are made to sources so that they meet requirements. Sources that are sealed will only be unsealed by persons authorized by the Court. EPA finds the SRMT has adequately established an enforcement mechanism to compliment its regulations, and EPA proposes to approve it. 7. Review of State Permits The Air Quality Program will evaluate and comment on air permit notices and draft permits for facilities located in contiguous areas where the air emissions may affect the Reservation's air quality and/or facilities located within 50 miles of the area covered by this proposed TIP. This is consistent with EPA's September 19, 2000 determination that the Tribe is eligible for TAS for the purpose of performing such reviews in accordance with Section 505(a)(2) of the Act. 8. Regional Haze Planning Regional haze planning is incorporated into the proposed TIP in section 20. The purpose of regional haze plans is to improve visibility in mandatory Federal Class I areas (primarily national parks and wilderness areas). In 1999, EPA issued regional haze regulations that require states to work together to address this air quality concern. The final regional haze rule provides for eventually reaching natural background condition in Class I areas by 2064. Because emissions that cause haze are emitted over wide areas and haze precursors are transported by winds, a regional program to implement the EPA's final rule helps to improve visibility not only in parks and wilderness areas, but in many other areas of the ozone transport region as well. The regional haze rule also started a process for the EPA to develop implementation plans for regional haze. Given the regional nature of the problem, in addition to endorsing regional planning, the rule endorsed the role of states and Indian tribes within regional planning organizations. The Mid-Atlantic Northeast Visibility Union was formed on July 24, 2001, and is the organization that encompasses the SRMT reservation (appendix E of the proposed TIP). The SRMT Air Quality Program in conjunction with the Ozone Transport Commission, Mid-Atlantic States for Regional Air Management, the Northeast States for Coordinated Air Use Management, eleven states and the Penobscot Indian Nation of Maine are committed to a long-term strategy for implementing the final regional haze rule. EPA is proposing approval into the TIP of the SRMT's commitment and planning as it applies to regional haze. VI. What EPA action is being taken today? With the exceptions below, the EPA is proposing approval of the proposed SRMT TIP, which contains programs to address: Ambient air quality standards for SO 2 , PM, NO 2 , and O 3 ; Emissions Inventory; Permitting; Synthetic Minor Facilities; Source Surveillance; Open Burning; Enforcement; Review of State Permits; and Regional Haze Planning. The EPA is not taking action on the SRMT TIP regarding fluoride and other metal standards because the EPA has not promulgated ambient air quality standards for these metals that can be enforced through a federally-approved SIP or TIP. EPA is not taking action on the SRMT TIP lead standard because it is not equivalent to the EPA air quality standard. The public docket contains SRMT's proposed TIP, TAS Eligibility determination, and enforcement MOA with EPA. Contact the For Further Information Contact for additional information on the materials contained in the docket. Statutory and Executive Order Reviews Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), this proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, 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 proposed action merely proposes to approve laws of an eligible Indian tribe as meeting Federal requirements and imposes no additional requirements beyond those imposed by Tribal law. Accordingly, the Administrator certifies that this proposed 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 proposes to approve pre-existing requirements under Tribal law and does not impose any additional enforceable duty beyond that required by Tribal 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). Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” EPA has concluded that this proposed rule will have tribal implications in that it will have substantial direct effects on the SRMT. However, it will neither impose substantial direct compliance costs on tribal governments, nor preempt tribal law. EPA is proposing to approve the SRMT's TIP at the request of the Tribe. Tribal law will not be preempted as the SRMT has already incorporated the TIP into Tribal Law on October 3, 2002. The Tribe has applied for, and fully supports, the proposed approval of the TIP. If it is finally approved, the TIP will become federally enforceable. EPA worked and consulted with officials of the SRMT early in the process of developing this proposed regulation to permit them to have meaningful and timely input into its development. In order to administer an approved TIP, tribes must be determined eligible (40 CFR part 49) for TAS for the purpose of administering a TIP. During the TAS eligibility process, the Tribe and EPA worked together to ensure that the appropriate information was submitted to EPA. SRMT and EPA also worked together throughout the process of development and Tribal adoption of the TIP. The Tribe and EPA also entered into an enforcement MOA. 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 proposes to approve a Tribal rule implementing a TIP over areas within the exterior boundaries of the St. Regis Mohawk Reservation, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885 (April 23, 1997)), because it is not economically significant. The requirements of section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) of 1995 (15 U.S.C. 272) do not apply to this proposed rule. In reviewing TIP submissions, the EPA's role is to approve an eligible tribe's submission, provided that it meets the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the Tribe to use voluntary consensus standards (VCS), the EPA has no authority to disapprove a TIP submission for failure to use VCS. It would thus be inconsistent with applicable law for the EPA, when it reviews a TIP submission, to use VCS in place of a TIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the NTTAA do not apply. This proposed 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.* ). List of Subjects in 40 CFR Part 49 Environmental protection, Air pollution control, Carbon monoxide, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds. Authority: 42 U.S.C. 7401 *et seq.* Dated: August 6, 2007. Alan J. Steinberg, Regional Administrator, Region 2. [FR Doc. E7-15921 Filed 8-13-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 300 [EPA-HQ-SFUND-1986-0005; FRL-8454-2] National Oil and Hazardous Substance Pollution Contingency Plan; National Priorities List AGENCY: Environmental Protection Agency. ACTION: Notice of intent to delete the Bailey Waste Disposal Superfund Site from the National Priorities List. SUMMARY: The Environmental Protection Agency

(EPA)Region 6 is issuing a notice of intent to delete the Bailey Waste Disposal Superfund Site located in Bridge City, Texas from the National Priorities List

(NPL)and requests public comments on this notice of intent. The NPL, promulgated pursuant to Section 105 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended, is found at Appendix B of 40 CFR part 300, which is the National Oil and Hazardous Substances Pollution Contingency Plan (NCP). The EPA and the State of Texas, through the Texas Commission on Environmental Quality (TCEQ), have determined that all appropriate response actions under CERCLA, other than operation and maintenance and five-year reviews, have been completed. However, this deletion does not preclude future actions under Superfund. In the “Rules and Regulations” Section of this **Federal Register** , we are publishing a direct final notice of deletion of the Bailey Waste Disposal Superfund Site without prior notice of intent to delete because we view this as a noncontroversial revision and anticipate no adverse comment. We have explained our reasons for this deletion in the direct final deletion. If we receive no adverse comment(s) on this notice of intent to delete or the direct final notice of deletion, we will not take further action on this notice of intent to delete. If we receive adverse comment(s), we will withdraw the direct final notice of deletion, and it will not take effect. We will, as appropriate, address all public comments in a subsequent final deletion notice based on this notice of intent to delete. We will not institute a second comment period on this notice of intent to delete. Any parties interested in commenting must do so at this time. For additional information see the direct final notice of deletion located in the Rules section of this **Federal Register** . DATES: Comments concerning this Site must be received by September 13, 2007. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-SFUND-1986-0005, by one of the following methods: *http://www.regulations.gov* (Follow the on-line instructions for submitting comments). *E-mail:* *walters.donn@epa.gov.* *Fax:* 214-665-6660. *Mail:* Donn Walters, Community Involvement, U.S. EPA Region 6 (6SF-TS), 1445 Ross Avenue, Dallas, TX 75202-2733,

(214)665-6483 or 1-800-533-3508. *Instructions:* Direct your comments to Docket ID No. EPA-HQ-SFUND-1986-0005. EPA 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, disclosure of which is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected. The *http://www.regulations.gov* Web site is an “anonymous access” system, which means 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 automatically be 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 and with any disk or CD-ROM you submit. 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, any form of encryption and be free of any defects or viruses. *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 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 at *http://www.regulations.gov* or in hard copy at the information repositories. FOR FURTHER INFORMATION CONTACT: Scott Harris, PhD, Remedial Project Manager (RPM), U.S. EPA Region 6 (6SF-RA), 1445 Ross Avenue, Dallas, TX 75202-2733, *harris.scott@epa.gov* or

(214)665-7114 or 800-533-3508. SUPPLEMENTARY INFORMATION: For additional information see the Direct Final Notice of Deletion located in the “Rules” section of this **Federal Register** . *Information Repositories:* Repositories have been established to provide detailed information concerning this decision at the following locations: U.S. EPA Online Library System at *http://www.epa.gov/natlibra/ols.htm;* U.S. EPA Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733,

(214)665-6617, by appointment only Monday through Friday 9 a.m. to 12 p.m. and 1 p.m. to 4 p.m.; Marion and Ed Hughes Public Library, 2712 Nederland Avenue, Nederland, Texas, 77627,

(409)722-1255, Monday 1 p.m. to 9 p.m., Tuesday through Friday 10 a.m. to 6 p.m. and closed Saturday-Sunday; City of Orange Public Library, 220 N. 5th Street, Orange, Texas, 77630,

(409)883-1086, Saturday and Monday 10 a.m. to 2 p.m., Tuesday 12 p.m. to 8 p.m. Wednesday through Friday 10 a.m. to 5 p.m. and closed Sunday; Texas Commission on Environmental Quality (TCEQ), Central File Room Customer Service Center, Building E, 12100 Park 35 Circle, Austin, Texas, 78753,

(512)239-2900, Monday through Friday 8 a.m. to 5 p.m. List of Subjects in 40 CFR Part 300 Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply. Authority: 33 U.S.C. 1321(c)(2); 42 U.S.C. 9601-9657; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 FR 2923; 3 CFR, 1987 Comp., p. 193. Dated: July 19, 2007. Richard E. Greene, Regional Administrator, EPA Region 6. [FR Doc. E7-15897 Filed 8-13-07; 8:45 am] BILLING CODE 6560-50-P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 232 and 252 RIN 0750-AF63 Defense Federal Acquisition Regulation Supplement; Mandatory Use of Wide Area WorkFlow (DFARS Case 2006-D049) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Proposed rule with request for comments. SUMMARY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to require use of the Wide Area WorkFlow-Receipt and Acceptance (WAWF-RA) electronic system for submitting and processing payment requests under DoD contracts. DoD-wide use of WAWF-RA will increase the efficiency of the payment process. DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before October 15, 2007, to be considered in the formation of the final rule. ADDRESSES: You may submit comments, identified by DFARS Case 2006-D049, using any of the following methods: • *Federal eRulemaking Portal:* *http://www.regulations.gov.* Follow the instructions for submitting comments. • *E-mail:* *dfars@osd.mil.* Include DFARS Case 2006-D049 in the subject line of the message. • *Fax:*

(703)602-7887. • *Mail:* Defense Acquisition Regulations System, Attn: Mr. John McPherson, OUSD (AT&L) DPAP (CPF), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. • *Hand Delivery/Courier:* Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402. Comments received generally will be posted without change to *http://www.regulations.gov,* including any personal information provided. FOR FURTHER INFORMATION CONTACT: Mr. John McPherson,

(703)602-0296. SUPPLEMENTARY INFORMATION: A. Background This proposed rule amends DFARS Subpart 232.70, and the contract clause at DFARS 252.232-7003, to require use of the WAWF-RA electronic system for submission and processing of payment requests under DoD contracts. DFARS Subpart 232.70 presently identifies three accepted electronic forms of transmitting payment requests under DoD contracts. Those are

(1)American National Standards Institute

(ANSI)X.12 Electronic Data Interchange (EDI);

(2)Web Invoicing System; and

(3)WAWF-RA. The proposed rule will still allow a contractor to submit a payment request through an electronic means other than WAWF-RA, or in a non-electronic format, if authorized by the contracting officer. In addition, the proposed rule will allow contractors to submit ANSI X.12 EDI transactions through WAWF-RA. The proposed changes will reduce the problems created by DoD's nonintegrated financial systems, by facilitating the electronic transmission of payment documents and related data. WAWF-RA, when fully implemented and utilized, will eliminate paper documents, eliminate redundant data entry, improve data accuracy, reduce the number of lost or misplaced documents, and ultimately, result in more timely payments to contractors. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. B. Regulatory Flexibility Act DoD has prepared an initial regulatory flexibility analysis consistent with 5 U.S.C. 603. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows: The objective of the proposed rule is to fully automate the payment process, including receiving reports, to significantly improve the timeliness of payments and to reduce DoD's interest charges for late payments. The proposed rule continues DoD's implementation of the electronic invoicing requirements of 10 U.S.C. 2227, as added by Section 1008 of the National Defense Authorization Act for Fiscal Year 2001 (Pub. L. 106-398). American National Standards Institute

(ANSI)X.12 Electronic Data Interchange

(EDI)and Web Invoicing System

(WInS)cannot process all DoD payment request types, nor can they process receiving reports. In addition, EDI and WInS information cannot be made available to all interested Government offices and organizations. WAWF-RA is the only DoD system that can process all payment request types as well as receiving reports. WAWF-RA keeps historical files that are readily available for both contractor and Government use. In addition, the use of WAWF-RA has contributed significantly to improving the timeliness of payments and to DoD's goal of reducing interest charges for late payments. The proposed rule changes the electronic systems available for submitting invoices to DoD. Approximately 1,000 small entities will be required to switch from the existing WInS to the WAWF-RA system, used by over 20,000 small entities. Both systems involve submission of invoices through the World Wide Web. Approximately 1 hour is needed to learn the new system. No reporting, recordkeeping, or compliance records will be required from small entities. All such records will be generated by DoD as a by-product of the use of the required systems. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2006-D049. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the proposed rule does not impose any 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 48 CFR Parts 232 and 252 Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Therefore, DoD proposes to amend 48 CFR parts 232 and 252 as follows: 1. The authority citation for 48 CFR parts 232 and 252 continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. PART 232—CONTRACT FINANCING 2. Section 232.7002 is amended in paragraph

(b)by revising the last sentence to read as follows: 232.7002 Policy.

(b)* * * Scanned documents are acceptable for processing supporting documentation other than receiving reports and other forms of acceptance. 3. Section 232.7003 is revised to read as follows: 232.7003 Procedures.

(a)The accepted electronic form for submission of payment requests is Wide Area WorkFlow-Receipt and Acceptance (see Web site— *http://wawf.eb.mil/* ).

(b)If the payment office and the contract administration office concur, the contracting officer may authorize a contractor to submit a payment request using an electronic form other than Wide Area WorkFlow-Receipt and Acceptance. However, with this authorization, the contractor and the contracting officer shall agree to a plan, which shall include a timeline, specifying when the contractor will transfer to Wide Area WorkFlow-Receipt and Acceptance. PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 4. Section 252.232-7003 is amended as follows: a. By revising the clause date; b. In paragraph (a)(2), by revising the last sentence; and c. By revising paragraphs

(b)and

(c)to read as follows: 252.232-7003 Electronic Submission of Payment Requests. ELECTRONIC SUBMISSION OF PAYMENT REQUESTS (XXX 2007)

(a)* * *

(2)* * * However, scanned documents are acceptable when they are part of a submission of a payment request made using Wide Area WorkFlow-Receipt and Acceptance (WAWF-RA) or another electronic form authorized by the Contracting Officer.

(b)Except as provided in paragraph

(c)of this clause, the Contractor shall submit payment requests using WAWF-RA, in one of the following electronic formats that WAWF-RA accepts: Electronic Data Interchange, Secure File Transfer Protocol, or World Wide Web input. Information regarding WAWF-RA is available on the Internet at *https://wawf.eb.mil/.*

(c)The Contractor may submit a payment request using other than WAWF-RA only when—

(1)The Contracting Officer authorizes use of another electronic form. With such an authorization, the Contractor and the Contracting Officer shall agree to a plan, which shall include a timeline, specifying when the Contractor will transfer to Wide Area WorkFlow-Receipt and Acceptance;

(2)DoD is unable to receive a payment request in electronic form; or

(3)The Contracting Officer administering the contract for payment has determined, in writing, that electronic submission would be unduly burdensome to the Contractor. In such cases, the Contractor shall include a copy of the Contracting Officer's determination with each request for payment. [FR Doc. E7-15928 Filed 8-13-07; 8:45 am] BILLING CODE 5001-08-P DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Part 17 RIN 1018-AU80 Endangered and Threatened Wildlife and Plants; Designation of Critical Habitat for Arenaria ursina (Bear Valley Sandwort), Castilleja cinerea (Ash-gray Indian Paintbrush), and Eriogonum kennedyi var. austromontanum (Southern Mountain Wild-buckwheat) AGENCY: Fish and Wildlife Service, Interior. ACTION: Proposed rule; reopening of comment period, notice of availability of draft economic analysis, and amended Required Determinations. SUMMARY: We, the U.S. Fish and Wildlife Service (Service), announce the reopening of the comment period on the proposed designation of critical habitat for *Arenaria ursina* , *Castilleja cinerea* , and *Eriogonum* *kennedyi* var. *austromontanum* under the Endangered Species Act of 1973, as amended (Act). We also announce the availability of the draft economic analysis for the proposed critical habitat designation and an amended Required Determinations section of the proposal. The draft economic analysis forecasts future costs associated with conservation efforts for the three listed plants in the areas proposed for designation to be $1.95 million (undiscounted) over the next 20 years. The present value of these impacts, applying a 3 percent discount rate, is $1.45 million ($0.10 million annualized); or $1.03 million, using a discount rate of 7 percent ($0.10 million annualized). The amended Required Determinations section provides our determination concerning compliance with applicable statutes and Executive Orders that we deferred until the information from the draft economic analysis of this proposal was available. We are reopening the comment period to allow all interested parties to comment simultaneously on the proposed rule, the associated draft economic analysis, and the amended Required Determinations section. DATES: We will accept public comments until September 13, 2007. ADDRESSES: Written comments and materials may be submitted to us by any one of the following methods:

(1)E-mail: Please submit electronic comments to *fw8cfwocomments@fws.gov* . Include “pebble plains plants” in the subject line. Please see the Public Comments Solicited section under SUPPLEMENTARY INFORMATION .

(2)Facsimile: You may send your comments to 760-431-5901.

(3)U.S. mail or hand-delivery: You may submit written comments and information to Jim Bartel, Field Supervisor, Carlsbad Fish and Wildlife Office, 6010 Hidden Valley Road, Carlsbad, CA 92011.

(4)*Federal eRulemaking Portal* : *http://www.regulations.gov* . Follow the instructions for submitting comments. FOR FURTHER INFORMATION CONTACT: Jim Bartel, Field Supervisor, Carlsbad Fish and Wildlife Office, at the address listed in ADDRESSES (telephone: 760-431-9440). Persons who use a telecommunications device for the deaf

(TDD)may call the Federal Information Relay Service

(FIRS)at 800-877-8339. SUPPLEMENTARY INFORMATION: Public Comments Solicited We will accept written comments and information during this reopened comment period. We solicit comments on the proposed critical habitat designation for *Arenaria* *ursina* (Bear Valley sandwort), *Castilleja* *cinerea* (Ash-gray Indian paintbrush), and *Eriogonum* *kennedyi* var. *austromontanum* (southern mountain wild-buckwheat) (also collectively referred to herein as three pebble plains plants), published in the **Federal Register** on November 22, 2006 (71 FR 67712), and on our draft economic analysis of the proposed designation. We will consider information and recommendations from all interested parties. We are particularly interested in comments concerning:

(1)The reasons why habitat should or should not be designated as critical habitat under section 4 of the Act (16 U.S.C. 1531 *et seq.* ), including whether the benefit of designation will outweigh threats to these species caused by designation, such that designation of critical habitat is prudent;

(2)Specific information on the amount and distribution of *Arenaria* *ursina* , *Castilleja* *cinerea* , and *Eriogonum* *kennedyi* var. *austromontanum* habitat, and what areas that were occupied at the time of listing that contain features essential for the conservation of the species should be included in the designation and why, and what areas that were not occupied at the time of listing are essential to the conservation of the species and why;

(3)Land use designations and current or planned activities in the subject areas and their possible impacts on proposed critical habitat;

(4)Information on the extent to which any State and local environmental protection measures referred to in the draft economic analysis may have been adopted largely as a result of the listing of *Arenaria* *ursina* , *Castilleja* *cinerea* , and *Eriogonum* *kennedyi* var. *austromontanum* ;

(5)Information on whether the draft economic analysis identifies all State and local costs attributable to the proposed critical habitat designation, and information on any costs that have been inadvertently overlooked;

(6)Information on whether the draft economic analysis makes appropriate assumptions regarding current practices and likely regulatory changes imposed as a result of the designation of critical habitat;

(7)Information on whether the draft economic analysis correctly assesses the effect on regional costs associated with any land use controls that may derive from the designation of critical habitat;

(8)Information on areas that could potentially be disproportionately impacted by designation of critical habitat for *Arenaria* *ursina* , *Castilleja* *cinerea* , or *Eriogonum* *kennedyi* var. *austromontanum* ;

(9)Any foreseeable economic, national security, or other potential impacts resulting from the proposed designation of critical habitat, and in particular, any impacts on small entities; and the benefits of including or excluding areas that exhibit these impacts;

(10)Information on whether the draft economic analysis appropriately identifies all costs that could result from the designation;

(11)Information on whether our approach to critical habitat designation could be improved or modified in any way to provide for greater public participation and understanding, or to assist us in accommodating public concern and comments;

(12)Economic data on the incremental effects that would result from designating any particular area as critical habitat; and

(13)Information on whether there are any quantifiable economic benefits that could result from the designation. Pursuant to section 4(b)(2) of the Act, an area may be excluded from critical habitat if it is determined that the benefits of such exclusion outweigh the benefits of including a particular area as critical habitat, unless the failure to designate such area as critical habitat will result in the extinction of the species. We may exclude an area from designated critical habitat based on economic impacts, national security, or any other relevant impact. All previous comments and information submitted during the initial comment period from November 22, 2006, to January 22, 2007, for the proposed rule (71 FR 67712) need not be resubmitted. If you wish to comment, you may submit your comments and materials concerning the draft economic analysis and the proposed rule by any one of several methods (see ADDRESSES ). Our final designation of critical habitat will take into consideration all comments and any additional information we have received during both comment periods. On the basis of public comment on this analysis, the critical habitat proposal, and the final economic analysis, we may, during the development of our final determination, find that areas proposed are not essential, are appropriate for exclusion under section 4(b)(2) of the Act, or are not appropriate for exclusion. If submitting comments electronically, please also include “Attn: pebble plains plants” and your name and return address in your e-mail message. If you do not receive a confirmation from the system that we have received your e-mail message, please contact the person listed under FOR FURTHER INFORMATION CONTACT . Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. You may obtain copies of the proposed rule and draft economic analysis by mail from the Carlsbad Fish and Wildlife Office (see ADDRESSES ) or by visiting our website at *http://www.fws.gov/carlsbad/SBMP.htm* . Background On September 13, 2004, the Center for Biological Diversity and the California Native Plant Society filed a joint lawsuit challenging the Service's failure to designate critical habitat for six California plant species, including *Arenaria* *ursina* , *Castilleja* *cinerea* , and *Eriogonum* *kennedyi* var. *austromontanum* ( *Center for Biological Diversity* , *et al* . v. *Norton, No. ED CV-04-1150 RT (SGLx* )). In an April 14, 2005, settlement agreement, the Service agreed to submit to the **Federal Register** a proposed rule to designate critical habitat, if prudent, on or before November 9, 2006, and a final rule by November 9, 2007. On November 4, 2006, a proposed rule to designate critical habitat for A. *ursina* , C. *cinerea* , and E. k. var. *austromontanum* was signed; it was published on November 22, 2006 (71 FR 67712). The proposal includes approximately 1,511 acres

(ac)(611 hectares (ha)) of land in San Bernardino County, California. Critical habitat is defined in section 3 of the Act as the specific areas within the geographical area occupied by a species, at the time it is listed in accordance with the Act, on which are found those physical or biological features essential to the conservation of the species and that may require special management considerations or protection, and specific areas outside the geographical area occupied by a species at the time it is listed, upon a determination that such areas are essential for the conservation of the species. If the proposed rule is made final, section 7 of the Act will prohibit destruction or adverse modification of critical habitat by any activity funded, authorized, or carried out by any Federal agency. Federal agencies proposing actions affecting areas designated as critical habitat must consult with us on the effects of their proposed actions, pursuant to section 7(a)(2) of the Act. Draft Economic Analysis Section 4(b)(2) of the Act requires that we designate or revise critical habitat based upon the best scientific and commercial data available, after taking into consideration the economic impact, impact on national security, or any other relevant impact of specifying any particular area as critical habitat. We have prepared a draft economic analysis based on the November 22, 2006, proposed rule to designate critical habitat for *Arenaria* *ursina* , *Castilleja* *cinerea* , and *Eriogonum* *kennedyi* var. *austromontanum* (71 FR 67712). The draft economic analysis is intended to quantify the economic impacts of all potential conservation efforts for the three pebble plains plants; some of these costs will likely be incurred regardless of whether critical habitat is designated. According to the draft economic analysis, activities associated with the conservation of the three listed pebble plains plants are likely to primarily impact unauthorized off-highway vehicle use, control of invasive, nonnative plants, and dispersed recreation. The draft economic analysis forecasts future costs associated with conservation efforts for the three pebble plains plants in the areas proposed for designation to be $1.95 million (undiscounted) over the next 20 years. The present value of these impacts, applying a 3 percent discount rate, is $1.45 million ($0.10 million annualized); or $1.03 million, using a discount rate of 7 percent ($0.10 million annualized). The analysis quantifies economic impacts associated with the conservation efforts on each affected entity—typically landowners or managers—associated with the following:

(1)vehicle use off designated routes;

(2)the presence of nonnative plant species; and

(3)dispersed recreation activities. The draft economic analysis considers the potential economic effects of actions relating to the conservation of *Arenaria* *ursina* , *Castilleja* *cinerea* , and *Eriogonum* *kennedyi* var. *austromontanum* , including costs associated with sections 4, 7, and 10 of the Act, and including those attributable to the designation of critical habitat. It further considers the economic effects of protective measures taken as a result of other Federal, State, and local laws that aid habitat conservation for A. *ursina* , C. *cinerea* , and E. k. var. *austromontanum* in areas containing features essential to the conservation of the species. The draft analysis considers both economic efficiency and distributional effects. In the case of habitat conservation, efficiency effects generally reflect the “opportunity costs” associated with the commitment of resources to comply with habitat protection measures (such as lost economic opportunities associated with restrictions on land use). This analysis also addresses how potential economic impacts are likely to be distributed, including an assessment of any local or regional impacts of habitat conservation and the potential effects of conservation activities on small entities and the energy industry. This information can be used by decision-makers to assess whether the effects of the designation might unduly burden a particular group or economic sector. Finally, this draft analysis looks retrospectively at costs that have been incurred since the date *Arenaria* *ursina* , *Castilleja* *cinerea* , and *Eriogonum* *kennedyi* var. *austromontanum* were listed as threatened (63 FR 49006; September 14, 1998), and considers those costs that may occur in the 20 years following the designation of critical habitat. As stated earlier, we solicit data and comments from the public on this draft economic analysis, as well as on all aspects of the proposal. We may revise the proposal or its supporting documents to incorporate or address new information received during the comment period. In particular, we may exclude an area from critical habitat if we determine that the benefits of excluding the area outweigh the benefits of including the area as critical habitat, provided such exclusion will not result in the extinction of the species. Required Determinations—Amended In our November 22, 2006, proposed rule (71 FR 67712), we indicated that we would defer our determination of compliance with several statutes and Executive Orders until the information concerning potential economic impacts of the designation and potential effects on landowners and stakeholders was available in the draft economic analysis. Those data are now available for our use in making these determinations. In this notice we are affirming the information contained in the proposed rule concerning Executive Order (E.O.) 13132; E.O. 12988, the Paperwork Reduction Act; and the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments (59 FR 22951). Based on the information made available to us in the draft economic analysis, we are amending our Required Determinations, as provided below, concerning E.O. 12866 and the Regulatory Flexibility Act, E.O. 13211, E.O. 12630, and the Unfunded Mandates Reform Act. Regulatory Planning and Review In accordance with E.O. 12866, this document is a significant rule because it may raise novel legal and policy issues. Based on our draft economic analysis of the proposed designation of critical habitat for *Arenaria* *ursina* , *Castilleja* *cinerea* , or *Eriogonum* *kennedyi* var. *austromontanum* , costs related to conservation activities for these species pursuant to sections 4, 7, and 10 of the Act are estimated to be approximately $1.95 million (undiscounted) over the next 20 years. The present value of these impacts, applying a 3 percent discount rate, is $1.45 million ($0.10 million annualized); or $1.03 million, using a discount rate of 7 percent ($0.10 million annualized). Therefore, based on our draft economic analysis, we do not anticipate that the proposed designation of critical habitat for *A. ursina* , C. *cinerea* , and E. k. var. *austromontanum* would result in an annual effect on the economy of $100 million or more or affect the economy in a material way. Due to the necessary timeline for publication in the **Federal Register** , the Office of Management and Budget

(OMB)has not formally reviewed the proposed rule or accompanying economic analysis. Further, E.O. 12866 directs Federal agencies promulgating regulations to evaluate regulatory alternatives (OMB Circular A-4, September 17, 2003). Pursuant to Circular A-4, once it has determined that the Federal regulatory action is appropriate, the agency will then need to consider alternative regulatory approaches. Since the determination of critical habitat is a statutory requirement pursuant to the Act, we must then evaluate alternative regulatory approaches, where feasible, when promulgating a designation of critical habitat. In developing our designations of critical habitat, we consider economic impacts, impacts to national security, and other relevant impacts pursuant to section 4(b)(2) of the Act. Based on the discretion allowable under this provision, we may exclude any particular area from the designation of critical habitat providing that the benefits of such exclusion outweigh the benefits of specifying the area as critical habitat and that such exclusion would not result in the extinction of the species. As such, we believe that the evaluation of the inclusion or exclusion of particular areas, or combination thereof, in a designation constitutes our regulatory alternative analysis. Regulatory Flexibility Act (5 U.S.C. 601 et seq.) Under the Regulatory Flexibility Act

(RFA)(5 U.S.C. 601 *et seq.* ), as amended by the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 802(2)) (SBREFA), whenever an agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effect of the rule on small entities (small businesses, small organizations, and small government jurisdictions). However, no regulatory flexibility analysis is required if the head of an agency certifies the rule will not have a significant economic impact on a substantial number of small entities. Based upon our draft economic analysis of the proposed designation, we provide our analysis for determining whether the proposed rule would result in a significant economic impact on a substantial number of small entities. Based on comments received, this determination is subject to revision as part of the final rulemaking. According to the Small Business Administration (SBA), small entities include small organizations, such as independent nonprofit organizations; small governmental jurisdictions, including school boards and city and town governments that serve fewer than 50,000 residents; and small businesses (13 CFR 121.201). Small businesses include manufacturing and mining concerns with fewer than 500 employees, wholesale trade entities with fewer than 100 employees, retail and service businesses with less than $5 million in annual sales, general and heavy construction businesses with less than $27.5 million in annual business, special trade contractors doing less than $11.5 million in annual business, and agricultural businesses with annual sales less than $750,000. To determine if potential economic impacts to these small entities are significant, we considered the types of activities that might trigger regulatory impacts under this designation as well as types of project modifications that may result. In general, the term significant economic impact is meant to apply to a typical small business firm's business operations. To determine if the proposed designation of critical habitat for *Arenaria ursina* , *Castilleja cinerea* , and *Eriogonum kennedyi* var. *austromontanum* would affect a substantial number of small entities, we considered the number of small entities affected within particular types of economic activities (such as residential development and dispersed recreation activities). We considered each industry or category individually to determine if certification is appropriate. In estimating the numbers of small entities potentially affected, we also considered whether their activities have any Federal involvement; some kinds of activities are unlikely to have any Federal involvement and thus will not be affected by the designation of critical habitat. Designation of critical habitat only affects activities conducted, funded, permitted, or authorized by Federal agencies; non-Federal activities are not affected by the designation. If this proposed critical habitat designation is made final, Federal agencies must consult with us under section 7 of the Act if their activities may affect designated critical habitat. Consultations to avoid the destruction or adverse modification of critical habitat would be incorporated into the existing consultation process. In our draft economic analysis of the proposed critical habitat designation, we evaluated the potential economic effects on small business entities resulting from conservation actions related to the listing of *Arenaria ursina* , *Castilleja cinerea* , or *Eriogonum kennedyi* var. *austromontanum* and proposed designation of its critical habitat. The analysis is based on the estimated impacts associated with the proposed rulemaking as described in Chapters 2 through 4 of the analysis and evaluates the potential for economic impacts related to three categories: unauthorized vehicle activities; invasive, nonnative plant species management; and dispersed recreation activities. The U.S. Forest Service (USFS), the California Department of Fish and Game, and the Boy Scouts of America are not considered small entities by the Small Business Administration. They do not meet the criteria because the first two entities are governments serving more than 50,000 people, and the Boy Scouts of America is a civic or social organization having annual receipts greater than $6.5 million. The private landowners are unlikely to be business entities. Accordingly, the small business analysis contained in Appendix A of the economic analysis focuses on economic impacts of controlling unauthorized off-highway vehicles and nonnative plant species on land owned by The Wildlands Conservancy. The Wildlands Conservancy

(TWC)is a nonprofit, public benefit organization. It was unaware of the presence of the three listed species and their habitat on its land and, to date, has not undertaken actions specific to the conservation of the plants. Potential impacts to TWC of managing unauthorized off-road vehicle use and controlling invasive, nonnative plant species are based on cost-per-acre estimates from the USFS. Annualized impacts to TWC at a 3 percent discount rate are expected to be $4,504. However, since only one entity meeting the definition of a small business owns land within the area proposed as critical habitat, we do not anticipate that this regulation, if finalized as proposed, will result in a significant impact to a substantial number of small business entities. Please refer to our draft economic analysis of the proposed critical habitat designation for a more detailed discussion of potential economic impacts. In summary, we have considered whether this proposed rule would result in a significant economic effect on a substantial number of small entities. For the above reasons and based on currently available information, we certify that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities. Therefore, an initial regulatory flexibility analysis is not required. Executive Order 13211 - Energy Supply, Distribution, and Use On May 18, 2001, the President issued E.O. 13211 on regulations that significantly affect energy supply, distribution, and use. E.O. 13211 requires agencies to prepare Statements of Energy Effects when undertaking certain actions. This proposed designation of critical habitat for *Arenaria ursina* , *Castilleja cinerea* , and *Eriogonum* *kennedyi* var. *austromontanum* is considered a significant regulatory action under E.O. 12866 due to its potentially raising novel legal and policy issues. OMB has provided guidance for implementing this Executive Order that outlines nine outcomes that may constitute “a significant adverse effect” when compared without the regulatory action under consideration. The draft economic analysis finds that none of these criteria are relevant to this analysis. Thus, based on the information in the draft economic analysis, energy-related impacts associated with A. *ursina* , C. *cinerea* , and E. k. var. *austromontanum* conservation activities within proposed critical habitat are not expected. As such, the proposed designation of critical habitat is not expected to significantly affect energy supplies, distribution, or use and a Statement of Energy Effects is not required. Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.) In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501), the Service makes the following findings:

(a)This rule will not produce a Federal mandate. In general, a Federal mandate is a provision in legislation, statute, or regulation that would impose an enforceable duty upon State, local, or Tribal governments, or the private sector, and includes both “Federal intergovernmental mandates” and “Federal private sector mandates.” These terms are defined in 2 U.S.C. 658(5)-(7). “Federal intergovernmental mandate” includes a regulation that “would impose an enforceable duty upon State, local, or tribal governments,” with two exceptions. It excludes “a condition of federal assistance.” It also excludes “a duty arising from participation in a voluntary Federal program,” unless the regulation “relates to a then-existing Federal program under which $500,000,000 or more is provided annually to State, local, and Tribal governments under entitlement authority,” if the provision would “increase the stringency of conditions of assistance” or “place caps upon, or otherwise decrease, the Federal Government's responsibility to provide funding” and the State, local, or tribal governments “lack authority” to adjust accordingly. (At the time of enactment, these entitlement programs were: Medicaid; Aid to Families with Dependent Children work programs; Child Nutrition; Food Stamps; Social Services Block Grants; Vocational Rehabilitation State Grants; Foster Care, Adoption Assistance, and Independent Living; Family Support Welfare Services; and Child Support Enforcement.) “Federal private sector mandate” includes a regulation that “would impose an enforceable duty upon the private sector, except

(i)a condition of Federal assistance; or

(ii)a duty arising from participation in a voluntary Federal program.” The designation of critical habitat does not impose a legally binding duty on non-Federal government entities or private parties. Under the Act, the only regulatory effect is that Federal agencies must ensure that their actions do not destroy or adversely modify critical habitat under section 7. Non-Federal entities that receive Federal funding, assistance, permits, or otherwise require approval or authorization from a Federal agency for an action may be indirectly impacted by the designation of critical habitat. However, the legally binding duty to avoid destruction or adverse modification of critical habitat rests squarely on the Federal agency. Furthermore, to the extent that non-Federal entities are indirectly impacted because they receive Federal assistance or participate in a voluntary Federal aid program, the Unfunded Mandates Reform Act would not apply, nor would critical habitat shift the costs of the large entitlement programs listed above on to State governments.

(b)We do not believe that this rule will significantly or uniquely affect small governments. As discussed in the draft economic analysis, the majority (92 percent) of the lands proposed as critical habitat are federally owned by the USFS, which does not qualify as a small government. Of the remaining eight percent, seven percent is privately owned land and one percent is State land. Consequently, we do not believe that critical habitat designation would significantly or uniquely affect small government entities. As such, a Small Government Agency Plan is not required. Executive Order 12630 - Takings In accordance with E.O. 12630 (“Government Actions and Interference with Constitutionally Protected Private Property Rights”), we have analyzed the potential takings implications of proposing critical habitat for *Arenaria ursina* , *Castilleja cinerea* , and *Eriogonum kennedyi* var. *austromontanum* in a takings implications assessment. The takings implications assessment concludes that this proposed designation of critical habitat for the three listed pebble plains plants does not pose significant takings implications. Author The primary author of this notice is the Carlsbad Fish and Wildlife Office. Authority: The authority for this action is the Endangered Species Act of 1973 (16 U.S.C. 1531 *et seq.* ). Dated: August 3, 2007. Todd Willens, Acting Assistant Secretary for Fish and Wildlife and Parks. [FR Doc. E7-15765 Filed 8-13-07; 8:45 am] Billing Code: 4310-55-S 72 156 Tuesday, August 14, 2007 Notices DEPARTMENT OF AGRICULTURE Submission for OMB Review; Comment Request August 9, 2007. The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments regarding

(a)whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;

(b)the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used;

(c)ways to enhance the quality, utility and clarity of the information to be collected;

(d)ways to minimize the burden of the collection of 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 should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), *OIRA_Submission@OMB.EOP.GOV* or fax

(202)395-5806 and to Departmental Clearance Office, USDA, OCIO, Mail Stop 7602, Washington, DC 20250-7602. Comments regarding these information collections are best assured of having their full effect if received within 30 days of this notification. Copies of the submission(s) may be obtained by calling

(202)720-8681. An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number. Agricultural Marketing Service *Title:* Reporting Forms under Milk Marketing Order Programs. *OMB Control Number:* 0581-0032. *Summary of Collection:* Agricultural Marketing Service

(AMS)oversees the administration of the Federal Milk Marketing Orders authorized by the Agricultural Marketing Agreement Act of 1937, as amended. The Act is designed to improve returns to producers while protecting the interests of consumers. The Federal Milk Marketing Order regulations require places certain requirements on the handling of milk in the area it covers. Currently, there are 10 milk marketing orders regulating the handling of milk in the respective marketing areas. *Need and Use of the Information:* The information collected is needed to administer the classified pricing system and related requirements of each Federal Order. Forms are used for reporting purposes and to establish the quantity of milk received by handlers, the pooling status of the handler, and the class-use of the milk used by the handler and the butterfat content and amounts of other components of the milk. Without the monthly information, the market administrator would not have the information to compute each monthly price nor know if handlers were paying producers on dates prescribed in the order. Penalties are imposed for order violation, such as the failure to pay producers by the prescribed dates. *Description of Respondents:* Business or other for-profit; Not-for-profit institutions; Individuals or households; Farms. *Number of Respondents:* 740. *Frequency of Responses:* Recordkeeping; Reporting: On occasion; Quarterly; Monthly; Annually. *Total Burden Hours:* 21,819. Agricultural Marketing Service *Title:* Reporting and Recordkeeping Requirements for 7 CFR, Part 29. *OMB Control Number:* 0581-0056. *Summary of Collection:* The Fair and Equitable Tobacco Reform Act of 2004 (7 U.S.C. 518) eliminated price supports and marketing quotas for all tobacco beginning with the 2005 crop year. Mandatory inspection and grading of domestic and imported tobacco was eliminated as well as the mandatory pesticide testing of imported tobacco and the tobacco Market News Program. The Tobacco Inspection Act (U.S.C. 511) requires that all tobacco sold at designated auction markets in the U.S. be inspected and graded. Provision is also made for interested parties to request inspection, pesticide testing and grading services on an “as needed” basis. *Need and Use of the Information:* Information is collected through various forms and other documents for the inspection and certification process. Upon receiving request information from tobacco dealers and/or manufacturers, tobacco inspectors will pull samples and apply U.S. Standard Grades to samples to provide a Tobacco Inspection Certificate (TB-92). Also, samples can be submitted to a USDA laboratory for pesticide testing and a detailed analysis is provided to the customer. *Description of Respondents:* Business or other for-profit; *Number of Respondents:* 50. *Frequency of Responses:* Recordkeeping; Reporting; On occasion, *Total Burden Hours:* 3,851. Agricultural Marketing Service *Title:* Lamb Promotion, Research and Information Program. *OMB Control Number:* 0581-0198. *Summary of Collection:* The authority for Lamb Promotion, Research, and Information Order is established under the Commodity Promotion, Research, and Information Act of 1996. These programs carry out projects relating to research, consumer information, advertising, producer information, market development, and product research with the goal of maintaining and expanding their existing markets and uses and strengthening their position in the marketplace. *Need and Use of the Information:* Various forms will be used to collect information for reporting, background, certification, and nomination and is the minimum information necessary to effectively carry out the requirements of the program. The information is not available from other sources because it relates specifically to individual lamb producers, feeders, seed stock producers, exporters and first handlers. *Description of Respondents:* Farms; Farms; Business or other for-profit; Not-for-profit institutions. *Number of Respondents:* 3,953. *Frequency of Responses:* Recordkeeping; Reporting: Monthly. *Total Burden Hours:* 8,066. Charlene Parker, Departmental Information Collection Clearance Officer. [FR Doc. E7-15931 Filed 8-13-07; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Office of the Secretary Notice of the National Agricultural Research, Extension, Education, and Economics Advisory Board Specialty Crop Meeting and Executive Committee Meeting AGENCY: Research, Education, and Economics, USDA. ACTION: Notice of meeting. SUMMARY: In accordance with the Federal Advisory Committee Act, 5 U.S.C. App 2, the United States Department of Agriculture announces a meeting of the National Agricultural Research, Extension, Education, and Economics Advisory Board Specialty Crop Committee and Executive Committee. DATES: The National Agricultural Research, Extension, Education, and Economics Advisory Board Specialty Crop Committee will meet on August 29, 2007 and the Executive Committee will hold a meeting on August 29-30, 2007 at the Double Tree Hotel, 1150 Ninth Place, Modesto, California. ADDRESSES: The public may file written comments before or up to two weeks after the meeting with the contact person. You may submit comments by any of the following methods: E-mail: *smorgan@csrees.usda.gov* ; Fax:

(202)720-6199; Mail/Hand-Delivery or Courier: The National Agricultural Research, Extension, Education, and Economics Advisory Board; Research, Education, and Economics Advisory Board Office, Room 344-A, Jamie L. Whitten Building, United States Department of Agriculture, STOP 2255, 1400 Independence Avenue, SW., Washington, DC 20250-2255. FOR FURTHER INFORMATION CONTACT: Shirley Morgan-Jordan, Program Support Coordinator, National Agricultural Research, Extension, Education, and Economics Advisory Board; telephone:

(202)720-8408. SUPPLEMENTARY INFORMATION: On Wednesday, August 29, 2007, from 9 a.m. to 2 p.m., the Specialty Crop Committee will hold a listening session to study the scope and effectiveness of research, extension, and economics programs affecting the specialty crop industry. The purpose of this Specialty Crop meeting is to obtain regional input on research and education issues of high priority focusing on “Measures to Improve the Efficiency, Productivity and Profitability of Specialty Crop Production in the United States” and “Measures Designed to Improve Competitiveness to Research, Extension, and Economics Programs Affecting the Specialty Crop Industry.” Particular emphasis will be placed on further elaborating on the committee's last report entitled “U.S. Specialty Crops: An Update on Opportunities and Challenges”, which was released May 9, 2007. On Wednesday, August 29, 2007 at 9 a.m., the general meeting will begin with introductory remarks provided by the Chair of the Specialty Crop Committee. The REE Under Secretary of Agriculture, Dr. Gale Buchanan, has been invited to provide opening remarks. Distinguished leaders and experts, organizations or institutions, local producers, or other groups interested in the issues with which the Specialty Crop Committee is charged are invited to provide comments on two or three of the most important recommendations from their perspective by which USDA can enhance its research, extension, education, and economic programs to address needs of our nation's specialty crop sector. Following the adjournment of the National Agricultural Research, Extension, Education, and Economics Advisory Board Specialty Crop Committee Listening Session on August 29, 2007, the Executive Committee will hold their meeting on Wednesday, 4 p.m. to 6:30 p.m. at the Double Tree Hotel, 1150 Ninth Place, Modesto, California. On Thursday, August 30, 2007, the Executive Committee will reconvene at 7:30 a.m. and complete all discussions to adjourn by 9:30 a.m. The Executive Committee will be discussing a number of issues relating to the Specialty Crop Committee and other forthcoming National Agricultural Research, Extension, Education, and Economics Advisory Board concerns. Written comments by attendees or other interested stakeholders will be welcomed for the public record before and up to two weeks following the Board meeting (by close of business Wednesday, September 12, 2007). The findings of the Specialty Crop Committee and Executive Committee will be based on input from speakers, other stakeholders, the general public, and Board discussions. These findings will be forwarded to the Advisory Board, which in turn will provide recommendations to the Secretary of Agriculture and the House and Senate agriculture-related committee/subcommittees of the U.S. Congress, as well as the land-grant colleges and universities, as mandated. All statements will become a part of the official record of the National Agricultural Research, Extension, Education, and Economics Advisory Board and will be kept on file for public review in the Research, Extension, Education, and Economics Advisory Board Office. Done at Washington, DC this 7th day of August, 2007. Merle Pierson, Deputy Under Secretary, Research, Education, and Economics. [FR Doc. E7-15918 Filed 8-13-07; 8:45 am] BILLING CODE 3410-22-P DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service [Docket No. APHIS-2007-0021] Louisiana State University; Availability of an Environmental Assessment and Finding of No Significant Impact for a Field Test of Two Non-Pathogenic, Genetically Engineered Strains of Burkholderia glumae . AGENCY: Animal and Plant Health Inspection Service, USDA. ACTION: Notice. SUMMARY: We are advising the public that the Animal and Plant Health Inspection Service has prepared an environmental assessment for a proposed field test involving two genetically engineered strains of the bacteria, *Burkholderia glumae. Burkholderia glumae* is a plant pathogen that causes panicle blight in rice ( *Oryza sativa* ). The purpose of this field test is to conduct experiments that will provide information on the pathogenicity of *Burkholderia glumae* and will assist in the development of control methods to reduce yield loss caused by panicle blight. After assessing the application, reviewing pertinent scientific information, and considering public comment, we have concluded that this field test will not present a plant pest risk, nor will it have a significant impact on the quality of the human environment. Based on its finding of no significant impact, the Animal and Plant Health Inspection Service has determined that an environmental impact statement need not be prepared for this field test. DATES: *Effective Date:* August 6, 2007. ADDRESSES: You may read the environmental assessment (EA), finding of no significant impact (FONSI), and our response to the one the comment we received on the EA in our reading room, which is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call

(202)690-2817 before coming. The EA, FONSI and decision notice, and our response to the public comment are available on the Internet at *http://www.aphis.usda.gov/brs/aphisdocs/06_11101r_ea.pdf* . FOR FURTHER INFORMATION CONTACT: Dr. Andrea Huberty, Biotechnology Regulatory Services, APHIS, 4700 River Road, Unit 147, Riverdale, MD 20737-1236;

(301)734-0659. To obtain copies of the EA, FONSI and decision notice, and our response to the public comment, contact Ms. Cynthia Eck at

(301)734-0667; e-mail: *cynthia.a.eck@aphis.usda.gov* . SUPPLEMENTARY INFORMATION: The regulations in 7 CFR part 340, “Introduction of Organisms and Products Altered or Produced Through Genetic Engineering Which Are Plant Pests or Which There Is Reason to Believe Are Plant Pests,” regulate, among other things, the introduction (importation, interstate movement, or release into the environment) of organisms and products altered or produced through genetic engineering that are plant pests or that there is reason to believe are plant pests. Such genetically engineered organisms and products are considered “regulated articles.” A permit must be obtained or a notification acknowledged before a regulated article may be introduced. The regulations set forth the permit application requirements and the notification procedures for the importation, interstate movement, or release in the environment of a regulated article. On April 21, 2006, the Animal and Plant Health Inspection Service (APHIS) received a permit application (APHIS No. 06-111-01r) from Louisiana State University, in Baton Rouge, LA for a field test using strains of the bacterium *Burkholderia glumae* . Permit application 06-111-01r describes four *Burkholderia glumae* strains—two wild-type strains, one of which is disease-causing and the other naturally non-pathogenic, endemic to the United States, and two genetically engineered, non-pathogenic strains that share the same avirulent phenotype. The transgenic strains were created by placing base pairs of a methyltransferase gene into the cloning vector. The introduced vector, along with the methyltransferase gene, will integrate into the bacterial chromosome by homologous recombination. The subject *Burkholderia glumae* is considered a regulated article under the regulations in 7 CFR part 340 because it is the causal pathological agent of panicle blight in rice, a plant disease occurring in the United States. On June 19, 2007, APHIS published a notice 1 in the **Federal Register** (72 FR 33735-33736, Docket No. APHIS-2007-0021) announcing the availability of an environmental assessment

(EA)for a field test of two non-pathogenic, genetically engineered strains of *Burkholderia glumae* . During the 30-day comment period, which ended on June 19, 2007, APHIS received one comment, from an academic professional who opposed APHIS granting the permit. APHIS has addressed the issues raised in the comment and has provided a response as an attachment to the finding of no significant impact (FONSI). 1 To view the notice, the EA, and the comment we received, go to *http://www.regulations.gov/fdmspublic/component/main?main=DocketDetail&d=APHIS-2007-0021* . Pursuant to the regulations in 7 CFR part 340 promulgated under the Plant Protection Act, APHIS has determined that this field test will not pose a risk of introducing or disseminating a plant pest. Additionally, based upon analysis described in the EA, APHIS has determined that the action proposed in Alternative C of the EA, issue the permit with supplemental permit conditions, will not have a significant impact on the quality of the human environment. You may read the FONSI and decision notice on the Internet or in the APHIS reading room (see ADDRESSES above). Copies may also be obtained from the person listed under FOR FURTHER INFORMATION CONTACT . The EA and FONSI were prepared in accordance with

(1)The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 *et seq.* ),

(2)regulations of the Council on Environmental Quality for implementing the procedural provisions of NEPA (40 CFR parts 1500-1508),

(3)USDA regulations implementing NEPA (7 CFR part 1b), and

(4)APHIS' NEPA Implementing Procedures (7 CFR part 372). Authority: 7 U.S.C. 7701-7772 and 7781-7786; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.3. Done in Washington, DC, this 8th day of August 2007. Cindy Smith, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E7-15932 Filed 8-13-07; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF AGRICULTURE Foreign Agricultural Service Assessment of Fees for Dairy Import Licenses for the 2008 Tariff-Rate Import Quota Year AGENCY: Foreign Agricultural Service, USDA. ACTION: Notice. SUMMARY: This notice announces that the fee to be charged for the 2008 tariff-rate quota

(TRQ)year for each license issued to a person or firm by the Department of Agriculture authorizing the importation of certain dairy articles, which are subject to tariff-rate quotas set forth in the Harmonized Tariff Schedule of the United States (HTS), will be $150.00 per license. DATES: *Effective Date:* January 1, 2008. FOR FURTHER INFORMATION CONTACT: Jorge Martinez, Dairy Import Licensing Program, Import and Trade Support Programs Division, STOP 1021, U.S. Department of Agriculture, 1400 Independence Avenue, SW., Washington, DC 20250-1021 or telephone at

(202)720-9439 or e-mail at *Jorge.Martinez@usda.gov.* SUPPLEMENTARY INFORMATION: The Dairy Tarrif-Rate Import Quota Licensing Regulation promulgated by the Department of Agriculture and codified at 7 CFR 6.20-6.37 provides for the issuance of licenses to import certain dairy articles that are subject to TRQs set forth in the HTS. Those dairy articles may only be entered into the United States at the in-quota TRQ tariff-rates by or the account of a person or firm to whom such licenses have been issued and only in accordance with the terms and conditions of the regulation. Licenses are issued on a calendar year basis, and each license authorizes the license holder to import a specified quantity and type of dairy article from a specified country of origin. The use of licenses by the license holder to import dairy articles is monitored by the Import and Trade Support Programs Division, Foreign Agricultural Service, U.S. Department of Agriculture, and the U.S. Customs and Border Protection, U.S. Department of Homeland Security. The regulation at 7 CFR 6.33(a) provides that a fee will be charged for each license issued to a person or firm by the Licensing Authority in order to reimburse the Department of Agriculture for the costs of administering the licensing system under this regulation. The regulation at 7 CFR 6.33(a) also provides that the Licensing Authority will announce the annual fee for each license and that such fee will be set out in a notice to be published in the **Federal Register** . Accordingly, this notice sets out the fee for the licenses to be issued for the 2008 calendar year. Notice The total cost to the Department of Agriculture of administering the licensing system for 2008 has been estimated to be $360,000, and the estimated number of licenses expected to be issued is 2,400. Of the total cost, $230,000 represents staff and supervisory costs directly related to administering the licensing system, and $130,000 represents other miscellaneous costs, including travel, postage, publications, forms, Internet software development, and ADP system contractors. Accordingly, notice is hereby given that the fee for each license issued to a person or firm for the 2008 calendar year, in accordance with 7 CFR 6.33, will be $150.00 per license. Dated: Issued at Washington, DC the 31st day of July, 2007. Ronald Lord, Licensing Authority. [FR Doc. 07-3944 Filed 8-13-07; 8:45 am]

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