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Code · REGISTER · 2007-12-28 · Food and Drug Administration, HHS · Notices

Notices. Interim final rule; request for comments

60,942 words·~277 min read·/register/2007/12/28/07-6220

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

BILLING CODE 1505-01-D DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 201, 312, 314, 601, 610, 801, 807, 809, 812, and 814 [Docket No. 2006N-0466] Exceptions or Alternatives to Labeling Requirements for Products Held by the Strategic National Stockpile AGENCY: Food and Drug Administration, HHS. ACTION: Interim final rule; request for comments. SUMMARY: The Food and Drug Administration
(FDA)is issuing regulations to permit FDA Center Directors to grant exceptions or alternatives to certain regulatory labeling requirements applicable to human drugs, biological products, or medical devices that are or will be included in the Strategic National Stockpile (SNS). Under this rule, the appropriate FDA Center Director may grant an exception or alternative to such labeling requirements if he or she determines that compliance with the requirements could adversely affect the safety, effectiveness, or availability of specified lots, batches, or other units of human drugs, biological products, or medical devices that are or will be included in the SNS, including not only those that are approved, licensed, or cleared for marketing, but also those that are investigational. A grant of an exception or alternative under these regulations will include any safeguards or conditions deemed appropriate by the FDA Center Director to ensure that the labeling of such products includes information for the safe and effective use of the products given their anticipated circumstances of use. This rule will facilitate the safety, effectiveness, and availability of appropriate medical countermeasures in the event of a public health emergency. DATES: The interim final rule is effective on December 28, 2007. Submit written or electronic comments on the interim final rule by March 27, 2008. Submit written or electronic comments regarding the information collection by January 28, 2008 to the Office of Management and Budget
(OMB)(see ADDRESSES ). ADDRESSES: You may submit comments, identified by Docket No. 2006N-0466, by any of the following methods: *Electronic Submissions* Submit electronic comments in the following ways: • Federal eRulemaking Portal: *http://www.regulations.gov* . Follow the instructions for submitting comments. • Agency Web site: *http://www.fda.gov/dockets/ecomments* . Follow the instructions for submitting comments on the agency Web site. *Written Submissions* Submit written submissions in the following ways: • FAX: 301-827-6870. • Mail/Hand delivery/Courier [For paper, disk, or CD-ROM submissions]: Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. To ensure more timely processing of comments, FDA is no longer accepting comments submitted to the agency by e-mail. FDA encourages you to continue to submit electronic comments by using the Federal eRulemaking Portal or the agency Web site, as described in the *Electronic Submissions* portion of this paragraph. *Instructions* : All submissions received must include the agency name and docket number for this rulemaking. All comments received may be posted without change to *http://www.fda.gov/ohrms/dockets/default.htm* , including any personal information provided. For additional information on submitting comments, see the “Request for Comments” heading of the SUPPLEMENTARY INFORMATION section of this document. *Docket* : For access to the docket to read background documents or comments received, go to *http://www.fda.gov/ohrms/dockets/default.htm* and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. *Information Collection Provisions* : Submit written comments on the information collection provisions to the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB). To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, FAX: 202-395-6974. FOR FURTHER INFORMATION CONTACT: *For information concerning human biological products* : Stephen Ripley, Center for Biologics Evaluation and Research (HFM-17), Food and Drug Administration, 1401 Rockville Pike, suite 200N, Rockville, MD 20852-1448, 301-827-6210. *For information concerning human drug products* : Brad G. Leissa, Center for Drug Evaluation and Research, Food and Drug Administration, Mail Stop 1603, 10903 New Hampshire Ave., White Oak Complex, Building 21, Room 1624, Silver Spring, MD 20993, 301-796-2190. *For information concerning medical devices* : Casper E. Uldriks, Center for Devices and Radiological Health, Food and Drug Administration, 2094 Gaither Rd., rm. 229, Rockville, MD 20850, 301-276-0106. SUPPLEMENTARY INFORMATION: I. Introduction This interim final rule applies to human drugs, biological products, and medical devices (hereinafter referred to collectively as medical products) that are or will be held in the SNS, including those SNS assets that are held at the manufacturer's facility or elsewhere on behalf of the SNS (e.g., vendor managed inventory that is distributed, held, and managed by manufacturers or commercial distributors for the SNS) and prepositioned locations (e.g., CHEMPACKs that are distributed, held, and managed by hospitals and other facilities for the SNS). An act of terrorism or a natural disaster event may result in the need for rapid access to large quantities of medical products. Under the Public Health Service Act (PHS Act), the Department of Health and Human Services
(HHS)stockpiles medical products that are essential to the health security of the Nation. (See PHS Act section 319F-2, 42 U.S.C. 247d-6b)). This collection of medical products , known as the SNS, is to “provide for the emergency health security of the United States, including the emergency health security of children and other vulnerable populations, in the event of a bioterrorist attack or other public health emergency.” The SNS is maintained by the Assistant Secretary for Preparedness and Response (ASPR), exercising this responsibility and authority of the Secretary, in collaboration with the Director of the Centers for Disease Control and Prevention (CDC), and in coordination with the Department of Homeland Security. Examples of situations that may necessitate the deployment of such products from the SNS are: • Acts of terrorism using chemical, biological, radiological, or nuclear agents; • Mass trauma; or • Natural disasters such as hurricanes, pandemics, or earthquakes. The SNS is also designed to augment similar stockpiles of medical supplies held by State and local public health agencies for use in the event of a national emergency. II. Background It may be appropriate for certain medical products that are or will be held in the SNS to be labeled in a manner that would not comply with certain FDA labeling regulations, given their anticipated circumstances of use in an emergency. However, noncompliance with these labeling requirements could render such products misbranded under section 502 of the Federal Food, Drug, and Cosmetic Act (the FFD&C Act or the act) (21 U.S.C. 352). Under this rule, the appropriate FDA Center Director may grant an exception or alternative to certain FDA labeling requirements if compliance with the requirements could adversely affect the safety, effectiveness, or availability of products that are or will be in the SNS. An exception or alternative granted under this rule may include conditions or safeguards so that the labeling for such products includes appropriate information necessary for the safe and effective use of the product given the product's anticipated circumstances of use. Issues relating to the labeling of products that are or will be in the SNS exist now and will likely continue to develop. Such labeling issues may arise as a result of many different factors, including the indicated use, the storage location, the necessary storage conditions for a particular product, or the unique distribution mechanisms that may be used in an emergency. The provisions of this rule apply only to medical products that are or will be included in the SNS. The medical products that may be stockpiled in the SNS include not only those that are approved, licensed, or cleared for marketing, but also those that are investigational. 1 When HHS procures investigational medical products for the SNS (i.e., products for which investigational new drug
(IND)applications or investigational device exemptions
(IDE)are in effect), it anticipates that these products may eventually become licensed, approved, or cleared for marketing by FDA while the products remain stockpiled. Labels on investigational products, however, including those in the SNS, ordinarily would not contain all elements required on licensed, approved, or cleared product labels. 1 Medical products stockpiled in the SNS may also include products that will ultimately be used in an emergency under section 564 of the FFD&C act (21 U.S.C. 360bbb-3) (regarding Emergency Use Authorizations). For example, certain information may not be available until after approval of the product. For licensed biological products, § 610.60 (21 CFR 610.60) requires the container label to include, among other things, the expiration date of the product and license number of the manufacturer. Similarly, § 201.17 (21 CFR 201.17), which applies to drugs, sets forth requirements regarding placement of an expiration date, when required, on the immediate container. This information may not be available for an investigational product and thus could not be placed on container labels if the investigational product was added to the SNS. (See section III.D of this document for a discussion of conditions or safeguards that may be imposed in connection with an alternative or exception granted under this rule to ensure that labeling includes information necessary for safe and effective use of the product.) Similarly, for medical devices that are restricted to use by prescription, § 801.109 (21 CFR 801.109) requires that the device label, other than for surgical instruments, bear a statement restricting sale of the device by order of a healthcare practitioner licensed by the law of the State in which he practices (§ 801.109(b)(1)). Whether a particular investigational device will be limited to sale by prescription may not be known before approval or clearance and, thus, this statement could not be placed on the investigational device's label if the product was still investigational when the device was added to the SNS. Additionally, the label of approved or cleared in vitro diagnostic products
(IVDs)must contain information, such as warnings for users and storage instructions, that may not be finalized until product approval or clearance and could not be placed on the label if the investigational products were added to the SNS (see § 809.10). Prior to the implementation of this rule, when such investigational products were ultimately approved for marketing, the products would have been subject to relabeling, a potentially time-consuming, costly, and labor-intensive process given that the SNS can contain large numbers of these products. The SNS does not have manufacturing facilities or equipment necessary to relabel products that the SNS stores. Therefore, it is not feasible for SNS personnel to relabel products that are physically located in SNS storage sites. Prior to the implementation of this rule, the products would have needed to be returned to the manufacturers or sent to relabelers in order to be relabeled. Requiring relabeling of such investigational medical products after approval, licensure, or clearance could adversely affect the safety, effectiveness, or availability of these medical products in a number of ways. For example, shipping certain products from the SNS storage sites to the manufacturer or a relabeler for relabeling could subject them to unacceptable temperature deviations and create opportunities for product mishandling, such as mixing of different batches of the same product. Relabeling is especially difficult for certain products that must be stored at extremely low temperatures. In some instances, relabeling could cause the product to be unavailable for dispensing, delay deployment of the product for use, or could result in reduced product quality (e.g., potency or stability) and the loss of critical products. Security issues may also affect availability, as there is the potential for sabotage and diversion if a product were shipped back to the manufacturer or to a relabeler. For these reasons, as explained in the following section of this document, this rule allows FDA Center Directors to grant exceptions or alternatives to certain labeling requirements not explicitly required by statute for medical products that are or will be included in the SNS. III. Provisions of the Interim Final Rule A. Applicability of a Request for an Exception or Alternative Under §§ 201.26, 610.68, 801.128, and 809.11 (21 CFR 201.26, 610.68, 801.128, and 809.11), the appropriate FDA Center Director may grant a request for an exception or alternative to certain regulatory provisions pertaining to the labeling of human drugs, biological products, and medical devices that currently are or will be included in the SNS if certain criteria are met. Any grant of an exception or alternative will only apply to the specified lots, batches, or other units of medical products in the request. We request comments on whether the scope of the rule should be amended to extend to medical products in other Federal, State, and local stockpiles, and if so, to which stockpile(s) the rule should apply. The appropriate FDA Center Director will only review requests for exceptions or alternatives to the labeling provisions specified in this rule. The rule is not intended to provide a mechanism for waiving applicable requirements of sections 502 and 503 (21 U.S.C. 353) of the FFD&C Act and/or section 351 of the PHS Act. For example, under this new rule, an SNS official (or a manufacturer with an SNS official's written concurrence) may submit to FDA a request for an exception or alternative to a regulatory provision identified in this rule, such as where an expiration date may be placed under § 201.17, but not to the requirements under the PHS Act that the package (not necessarily the container) of a biological product be plainly marked with the product's expiration date (section 351(a)(1)(B)(iii) of the PHS Act (42 U.S.C. 262(a)(1)(B)(iii))). To the extent that a request for an exception or alternative to labeling requirements under this rule implicates other regulations not specified in this rule (e.g., regulations in 21 CFR part 211, Current Good Manufacturing Practice for Finished Pharmaceuticals) or involves statutory requirements, FDA will limit its consideration of the exception or alternative request to the labeling provisions specified in this rule. The remaining portions of such a request or other requests (i.e., those that do not involve the labeling provisions specified in this rule) will be reviewed under other applicable waiver provisions, if any. We note that FDA's authority to grant an exception or alternative to the regulatory provisions specified in the rule is distinct from the agency's authority to exercise enforcement discretion (i.e., decide not to take or recommend enforcement action) with respect to statutory and regulatory requirements, including those involving product labeling (see Heckler v. Chaney, 470 U.S. 821 (1985)). In granting an exception or alternative under this rule, the appropriate FDA Center Director will consider whether compliance with the labeling requirements specified in this rule could adversely affect the safety, effectiveness, or availability of medical products that are or will be included in the SNS. As previously explained in this document, relabeling these medical products in compliance with certain FDA labeling regulations could adversely affect the safety, effectiveness, or availability of the products in some circumstances. In those instances, the appropriate FDA Center Director may grant an exception or alternative to the labeling requirements specified in this rule. On the other hand, there may be some products for which full or partial relabeling in compliance with the labeling requirements specified by this rule will not adversely affect the safety, effectiveness, or availability of the products. In such cases, an exception or alternative to the labeling requirements specified in this rule would not be warranted. On a case-by-case basis, the appropriate FDA Center Director may also determine when an exception or alternative is granted that certain safeguards and conditions are appropriate, such as additional labeling on the SNS products, so that the labeling of such products would include information needed for safe and effective use under the anticipated circumstances of use. B. Who May Submit a Request A request for an exception or alternative to the labeling requirements specified in this rule may be submitted by an SNS official, or by any entity that manufactures (including labeling, packing, repackaging, or relabeling), distributes, or stores the medical products subject to the request. Requests from entities other than the SNS must be submitted with an SNS official's written concurrence. We believe that many of the requests under this rule will be submitted by manufacturers, with concurrence of SNS officials, prior to or at the time a specified lot, batch, or other unit of product is procured by the SNS, or when an investigational product held in the SNS has been approved, licensed, or cleared. We anticipate that SNS officials will also submit requests. The appropriate FDA Center Director may also grant an exception or alternative to the labeling provisions specified in this rule at his or her own initiative. C. Request Criteria Except when initiated by an FDA Center Director, a request for an exception or alternative to the labeling requirements specified in this rule will be in writing and must contain: • An identification of the specific lot, batch, or other unit of product, which are or will be in the SNS, that would be subject to the exception or alternative; • An identification of the specific labeling provisions under this rule that are the subject of the request; • An explanation of why compliance with the specified labeling provisions could adversely affect the safety, effectiveness, or availability of the product subject to the request; • A description of any proposed safeguards or conditions to be implemented so that the labeling of the product includes appropriate information necessary for the safe and effective use of the product given the anticipated circumstances of use; • Copies of the proposed labeling of the specified lots, batches, or other units of product that will be subject to the exception or alternative; and • Any other information requested by the appropriate FDA Center Director. D. Granting of the Request When the appropriate FDA Center Director grants or denies a request for an exception or alternative to the labeling requirements specified in this rule, the FDA Center Director will convey this decision in writing. In the written decision, the FDA Center Director may also impose appropriate conditions or safeguards so that the labeling of the product includes appropriate information necessary for the safe and effective use of the product given the anticipated circumstances of use. Such safeguards or conditions need not be limited to those proposed in the request, nor do they need to include all conditions or safeguards proposed in the request. Conditions could include, for example, a requirement of additional labeling on the SNS product, such as including the statement “For Strategic National Stockpile Use Only” on the label or elsewhere within the product's labeling. Such conditions could also address how or where any packaging or labeling changes would be conducted, or with what personnel. For example, the manufacturer may be required to take additional steps to ensure that products licensed, approved, or cleared while in the SNS bear information in their outer package labeling that was not available when such products entered the SNS as investigational products. After the request is granted, the manufacturer may need to report to FDA any resulting changes to the New Drug Application (NDA), Biologics License Application (BLA), Premarket Approval Application (PMA), or Premarket Notification (510(k)) in effect, if any. The submission and grant of a request for an exception or alternative to the labeling requirements specified in this rule may be used to satisfy certain reporting obligations relating to changes to product applications under § 314.70 (21 CFR 314.70) (human drugs), § 601.12 (21 CFR 601.12) (biological drugs), § 814.39 (21 CFR 814.39) (medical devices subject to premarket approval), or § 807.81 (21 CFR 807.81) (medical devices subject to premarket notification submission (510(k) clearance) requirements). Specifically, because the information affecting the premarket application will already be reviewed and approved as part of the request for an exception or alternative, manufacturers of medical products to which annual or periodic reporting requirements apply must describe such changes in their annual (or periodic) reports but are not required to submit supplement(s) to an approved application describing this information. This will reduce regulatory burden on industry by reducing duplication of regulatory submissions. Supplements under 21 CFR 814.39 and periodic reports under § 814.84 are not required for medical devices with 510(k) clearance, however. For these devices, the Center Director may determine that the submission and grant of a written request for an exception or alternative under this rule satisfies the 510(k) submission requirements in § 807.81(a)(3). E. Labeling Provisions Subject to Exception or Alternative We are listing in §§ 201.26(f) (human drug products), 610.68(f) (biological products), 801.128(f) (medical devices), and 809.11(f) (in vitro diagnostic products) those labeling provisions for which the appropriate FDA Center Director may grant an exception or alternative. As indicated in section III.A of this document, requests for exceptions or alternatives to other requirements of FDA's labeling regulations (such as bar code label requirements), or to other general regulations or statutory provisions, will be handled under any waiver provisions that may be applicable to those statutory or regulatory requirements. Additionally, FDA may exercise enforcement discretion with respect to the labeling requirements specified in this rule or other regulatory and statutory requirements. 1. Human Drug Products (§ 201.26(f)) For human drug products, including biological drugs, the following requirements pertaining to labeling in part 201, subpart A (21 CFR part 201, subpart A) and § 312.6 (21 CFR 312.6) may be the subject of an exception or alternative under this rule, except to the extent that they are explicitly required by statute: • Identification of persons other than the manufacturer, packer, or distributor (§ 201.1(h)(1)); • Appearance of a person's name without qualification on the label (§ 201.1(h)(2)); • Appropriate qualifying phrases for the identity of the distributor or packer (§ 201.1(h)(5) and (h)(6)); • Criteria for the statement of the place of business (§ 201.1(i)); • Placement of the ingredient information required by section 502(e) of the FFD&C Act (§ 201.10(a)); • Criteria for the statement of the percentage of an ingredient in a drug (§ 201.10(d)(2)); • Declaration that an ingredient is a derivative or a preparation of a substance specifically named in section 502(e) of the FFD&C Act when the established name does not indicate such (§ 201.10(f)); • Criteria for the frequency of use and use in the running text of the established name in association with the proprietary name or designation for the drug or any ingredient thereof in the label or labeling of a prescription drug (§ 201.10(g)(1)); • The placement of the quantitative ingredient information when the established name does not correspond to the proprietary name or designation and the prescription drug contains two or more active ingredients (§ 201.10(h)(1)); • The location of the expiration date (§ 201.17); • The information provided by the lot number (§ 201.18); • Use of the term “infant” (§ 201.19); • Declaration of the presence of FD&C Yellow No. 5 and FD&C Yellow No. 6 in certain drugs for human use (§ 201.20); • Declaration of the presence of phenylalanine as a component of aspartame in over-the-counter and prescription drugs for human use (§ 201.21); • Required warning statements for prescription drugs containing sulfites (§ 201.22); • Labeling statements for systemic antibacterial drug products (§ 201.24); and • The prescribed statement for investigational new drugs limiting them to investigational use (§ 312.6(a)). 2. Biological Drug Products (§ 610.68(f)) In addition to the labeling requirements for investigational new drugs in § 312.6, certain labeling requirements for biological products in 21 CFR part 610 subpart G, except to the extent that they are explicitly required by statute, may also be the subject of an exception or alternative under this rule: • The information required on the product's container label (§ 610.60); 2 2 This is distinct from the requirements for a product's package label under § 610.61 (21 CFR 610.61). • Certain information on the package label, specifically: Lot number, information on the preservative, number of containers, recommended storage temperature, certain instructions for use, recommended individual dose, route of administration, known sensitizing substances, type and amount of added antibiotics, inactive ingredients, adjuvant, source of product, identity of microorganisms used in manufacture, and minimum potency (§ 610.61(c) and
(e)through (r)); • Requirements relating to the position and prominence of the proper name on the package label as well as requirements relating to size and type of characters (21 CFR 610.62); • The placement on the container and package label of the name, address, and license information of each manufacturer participating in the manufacture of a biological product, if two or more manufacturers participate in manufacturing (21 CFR 610.63); • The name and address of the distributor, and the required identifying phrases on the label (21 CFR 610.64); and • Label requirements relating to products for export (21 CFR 610.65) 3. Medical Devices (§ 801.128(f)) For medical devices, the appropriate FDA Center Director may grant a request for an exception or alternative to certain labeling requirements in parts 801 and 812 (21 CFR parts 801 and 812), except to the extent that they are explicitly required by statute: • Criteria for the statement of the place of business (§ 801.1(d)); • Labeling information on the principal display panel of over-the-counter devices in package form, i.e., the part of a label that is most likely to be displayed, presented, shown, or examined under customary conditions of display for retail sale (§ 801.60); • Requirements related to an accurate statement of principal intended action and format of a statement of identity for an over-the-counter device in package form (§ 801.61); • Requirements related to the declaration of net quantity of contents on the label of an over-the-counter device in package form (§ 801.62); • Warning statement for over-the-counter devices containing or manufactured with chlorofluorocarbons and other class I ozone-depleting substances (§ 801.63); • Labeling requirements for prescription devices (§ 801.109); • Labeling requirements for specific devices including dentures and hearing aids (part 801, subpart H); • The prescribed statement for investigational devices limiting the device to investigational use (§ 812.5(a)); and • The prescribed statement for investigational devices used solely on research animals limiting the device to investigational use in laboratory animals (§ 812.5(c)). 4. In Vitro Diagnostic Products (§ 809.11(f)) The appropriate FDA Center Director may grant a request for an exception or alternative to the following requirements pertaining to IVDs in parts 809 (21 CFR part 809) and 812, except to the extent that they are explicitly required by statute. • Certain label information for IVDs, i.e., the proprietary name; the intended use or uses of the product; for a reagent, the declaration of the established name, if any, the quantity, proportion, and concentration of each reactive ingredient, and the source and activity if derived from a biological material; statement of warnings or precautions; for a reagent, appropriate storage instructions adequate to protect the stability of the product; for a reagent, a means by which the user may be ensured that the product meets appropriate standards of identity, strength, quality and purity at the time of use; and a lot or control number (§ 809.10(a)(1) through (a)(6) and (a)(9)); • Labeling accompanying each IVD, including reagents and instruments, i.e., such information as proprietary name, intended use or uses, summary and explanation of the test, a statement of warnings or precautions for users, information regarding specimen collection and preparation for analysis, outline of recommended procedures, information regarding results, limitation of the procedure, expected values, specific performance characteristics, and bibliography (§ 809.10(b)); • The prescribed statements for investigational IVDs that are not subject to part 812 (§ 809.10(c)(2)); • The label of general purpose laboratory reagents, i.e., the proprietary name; the quantity, proportion, or concentration of the reagent ingredient; and for a reagent derived from biological material, the source and measure of activity; statement of purity and quality of the reagent; statement of warnings or precautions; appropriate storage instructions adequate to protect the stability of the product; and a lot or control number (§ 809.10(d)(1)(i) through (d)(1)(v) and (d)(1)(viii)); • Labeling of general purpose laboratory equipment, i.e., description of the product, its composition, and physical characteristics if necessary for use (§ 809.10(d)(2)); and • Labeling for analyte specific reagents, i.e., the proprietary name; the quantity, proportion, or concentration of the reagent ingredient; and for a reagent derived from biological material, the source and measure of activity; statement of purity and quality of the reagent; statement of warnings or precautions for users; date of manufacture and appropriate storage instructions adequate to protect the stability of the product; a lot or control number; prescribed statements regarding analytical and performance characteristics specific to class I, II, and III analyte specific reagents (§ 809.10(e)(1)(i) through (e)(1)(vi) and (e)(1)(ix) through (e)(1)(xi)). IV. Legal Authority In this interim final rule, FDA is amending regulations pertaining to the content and format of medical product labeling. The provisions of this rule will allow FDA to grant exceptions or alternatives to certain of those labeling requirements. The labeling regulations to which exceptions or alternatives will be permitted were issued by FDA under authority of the FFD&C Act and the PHS Act to mandate particular ways that firms must satisfy the broad requirements and prohibitions in those statutes, such as the prohibition on false and misleading drug and device labeling. As described in section II of this document, FDA has determined that circumstances may arise in which compliance with those regulatory mandates could adversely affect the safety, effectiveness, or availability of certain medical products that are or will be included in the SNS. Moreover, due to the unique nature of the SNS, those products could deviate from particular mandates of existing labeling regulations without violating the broad statutory requirements and prohibitions in the FFD&C Act and the PHS Act. For those reasons, FDA is exercising its authority to regulate labeling by modifying the existing regulations in a way that will allow exceptions or alternatives for medical products that are or will be included in the SNS. FDA has various sources of authority to issue labeling regulations. For example, under section 502(a) of the FFD&C Act, a drug (including biological products) or device is misbranded if its labeling is false or misleading in any particular. In determining whether a product's labeling is misleading, FDA may consider not only representations or suggestions made in the labeling, but also whether the labeling fails to reveal material facts in light of those representations or suggestions or with respect to consequences which may result from the use of the product under customary or usual conditions of use (section 201(n) of the FFD&C Act (21 U.S.C. 321(n))). By authority delegated under section 701(a) of the FFD&C Act (21 U.S.C. 371(a)), FDA is authorized to issue regulations for the efficient enforcement of the FFD&C Act. Existing FDA regulations mandating specific labeling content and format for drugs and devices satisfy those general statutory standards. For example, many labeling regulations are designed to ensure that nothing in the labeling is false or misleading in any particular, to ensure that the labeling reveals all material facts in light of the representations or suggestions in the labeling, and to ensure that FDA may efficiently enforce those statutory requirements as well as other requirements of the FFD&C Act and the PHS Act. Because biological products are also drugs as defined within the FFD&C Act, the authority discussed previously extends to regulations prescribing content and format requirements for biological product labeling. There is, however, additional legal authority in the PHS Act for this rule's requirements with respect to biological products generally. For example, section 351(a)(1)(A) of the PHS Act provides that no person may introduce or deliver for introduction into interstate commerce any biological product unless a biologics license is in effect for the product. By authority delegated under section 351(a)(2)(A) of the PHS Act, FDA is required to establish, by regulation, requirements for the approval, suspension, and revocation of biologics licenses. Because the SNS is intended “to provide for the emergency health security of the United States * * * in the event of a bioterrorist attack or other public health emergency,” 3 the SNS may contain products that would otherwise not be available for widespread distribution. For example, the ASPR (exercising the Secretary's authority), in collaboration with the Director of the CDC and in coordination with the Department of Homeland Security, may determine that it is appropriate to include certain investigational medical products in the SNS. As described in section II of this document, some of these products require storage at extremely low temperatures and cannot be temporarily removed from storage for relabeling without compromising their integrity. Moreover, shipping products from SNS storage sites to relabelers or back to manufacturers for relabeling could increase the potential for sabotage and diversion, as well as increase exposure to conditions affecting product quality, such as temperature deviations. As a result, removing these investigational products from storage for relabeling at the time of approval and then returning them to storage could undermine their safety, effectiveness, or availability and, in some cases, would be impracticable. Compliance with the FDA regulations that would require such relabeling could discourage SNS procurement of these products and thereby limit available countermeasures in the event of a bioterrorist attack or other public health emergency. 3 Section 3 of the Project BioShield Act of 2004 (section 319F-2 of the PHS Act (42 U.S.C. 247d-6b)). To address this concern, FDA is creating a mechanism to allow exceptions or alternatives to the labeling regulations specified in this rule to help ensure the safety, effectiveness, and availability of medical products that are or will be included in the SNS. FDA has concluded that exceptions or alternatives granted under this rule will not render products misbranded due to the additional safeguards and conditions that may be required when an exception or alternative is granted, as well as the unique storage, deployment, and distribution considerations essential to the SNS. As explained in section III.D of this document, a grant of an exception or alternative under this rule may include additional safeguards or conditions so that the labeling of products subject to the exception or alternative includes information needed for safe and effective use under the anticipated circumstances of use. Moreover, products intended for use in certain public health emergencies are likely to be administered to large numbers of people within confined geographic areas, such as in the case of a natural disaster. These SNS products may therefore be packaged in large quantities to facilitate rapid distribution on extremely short notice. Consequently, their packaging and distribution may differ from that of non-SNS products. Moreover, HHS may establish special mechanisms to provide product information, collect adverse event information, and track the product's distribution. This rule does not create exemptions from express statutory requirements or prohibitions regarding medical product labeling. The FFD&C Act and the PHS Act set forth certain types of information that must appear in the labeling for medical products. For example, section 351(a)(1)(B) of the PHS Act provides that each package of a biological product must be marked with the proper name of the biological product; the name, address, and applicable license number of the manufacturer of the biological product; and the expiration date of the biological product. Drugs (including biological products) and medical devices in package form must bear labels containing the name and place of business of the manufacturer, packer, or distributor (section 502(b)(1) of the FFD&C Act). This interim final rule does not permit exceptions or alternatives to any of those requirements. In addition, the FFD&C Act and the PHS Act both prohibit false labeling (section 502(a) of the FFD&C Act); section 351(b) of the PHS Act). This interim final rule does not allow false information to appear in medical product labeling. As noted previously, this rule does not limit FDA's ability to exercise enforcement discretion with respect to statutory and regulatory requirements, including those involving medical product labeling ( *see* *Heckler* v. *Chaney* , 470 U.S. 821 (1985)). To the extent that a State requires labeling that directly conflicts with, is different from, or is in addition, to any exceptions or alternatives granted under this rule, the State-required labeling would be subject to implied conflict preemption and, in some cases, express preemption. FDA restated its longstanding views on preemption in the preamble to the recently promulgated final rule entitled “Requirements on Content and Format of Labeling for Human Prescription Drug and Biological Products” (see 71 FR 3922 at 3933 through 3936 and 3967 through 3969; January 24, 2006), and that discussion reflects the agency's current position on this issue. Under the principles of implied conflict preemption, courts have found State law preempted where it is impossible to comply with both Federal and State law or where the State law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” *See* *English* v. *General Electric Co.* , 496 U.S. 72, 79 (1990); *Florida Lime & Avocado Growers, Inc.* , 373 U.S. 132, 142-143 (1963); *Hines* v. *Davidowitz* , 312 U.S. 52, 67 (1941). Consistent with this case law, section 4(a) of Executive Order 13132 states that “[a]gencies shall construe * * * a Federal statute to preempt State law only where the statute contains an express preemption provision or there is some other clear evidence that the Congress intended preemption of State law, or where the exercise of State authority conflicts with the exercise of Federal authority under the Federal statute.” As explained previously, this interim final rule will facilitate the safety, effectiveness, and availability of appropriate medical countermeasures in the event of a public health emergency. Because Congress authorized the SNS to “provide for the emergency health security of the United States * * * in the event of a bioterrorist attack or other public health emergency,” products held in the SNS should be ready for deployment at all times. In an emergency, it is critical that State requirements regarding the content and format of labeling do not interfere with the safety, effectiveness, or availability of SNS products. FDA believes that State-required labeling requirements different from or in addition to FDA requirements would “stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” See Hines, 312 U.S. at 67. Moreover, these State requirements would “conflict with the exercise of Federal authority under [PHS Act section 319F-2, 42 U.S.C. 247d-6b].” See Executive Order 13132. Additionally, under section 751 of the FFD&C Act (21 U.S.C. 379r), State or local requirements that are different from or in addition to exceptions or alternatives granted under this rule, and relate to the regulation of nonprescription drugs, are expressly preempted. Similarly, in accordance with section 521 of the FFD&C Act (21 U.S.C. 360k), State or local requirements that are different from, or in addition to, exceptions or alternatives granted under this rule with respect to approved medical devices are expressly preempted. See the Federalism section in this document for additional discussion of preemption in the context of this interim final rule. V. Issuance of an Interim Final Rule, Immediate Effective Date, and Opportunity for Public Comment FDA is issuing this rule as an interim final rule, effective immediately, with an opportunity for public comment. Section 553(b)(3)(B) of the Administrative Procedure Act (5 U.S.C. 553(b)(3)(B)) provides that, when an agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to public interest, the agency may issue a rule without providing notice and public comment. FDA has determined that there is good cause under 5 U.S.C. 553(b)(3)(B) and 21 CFR 10.40(d) to publish this regulation as an interim final rule. An emergency requiring deployment of medical products in the SNS could happen at any time. Without this rule, the safety, effectiveness, or availability of medical products held in the SNS could be adversely affected because of relabeling requirements. An interim final rule ensures that a legal mechanism is immediately available for addressing labeling issues associated with medical products in the SNS without compromising their safety, effectiveness, or availability for use in an emergency. Products held in the SNS should be ready for deployment at all times. FDA invites public comment on this interim final rule. The comment period on this interim final rule will be 90 days. The agency will consider modifications to this interim final rule based on comments made during the comment period. Interested persons may submit to the Division of Dockets Management (see ADDRESSES) written or electronic comments regarding this interim final rule. Submit a single copy of electronic comments or two paper copies of any mailed comments, except that individuals may submit one paper copy. Comments are to be identified with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday. FDA will address comments received and confirm or amend this interim final rule in a final rule. VI. Analysis of Impacts FDA has examined the impacts of the interim final rule under Executive Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes that this interim final rule is not a significant regulatory action under the Executive order. The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because of the deregulatory nature of this rule and the minimal costs associated with applying for an exception or alternative under this rule, the agency certifies that the interim final rule will not have a significant economic impact on a substantial number of small entities. Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $127 million, using the most current
(2006)Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this interim final rule to result in any 1-year expenditure that would meet or exceed this amount. A. Need for the Interim Final Rule FDA is issuing this interim final rule to allow for exceptions or alternatives to specified labeling requirements for certain medical products that are or will be in the SNS. As explained in other sections of this preamble, compliance with these labeling requirements in some circumstances could adversely affect or compromise the safety, effectiveness or availability of these products. Exceptions or alternatives to certain labeling requirements will provide the flexibility needed to help ensure that FDA-regulated medical products that are or will be in the SNS are not deemed misbranded and are available in an emergency situation. B. Scope of the Interim Final Rule This interim final rule applies to medical products that are or will be stockpiled by the SNS. It allows entities that manufacture (including labeling, packing, relabeling, or repackaging), distribute, or store affected SNS products to request an exception or alternative to specified regulatory labeling requirements for human drugs, biological products, and medical devices to prevent misbranding of those products in the SNS. Any grant of such a request by an FDA Center Director would apply to specified lots, batches, or other units of medical product identified in the request. When reviewing requests, the FDA Center Director will consider whether complying with the specified labeling regulations could adversely affect the safety, effectiveness, or availability of stockpiled products and may impose appropriate safeguards and conditions so that the labeling of products subject to the request would include information needed for safe and effective use under the anticipated circumstances of use. Alternatively, at his or her own initiative, an FDA Center Director may grant an exception or alternative to the specified labeling provisions without receiving a written request. Allowing the agency the ability to act on its own initiative could help avoid misbranding of products that are or will be in the SNS. C. Costs of the Interim Final Rule This rule would allow SNS officials and entities that manufacture (including labeling, packing, relabeling, or repackaging), distribute, or store medical products in the SNS to request exceptions from certain labeling requirements in FDA regulations. An exception or alternative from specified labeling requirements for FDA-regulated medical products can also be initiated by the appropriate FDA Center Director. The interim final rule would impose compliance costs on industry when entities prepare and submit requests for exceptions or alternatives to labeling requirements to avoid misbranding of their products that are or will be in the SNS. However, granting exceptions or alternatives to labeling requirements would provide the government with the flexibility needed to more efficiently manage medical products in the SNS without risking the availability of medical products for emergency use (see section VI.D of this document, Benefits of the Interim Final Rule). FDA estimates that requests for exceptions would cost from $380 to $1,130 for each request. Regulatory Affairs personnel may spend from 8 to 24 hours per request preparing the information that would be required in an application for an exception or alternative under this rule. According to Bureau of Labor Statistics data, the fully loaded hourly wage for management and professional employees working in goods-producing industries was $47.25 in 2004 (U.S. Department of Labor, Bureau of Labor Statistics, “Employer Cost Employee Compensation—December 2004,” *Bureau of Labor Statistics News* , USDL 05-432, March 16, 2005). D. Benefits of the Interim Final Rule Although the agency has no data to quantify the benefits, this interim final rule provides flexibility in labeling requirements for FDA-regulated medical products in the SNS. If an exception or alternative is granted, affected medical products in the SNS would not be misbranded and would not be rendered unavailable for emergency use due to relabeling operations. Exceptions or alternatives may be granted on a case-by-case basis at the initiative of the appropriate FDA Center Director or after receipt of a written request from an entity that manufactures, distributes, or stores products in the SNS. To illustrate the potential benefits of this rule we describe costs that could be avoided by granting an exception or alternative to certain labeling requirements upon written request of a manufacturer. In some cases, granting an exception to labeling requirements may save direct relabeling costs. For example, to change information on a carton or container label, a firm might spend $300 in material costs for new artwork, $600 to $1,000 in labor costs to prepare the new artwork and about 10 cents to print each new carton or container label. Besides the costs to prepare a new carton, there would be additional labor costs to remove the product from the old carton and insert it in the new carton. With a container label, it is likely that the new label could be affixed directly on top of the existing label, reducing the amount of effort needed to make this change. Because packaging is normally automated, the agency has no information about how much time it would take to manually replace a container label or exchange a carton, but believes this could cost about 5 to 10 cents per unit. Before the implementation of this rule, when an investigational product in the SNS was subsequently approved, the product labeling would have needed to be immediately changed to add approved labeling information that was unavailable prior to approval. An exception or alternative to these labeling requirements might allow entities to ship investigational products with labeling that can be manually modified or supplemented at the SNS location once the drug is approved. Without an exception or alternative, it would be necessary to remove the investigational products from the SNS for relabeling or, in some cases, to replace the product. This rule would avoid other potential costs. Without an exception or alternative, the SNS might be required to purchase costly replacement units. In other cases, some products may be appropriate for exceptions or alternatives because their availability for use in an emergency could be compromised if they had to be shipped out of the SNS to be relabeled. Removing such products from the stockpile, even temporarily, could jeopardize or adversely affect product safety or effectiveness (due to conditions of relabeling or related shipping, storage, and handling), requiring additional product testing or product replacement. Because replacement costs would vary widely and depend on the nature of the product, the number of units affected, and current market price, the amount of these avoided costs is unknown. Although we only describe the potential benefits of this interim final rule in qualitative terms, we believe it is reasonable to assume that the benefits of providing flexibility in labeling requirements for SNS products justify the potential compliance costs of the rule. Moreover, the rule will allow FDA the flexibility to manage the products in the SNS without risking the safety, effectiveness, or availability of these products for use in an emergency. E. Small Business Impacts FDA has examined the economic implications of this proposed rule as required by the Regulatory Flexibility Act (5 U.S.C. 601-612). If a rule has a significant economic impact on a substantial number of small entities, the Regulatory Flexibility Act requires agencies to analyze regulatory options that would lessen the economic effect of the rule on small entities. This rule is not expected to have a significant impact on a substantial number of small entities. It is estimated that this interim final rule will cost small entities no more than $1,130 when they submit a request. For affected small entities (e.g., medical product manufacturers, relabelers, or packers) we expect that this would represent a negligible proportion of annual receipts. Therefore, the agency certifies that the interim final rule will not have a significant economic impact on a substantial number of small entities. F. Regulatory Options Considered No new regulatory action. The agency considered and rejected this option. The Agency recognized that certain medical products in the SNS, due to their anticipated circumstances of use in an emergency, might need to be labeled in a manner that did not comply with certain FDA labeling regulations. Without the ability to grant an exception to labeling requirements, existing FDA labeling regulations would have rendered such medical products misbranded. Moreover, the relabeling of these products to comply with FDA labeling regulations could have adversely affected their safety, effectiveness, or availability. As a result, FDA would have needed to exercise enforcement discretion to allow labeling to deviate from FDA requirements. To the extent possible, FDA believes that amending its labeling regulations is preferable to reliance on enforcement discretion to ensure the continued availability of medical products that are or will be in the SNS. VII. The Paperwork Reduction Act of 1995 This interim final rule contains information collection provisions that are subject to review by the Office of Management and Budget
(OMB)under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501-3520). The title, description, and respondent description of the information collection provisions are shown as follows with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information. FDA invites comments on the following topics:
(1)Whether the collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility;
(2)the accuracy of FDA's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
(3)ways to enhance the quality, utility, and clarity of the information to be collected; and
(4)ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology. *Title* : Exceptions or Alternatives to Labeling Requirements for Products Held by the Strategic National Stockpile. *Description* : FDA is issuing regulations to permit FDA Center Directors to grant a request submitted under §§ 201.26(c)(1)(i) (human drug products), 610.68(c)(1)(i) (biological products), 801.128(c)(1)(i) (medical devices), and 809.11(c)(1)(i) (in vitro diagnostic products for human use) for an exception or alternative to certain applicable regulatory labeling provisions when these products are or will be included in the SNS. The request must: • Identify the specified lots, batches, or other units of the affected product; • Identify the labeling provisions under this rule that are the subject of the request; • Explain why compliance with the specified labeling provisions could adversely affect the safety, effectiveness, or availability of the product subject to the request; • Describe any proposed safeguards or conditions that will be implemented so that the labeling of the product includes appropriate information necessary for the safe and effective use of the product given the anticipated circumstances of use of the product; • Provide a draft of the proposed labeling; and • Provide any other information requested by the FDA Center Director in support of the request. The FDA Center Director will grant the request if he or she determines that compliance with the identified labeling provisions could adversely affect the safety, effectiveness, or availability of specified lots, batches, or other units of human drugs, biological products, or medical devices that are or will be included in the SNS. *Description of Respondents* : Entities that manufacture (including labeling, packing, relabeling, or repackaging), distribute, or store affected products. FDA estimates the information collection burden as follows: **Table 1.—Estimated Annual Reporting Burden** 1 21 CFR Section No. of Respondents Annual Frequency per Response Total Annual Responses Hours per Response Total Hours 201.26(c)(1)(i) 18 1 18 24 432 610.68(c)(1)(i) 10 1 10 24 240 801.128(c)(1)(i) and 809.11(c)(1)(i) 2 1 2 24 48 Total 720 1 There are no capital costs or operating and maintenance costs associated with this collection of information. Although FDA cannot predict the number of future requests, based on limited information within FDA, we estimate that approximately 30 respondents will request annually one exception or alternative to labeling provisions to avoid misbranding of their products in the SNS. The estimate of one request per respondent is based on the anticipated occasional occurrence of a product being misbranded while in the SNS. We are estimating that each respondent will spend from 8 to 24 hours preparing each request. The hours per response are based on estimated time that it takes to prepare a supplement to an application, which may be considered similar to a request for an exception or alternative. The information collection provisions in §§ 314.70, 601.12, 807.81 and 814.39 have been approved under OMB control numbers 0910-0001 (expires May 31, 2008), 0910-0338 (expires September 30, 2008), 0910-0120 (expires August 31, 2010), and 0910-0231 (expires September 30, 2007), respectively. The information collection provisions for this interim final rule have been approved under the emergency processing provisions of the PRA. The assigned OMB approval number of this collection of information is 0910-0614. This approval expires on June 30, 2008. Interested persons are requested to fax comments regarding the information collection by (see DATES) to the Office of Information and Regulatory Affairs, OMB (see ADDRESSES). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. VIII. Environmental Impact The agency has determined under 21 CFR 25.30(k) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. IX. Federalism As stated in the preamble, FDA has analyzed this interim final rule in accordance with the principles set forth in Executive Order 13132. Section 4(a) of this Executive Order requires agencies to “construe * * * a Federal statute to preempt State law only where the statute contains an express preemption provision or there is some other clear evidence that the Congress intended preemption of State law, or where the exercise of State authority conflicts with the exercise of Federal authority under the Federal statute.” In this rule, FDA is revising certain requirements concerning the format and content of labeling for human drugs, biological products, and medical devices that are or will be included in the SNS to provide for exceptions or alternatives to these requirements under specified circumstances. To the extent that a State requires labeling that directly conflicts with, is different from, or is in addition, to any exceptions or alternatives granted under this rule, the State-required labeling would be subject to implied conflict preemption. Moreover, certain State requirements regarding the format and content of nonprescription drug labeling and/or labeling of approved medical devices may be subject to the express preemption provisions in section 751 of the FFD&C Act (21 U.S.C. 360k) (nonprescription drugs) and section 521 of the FFD&C Act (approved medical devices). FDA is aware that State requirements on medical product labeling, often as a result of product liability lawsuits, may conflict with Federal requirements. FDA restated its longstanding views on preemption in the preamble to the recently promulgated final rule entitled “Requirements on Content and Format of Labeling for Human Prescription Drug and Biological Products” (see 71 FR 3922 at 3933 through 3936 and 3967 through 3969). That discussion is applicable to this interim final rule as well, and reflects the agency's current position on this issue. Section 4(c) of Executive Order 13132 instructs us to restrict any Federal preemption of State law to the “minimum level necessary to achieve the objectives of the statute pursuant to which the regulations are promulgated.” This interim final rule meets the preceding requirement because, as discussed previously, it would preempt only State laws that directly conflict with, are different from, or are in addition to any Federal requirements. Section 4(d) of Executive Order 13132 states that when an agency foresees the possibility of a conflict between State law and federally protected interests within the agency's area of regulatory responsibility, the agency “shall consult, to the extent practicable, with appropriate State and local officials in an effort to avoid such a conflict.” In this case, FDA foresees the possibility of a conflict between State law and federally protected interests within the agency's area of regulatory responsibility. Section 4(e) of Executive Order 13132 adds that “when an agency proposes to act through adjudication or rulemaking to preempt State law, the agency “shall provide all affected State and local officials notice and an opportunity for appropriate participation in the proceedings.” FDA is seeking input from all stakeholders on the provisions of this interim final rule through publication of the rule in the **Federal Register** , and will consult with State and local officials in an effort to avoid conflicts between State law and Federal protected interests in accordance with Executive Order 13132. In conclusion, the agency believes that it has complied with all of the applicable requirements under Executive Order 13132 and has determined that this interim final rule is consistent with the Executive order. X. Request for Comments Interested persons may submit to the Division of Dockets Management (see ADDRESSES ) written or electronic comments regarding this document. Submit a single copy of electronic comments or two paper copies of any mailed comments, except that individuals may submit one paper copy. Comments are to be identified with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday. List of Subjects 21 CFR Part 201 Drugs, Labeling, Reporting and recordkeeping requirements. 21 CFR Part 312 Drugs, Exports, Imports, Investigations, Labeling, Medical research, Reporting and recordkeeping requirements, Safety. 21 CFR Part 314 Administrative practice and procedure, Confidential business information, Drugs, Reporting and recordkeeping requirements. 21 CFR Part 601 Administrative practice and procedure, Biologics, Confidential business information. 21 CFR Part 610 Biologics, Labeling, Reporting and recordkeeping requirements. 21 CFR Part 801 Labeling, Medical devices, Reporting and recordkeeping requirements. 21 CFR Part 807 Confidential business information, Imports, Medical devices, Reporting and recordkeeping requirements. 21 CFR Part 809 Labeling, Medical devices. 21 CFR Part 812 Health records, Medical devices, Medical research, Reporting and recordkeeping requirements. 21 CFR Part 814 Administrative practice and procedure, Confidential business information, Medical devices, Medical research, Reporting and recordkeeping requirements. Therefore, under the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act, and under authority delegated to the Commissioner of Food and Drugs, 21 CFR chapter I is amended as follows: PART 201—LABELING 1. The authority citation for 21 CFR part 201 continues to read as follows: Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 358, 360, 360b, 360gg-360ss, 371, 374, 379e; 42 U.S.C. 216, 241, 262, 264. 2. Add § 201.26 to subpart A to read as follows: § 201.26 Exceptions or alternatives to labeling requirements for human drug products held by the Strategic National Stockpile.
(a)The appropriate FDA Center Director may grant an exception or alternative to any provision listed in paragraph
(f)of this section and not explicitly required by statute, for specified lots, batches, or other units of a human drug product, if the Center Director determines that compliance with such labeling requirement could adversely affect the safety, effectiveness, or availability of such product that is or will be included in the Strategic National Stockpile. (b)(1)(i) A Strategic National Stockpile official or any entity that manufactures (including labeling, packing, relabeling, or repackaging), distributes, or stores a human drug product that is or will be included in the Strategic National Stockpile may submit, with written concurrence from a Strategic National Stockpile official, a written request for an exception or alternative described in paragraph
(a)of this section to the Center Director.
(ii)The Center Director may grant an exception or alternative described in paragraph
(a)of this section on his or her own initiative.
(2)A written request for an exception or alternative described in paragraph
(a)of this section must:
(i)Identify the specified lots, batches, or other units of the human drug product that would be subject to the exception or alternative;
(ii)Identify the labeling provision(s) listed in paragraph
(f)of this section that are the subject of the exception or alternative request;
(iii)Explain why compliance with such labeling provision(s) could adversely affect the safety, effectiveness, or availability of the specified lots, batches, or other units of a human drug product that are or will be held in the Strategic National Stockpile;
(iv)Describe any proposed safeguards or conditions that will be implemented so that the labeling of the product includes appropriate information necessary for the safe and effective use of the product, given the anticipated circumstances of use of the product;
(v)Provide a draft of the proposed labeling of the specified lots, batches, or other units of the human drug product subject to the exception or alternative; and
(vi)Provide any other information requested by the Center Director in support of the request.
(c)The Center Director must respond in writing to all requests under this section.
(d)A grant of an exception or alternative under this section will include any safeguards or conditions deemed appropriate by the Center Director so that the labeling of product subject to the exception or alternative includes the information necessary for the safe and effective use of the product, given the anticipated circumstances of use.
(e)If you are a sponsor receiving a grant of a request for an exception or alternative to the labeling requirements under this section:
(1)You need not submit a supplement under § 314.70(a) through
(c)or § 601.12(f)(1) through (f)(2) of this chapter; however,
(2)You must report any grant of a request for an exception or alternative under this section as part of your annual report under §§ 314.70(d) or 601.12(f)(3) of this chapter.
(f)The Center Director may grant an exception or alternative under this section to the following provisions of this chapter, to the extent that the requirements in these provisions are not explicitly required by statute:
(1)§ 201.1(h)(1) through (h)(2), (h)(5) through (h)(6), and (i);
(2)§ 201.10(a), (d)(2), (f), (g)(1), and (h)(1);
(3)§ 201.17;
(4)§ 201.18;
(5)§ 201.19;
(6)§ 201.20;
(7)§ 201.21;
(8)§ 201.22;
(9)§ 201.24; and
(10)§ 312.6. PART 312—INVESTIGATIONAL NEW DRUG APPLICATION 3. The authority citation for 21 CFR part 312 continues to read as follows: Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 356, 371, 381, 382, 383, 393; 42 U.S.C. 262. 4. Section 312.6 is amended by adding paragraph
(c)to read as follows: § 312.6 Labeling of an investigational new drug.
(c)The appropriate FDA Center Director, according to the procedures set forth in §§ 201.26 or 610.68 of this chapter, may grant an exception or alternative to the provision in paragraph
(a)of this section, to the extent that this provision is not explicitly required by statute, for specified lots, batches, or other units of a human drug product that is or will be included in the Strategic National Stockpile. PART 314—APPLICATIONS FOR FDA APPROVAL TO MARKET A NEW DRUG 5. The authority citation for 21 CFR part 314 continues to read as follows: Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 355a, 356, 356a, 356b, 356c, 371, 374, 379e. 6. Section 314.70 is amended by revising paragraph (a)(1) to read as follows: § 314.70 Supplements and other changes to an approved application.
(a)* * * (1)(i) Except as provided in paragraph (a)(1)(ii) of this section, the applicant must notify FDA about each change in each condition established in an approved application beyond the variations already provided for in the application. The notice is required to describe the change fully. Depending on the type of change, the applicant must notify FDA about the change in a supplement under paragraph
(b)or
(c)of this section or by inclusion of the information in the annual report to the application under paragraph
(d)of this section.
(ii)The submission and grant of a written request for an exception or alternative under § 201.26 of this chapter satisfies the applicable requirements in paragraphs
(a)through
(c)of this section. However, any grant of a request for an exception or alternative under § 201.26 of this chapter must be reported as part of the annual report to the application under paragraph
(d)of this section. PART 601—LICENSING 7. The authority citation for 21 CFR part 601 continues to read as follows: Authority: 15 U.S.C. 1451-1561; 21 U.S.C. 321, 351, 352, 353, 355, 356b, 360, 360c-360f, 360h-360j, 371, 374, 379e, 381; 42 U.S.C. 216, 241, 262, 263, 264; sec 122, Pub. L. 105-115, 111 Stat. 2322 (21 U.S.C. 355 note). 8. Section 601.12 is amended by revising paragraph (f)(3)(i)(D) and by adding paragraph (f)(5) to read as follows: § 601.12 Changes to an approved application.
(f)* * * (3)(i) * * *
(D)A change made pursuant to an exception or alternative granted under § 201.26 or § 610.68 of this chapter.
(5)The submission and grant of a written request for an exception or alternative under § 201.26 or § 610.68 of this chapter satisfies the requirements in paragraphs (f)(1) through (f)(2) of this section. PART 610—GENERAL BIOLOGICAL PRODUCTS STANDARDS 9. The authority citation for 21 CFR part 610 continues to read as follows: Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 360, 360c, 360d, 360h, 360i, 371, 372, 374, 381; 42 U.S.C. 216, 262, 263, 263a, 264. 10. Add § 610.68 to subpart G to read as follows: § 610.68 Exceptions or alternatives to labeling requirements for biological products held by the Strategic National Stockpile.
(a)The appropriate FDA Center Director may grant an exception or alternative to any provision listed in paragraph
(f)of this section and not explicitly required by statute, for specified lots, batches, or other units of a biological product, if the Center Director determines that compliance with such labeling requirement could adversely affect the safety, effectiveness, or availability of such product that is or will be included in the Strategic National Stockpile. (b)(1)(i) A Strategic National Stockpile official or any entity that manufactures (including labeling, packing, relabeling, or repackaging), distributes, or stores a biological product that is or will be included in the Strategic National Stockpile may submit, with written concurrence from a Strategic National Stockpile official, a written request for an exception or alternative described in paragraph
(a)of this section to the Center Director.
(ii)The Center Director may grant an exception or alternative described in paragraph
(a)of this section on his or her own initiative.
(2)A written request for an exception or alternative described in paragraph
(a)of this section must:
(i)Identify the specified lots, batches, or other units of the biological product that would be subject to the exception or alternative;
(ii)Identify the labeling provision(s) listed in paragraph
(f)of this section that are the subject of the exception or alternative request;
(iii)Explain why compliance with such labeling provision(s) could adversely affect the safety, effectiveness, or availability of the specified lots, batches, or other units of the biological product that are or will be included in the Strategic National Stockpile;
(iv)Describe any proposed safeguards or conditions that will be implemented so that the labeling of the product includes appropriate information necessary for the safe and effective use of the product, given the anticipated circumstances of use of the product;
(v)Provide a draft of the proposed labeling of the specified lots, batches, or other units of the biological product subject to the exception or alternative; and
(vi)Provide any other information requested by the Center Director in support of the request.
(c)The Center Director must respond in writing to all requests under this section.
(d)A grant of an exception or alternative under this section will include any safeguards or conditions deemed appropriate by the Center Director so that the labeling of product subject to the exception or alternative includes the information necessary for the safe and effective use of the product, given the anticipated circumstances of use.
(e)If you are a sponsor receiving a grant of a request for an exception or alternative to the labeling requirements under this section:
(1)You need not submit a supplement under § 601.12(f)(1) through (f)(2) of this chapter; however,
(2)You must report any grant of a request for an exception or alternative under this section as part of your annual report under § 601.12(f)(3) of this chapter.
(f)The Center Director may grant an exception or alternative under this section to the following provisions of this chapter, to the extent that the requirements in these provisions are not explicitly required by statute:
(1)§ 610.60;
(2)§ 610.61(c) and
(e)through (r);
(3)§ 610.62;
(4)§ 610.63;
(5)§ 610.64;
(6)§ 610.65; and
(7)§ 312.6. PART 801—LABELING 11. The authority citation for 21 CFR part 801 continues to read as follows: Authority: 21 U.S.C. 321, 331, 351, 352, 360i, 360j, 371, 374. 12. Add § 801.128 to subpart D to read as follows: § 801.128 Exceptions or alternatives to labeling requirements for medical devices held by the Strategic National Stockpile.
(a)The appropriate FDA Center Director may grant an exception or alternative to any provision listed in paragraph
(f)of this section and not explicitly required by statute, for specified lots, batches, or other units of a medical device, if the Center Director determines that compliance with such labeling requirement could adversely affect the safety, effectiveness, or availability of such devices that are or will be included in the Strategic National Stockpile. (b)(1)(i) A Strategic National Stockpile official or any entity that manufactures (including labeling, packing, relabeling, or repackaging), distributes, or stores devices that are or will be included in the Strategic National Stockpile may submit, with written concurrence from a Strategic National Stockpile official, a written request for an exception or alternative described in paragraph
(a)of this section to the Center Director.
(ii)The Center Director may grant an exception or alternative described in paragraph
(a)of this section on his or her own initiative.
(2)A written request for an exception or alternative described in paragraph
(a)of this section must:
(i)Identify the specified lots, batches, or other units of the medical device that would be subject to the exception or alternative;
(ii)Identify the labeling provision(s) listed in paragraph
(f)of this section that are the subject of the exception or alternative request;
(iii)Explain why compliance with the labeling provision(s) could adversely affect the safety, effectiveness, or availability of the specified lots, batches, or other units of a medical device that are or will be held in the Strategic National Stockpile;
(iv)Describe any proposed safeguards or conditions that will be implemented so that the labeling of the device includes appropriate information necessary for the safe and effective use of the device, given the anticipated circumstances of use of the device;
(v)Provide a draft of the proposed labeling of the specified lots, batches, or other units of the medical device subject to the exception or alternative; and
(vi)Provide any other information requested by the Center Director in support of the request.
(c)The Center Director must respond in writing to all requests under this section. The Center Director may impose appropriate conditions when granting such an exception or alternative under this section.
(d)A grant of an exception or alternative under this section will include any safeguards or conditions deemed appropriate by the Center Director so that the labeling of devices subject to the exception or alternative includes the information necessary for the safe and effective use of the device, given the anticipated circumstances of use.
(e)If the Center Director grants a request for an exception or alternative to the labeling requirements under this section:
(1)The Center Director may determine that the submission and grant of a written request under this section satisfies the provisions relating to premarket notification submissions under § 807.81(a)(3) of this chapter. (2)(i) For a Premarket Approval Application (PMA)-approved device, the submission and grant of a written request under this section satisfies the provisions relating to submission of PMA supplements under § 814.39 of this chapter; however,
(ii)The grant of the request must be identified in a periodic report under § 814.84 of this chapter.
(f)The Center Director may grant an exception or alternative under this section to the following provisions of this chapter, to the extent that the requirements in these provisions are not explicitly required by statute:
(1)§ 801.1(d);
(2)§ 801.60;
(3)§ 801.61;
(4)§ 801.62;
(5)§ 801.63;
(6)§ 801.109; and
(7)Part 801, subpart H. PART 807—ESTABLISHMENT REGISTRATION AND DEVICE LISTING FOR MANUFACTURERS AND INITIAL IMPORTERS OF DEVICES 13. The authority citation for 21 CFR part 807 continues to read as follows: Authority: 21 U.S.C. 321, 331, 351, 352, 360, 360c, 360e, 360i, 360j, 371, 374, 381, 393; 42 U.S.C. 264, 271. 14. Section 807.81 is amended by revising paragraph
(b)to read as follows: § 807.81 When a premarket notification submission is required. (b)(1) A premarket notification under this subpart is not required for a device for which a premarket approval application under section 515 of the act, or for which a petition to reclassify under section 513(f)(2) of the act, is pending before the Food and Drug Administration.
(2)The appropriate FDA Center Director may determine that the submission and grant of a written request for an exception or alternative under § 801.128 or § 809.11 of this chapter satisfies the requirement in paragraph (a)(3) of this section. PART 809—IN VITRO DIAGNOSTIC PRODUCTS FOR HUMAN USE 15. The authority citation for 21 CFR part 809 continues to read as follows: Authority: 21 U.S.C. 331, 351, 352, 355, 360b, 360c, 360d, 360h, 360i, 360j, 371, 372, 374, 381. 16. Add § 809.11 to subpart B to read as follows: § 809.11 Exceptions or alternatives to labeling requirements for in vitro diagnostic products for human use held by the Strategic National Stockpile.
(a)The appropriate FDA Center Director may grant an exception or alternative to any provision listed in paragraph
(f)of this section and not explicitly required by statute, for specified lots, batches, or other units of an in vitro diagnostic product for human use, if the Center Director determines that compliance with such labeling requirement could adversely affect the safety, effectiveness, or availability of such products that are or will be included in the Strategic National Stockpile. (b)(1)(i) A Strategic National Stockpile official or any entity that manufactures (including labeling, packing, relabeling, or repackaging), distributes, or stores an in vitro diagnostic product for human use that is or will be included in the Strategic National Stockpile may submit, with written concurrence from a Strategic National Stockpile official, a written request for an exception or alternative described in paragraph
(a)of this section to the Center Director.
(ii)The Center Director may grant an exception or alternative described in paragraph
(a)of this section on his or her own initiative.
(2)A written request for an exception or alternative described in paragraph
(a)of this section must:
(i)Identify the specified lots, batches, or other units of an in vitro diagnostic product for human use that would be subject to the exception or alternative;
(ii)Identify the labeling provision(s) listed in paragraph
(f)of this section that are the subject of the exception or alternative request;
(iii)Explain why compliance with such labeling provision(s) could adversely affect the safety, effectiveness, or availability of the specified lots, batches, or other units of the in vitro diagnostic product for human use that are or will be held in the Strategic National Stockpile;
(iv)Describe any proposed safeguards or conditions that will be implemented so that the labeling of the product includes appropriate information necessary for the safe and effective use of the product, given the anticipated circumstances of use of the product;
(v)Provide a draft of the proposed labeling of the specified lots, batches, or other units of the in vitro diagnostic products for human use subject to the exception or alternative; and
(vi)Provide any other information requested by the Center Director in support of the request.
(c)The Center Director must respond in writing to all requests under this section. The Center Director may impose appropriate conditions or safeguards when granting such an exception or alternative under this section.
(d)A grant of an exception or alternative under this section will include any safeguards or conditions deemed appropriate by the Center Director to ensure that the labeling of the product subject to the exception or alternative includes the information necessary for the safe and effective use of the product, given the anticipated circumstances of use.
(e)If the Center Director grants a request for an exception or alternative to the labeling requirements under this section:
(1)The Center Director may determine that the submission and grant of a written request under this section satisfies the provisions relating to premarket notification submissions under § 807.81(a)(3) of this chapter. (2)(i) For a Premarket Approval Application (PMA)-approved in vitro diagnostic product for human use, the submission and grant of a written request under this section satisfies the provisions relating to submission of PMA supplements under § 814.39 of this chapter; however,
(ii)The grant of the request must be identified in a periodic report under § 814.84 of this chapter.
(f)The Center Director may grant an exception or alternative under this section to the following provisions of this part, to the extent that the requirements in these provisions are not explicitly required by statute:
(1)§ 809.10(a)(1) through (a)(6) and (a)(9);
(2)§ 809.10(b);
(3)§ 809.10(c)(2);
(4)§ 809.10(d)(1)(i) through (d)(1)(v), (d)(1)(viii), and (d)(2); and
(5)§ 809.10(e)(1)(i) through (e)(1)(vi) and (e)(1)(ix) through (e)(1)(xi). PART 812—INVESTIGATIONAL DEVICE EXEMPTIONS 17. The authority citation for 21 CFR part 812 continues to read as follows: Authority: 21 U.S.C. 331, 351, 352, 353, 355, 360, 360c-360f, 360h-360j, 371, 372, 374, 379e, 381, 382, 383; 42 U.S.C. 216, 241, 262, 263b-263n. 18. Section 812.5 is amended by adding paragraph
(d)to read as follows: § 812.5 Labeling of investigational devices.
(d)The appropriate FDA Center Director, according to the procedures set forth in § 801.128 or § 809.11 of this chapter, may grant an exception or alternative to the provisions in paragraphs
(a)and
(c)of this section, to the extent that these provisions are not explicitly required by statute, for specified lots, batches, or other units of a device that are or will be included in the Strategic National Stockpile. PART 814—PREMARKET APPROVAL OF MEDICAL DEVICES 19. The authority citation for 21 CFR part 814 continues to read as follows: Authority: 21 U.S.C. 351, 352, 353, 360, 360c-360j, 371, 372, 373, 374, 375, 379, 379e, 381. 20. Section 814.39 is amended by adding paragraph
(g)to read as follows: § 814.39 PMA Supplements.
(g)The submission and grant of a written request for an exception or alternative under § 801.128 or § 809.11 of this chapter satisfies the requirement in paragraph
(a)of this section. 21. Section 814.84 is amended by adding paragraph (b)(3) to read as follows: § 814.84 Reports.
(b)* * *
(3)Identify changes made pursuant to an exception or alternative granted under § 801.128 or § 809.11 of this chapter. Dated: December 20, 2007. Jeffrey Shuren, Assistant Commissioner for Policy. [FR Doc. E7-25165 Filed 12-27-07; 8:45 am] BILLING CODE 4160-01-S ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R03-OAR-2007-0381; FRL-8510-3] Approval and Promulgation of Air Quality Implementation Plans; Virginia; Clean Air Interstate Rule Budget Trading Programs AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: EPA is approving a State Implementation Plan
(SIP)revision submitted by the Commonwealth of Virginia. This revision establishes budget trading programs for nitrogen oxides (NO <sup>X</sup> ) annual, NO <sup>X</sup> ozone season, and sulfur dioxides (SO <sup>2</sup> ) annual emissions to address the requirements of EPA's Clean Air Interstate Rule (CAIR). Virginia will meet its CAIR requirements by participating in the EPA-administered regional cap-and-trade program for NO <sup>X</sup> annual, NO <sup>X</sup> ozone season, and SO <sup>2</sup> annual emissions. EPA is determining that the SIP revision fully implements the CAIR requirements for Virginia. Therefore, as a consequence of the SIP approval, EPA will also withdraw the CAIR Federal Implementation Plan
(FIP)that addresses NO <sup>X</sup> annual, NO <sup>X</sup> ozone season, and SO <sup>2</sup> annual emissions in Virginia. EFFECTIVE DATE: The final rule is effective on December 28, 2007. ADDRESSES: EPA has established a docket for this action under Docket ID Number EPA-R03-OAR-2007-0381. All documents in the electronic docket are listed in the *www.regulations.gov* index. Although listed in the index, some information is not publicly available, i.e., confidential business information
(CBI)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 at *www.regulations.gov* or in hard copy during normal business hours at the Air Protection Division, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. Copies of the State submittal are available at the Virginia Department of Environmental Quality, 629 East Main Street, Richmond, Virginia, 23219. FOR FURTHER INFORMATION CONTACT: Marilyn Powers,
(215)814-2308 or by e-mail at *powers.marilyn@epa.gov.* SUPPLEMENTARY INFORMATION: I. Background On March 30, 2007, and supplemented on April 30, 2007 and June 11, 2007, the Virginia Department of Environmental Quality (VADEQ) submitted a CAIR SIP revision to meet the requirements of CAIR, which was promulgated on May 12, 2005 (70 FR 25162), and subsequently revised on April 28, 2006, and December 13, 2006. The SIP revision is comprised of new regulations under 9 VAC 5 Chapter 140 of the Virginia Code as follows: Part II—NO <sup>X</sup> Annual Trading Program; Part III—NO <sup>X</sup> Ozone Season Trading Program; and Part IV—SO <sup>2</sup> Annual Trading Program. The regulations address all the requirements of the part 96 model rules set forth in the May 12, 2005 CAIR rulemaking. On September 25, 2007 (72 FR 54385), EPA published a notice of proposed rulemaking
(NPR)to approve Virginia's CAIR SIP revision. A detailed discussion of the CAIR requirements, Virginia's CAIR submittal, and EPA's rationale for approval of Virginia's CAIR SIP revision may be found in the NPR and will not be repeated here. On October 24, 2007, EPA received adverse comments from the State of Connecticut Department of Environmental Protection. II. Public Comments and EPA Responses *Comment:* On October 24, 2007, the Connecticut Department of Environmental Protection (CTDEP) submitted adverse comments on EPA's proposed approval of Virginia's CAIR SIP revision. CTDEP encourages EPA to approve state programs adopted to meet the emission reduction requirements of CAIR. However, it argues that before approving state CAIR plans, EPA should evaluate individually and in the aggregate each state's clean air programs. They argue such evaluation is necessary to ensure that each state's emissions do not significantly contribute to downwind nonattainment. CTDEP asserts its belief that the CAIR program does not ensure that the CAA section 110(a)(2)(D)(i) requirements to prohibit transported emissions that significantly contribute to nonattainment in Connecticut and other states will be met. CTDEP expresses concern that EPA is determining through this and other similar rulemakings that CAIR programs are sufficient to meet States' section 110(a)(2)(D)(i) obligations. CTDEP asserts, based on EPA and State modeling for CAIR, that the levels of transported pollution remaining after CAIR implementation are large enough that, even with local controls, it may be difficult for Connecticut to attain the 8-hour ozone NAAQS by 2010. Finally, CTDEP questions EPA's determination that highly cost effective controls are adequate to address States' section 110(a)(2)(D)(i) obligations as compared to “reasonable cost” controls that could be achieved to effect more stringent NO <sup>X</sup> reductions. *Response:* EPA does not agree that it is appropriate or necessary for EPA to conduct additional analysis before approving Virginia's CAIR SIP revision. In the CAIR rulemaking promulgated on May 12, 2005 (70 FR 25162), EPA established model rules for multi-State cap and trade programs for annual NO <sup>X</sup> , ozone season NO <sup>X</sup> , and annual SO <sup>2</sup> that States may choose to adopt to meet the required emissions reductions in a flexible and cost-effective manner. EPA requires States that wish to participate in the EPA-administered cap and trade program to use the model rule (with only limited flexibility to modify specific provisions) to ensure that all participating sources, regardless of which State in the CAIR region they are located, are subject to the same trading and allowance holding requirements. Virginia has chosen to participate in the cap and trade program administered by EPA and has chosen to adopt the model rules with modifications allowed by flexibilities in the model rule. EPA has evaluated Virginia's SIP revision and determined that Virginia is meeting its CAIR requirements. CTDEP does not challenge this determination. Thus, CTDEP's comments do not specifically pertain to any aspect of EPA's proposed action to approve the Virginia CAIR SIP revision. Rather, the comments appear to be directed broadly at EPA's decisions with regard to States' section 110(a)(2)(D)(i) obligations. These decisions were made by EPA in the context of the CAIR rulemaking, not in the proposed action to approve Virginia's CAIR SIP revision. Therefore, CTDEP's comments are not relevant to the proposed action. CTDEP had ample opportunity to submit comments both during the comment period for the proposed CAIR rulemaking of January 30, 2004 (70 FR 49708) and during the comment period for the proposed CAIR FIP of August 24, 2005 (70 FR 49708). EPA's proposal to approve Virginia's CAIR SIP did not reopen either the CAIR or CAIR FIP rulemakings. Consequently, CTDEP's comments are not relevant to this rulemaking, or timely with respect to the CAIR and CAIR FIP rulemakings. Thus, EPA does not believe it is necessary to conduct additional analysis on whether Virginia or any other state satisfies the requirements of 110(a)(2)(D)(i) before approving Virginia's CAIR SIP submission. III. Information Pertaining to SIP Submittals From the Commonwealth of Virginia In 1995, Virginia adopted legislation that provides, subject to certain conditions, for an environmental assessment (audit) “privilege” for voluntary compliance evaluations performed by a regulated entity. The legislation further addresses the relative burden of proof for parties either asserting the privilege or seeking disclosure of documents for which the privilege is claimed. Virginia's legislation also provides, subject to certain conditions, for a penalty waiver for violations of environmental laws when a regulated entity discovers such violations pursuant to a voluntary compliance evaluation and voluntarily discloses such violations to the Commonwealth and takes prompt and appropriate measures to remedy the violations. Virginia's Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1-1198, provides a privilege that protects from disclosure documents and information about the content of those documents that are the product of a voluntary environmental assessment. The Privilege Law does not extend to documents or information
(1)that are generated or developed before the commencement of a voluntary environmental assessment;
(2)that are prepared independently of the assessment process;
(3)that demonstrate a clear, imminent and substantial danger to the public health or environment; or
(4)that are required by law. On January 12, 1998, the Commonwealth of Virginia Office of the Attorney General provided a legal opinion that states that the Privilege law, Va. Code Sec. 10.1-1198, precludes granting a privilege to documents and information “required by law,” including documents and information “required by Federal law to maintain program delegation, authorization or approval,” since Virginia must “enforce Federally authorized environmental programs in a manner that is no less stringent than their Federal counterparts * * *.” The opinion concludes that “[r]egarding § 10.1-1198, therefore, documents or other information needed for civil or criminal enforcement under one of these programs could not be privileged because such documents and information are essential to pursuing enforcement in a manner required by Federal law to maintain program delegation, authorization or approval.” Virginia's Immunity law, Va. Code Sec. 10.1-1199, provides that “[t]o the extent consistent with requirements imposed by Federal law,” any person making a voluntary disclosure of information to a state agency regarding a violation of an environmental statute, regulation, permit, or administrative order is granted immunity from administrative or civil penalty. The Attorney General's January 12, 1998 opinion states that the quoted language renders this statute inapplicable to enforcement of any Federally authorized programs, since “no immunity could be afforded from administrative, civil, or criminal penalties because granting such immunity would not be consistent with Federal law, which is one of the criteria for immunity.” Therefore, EPA has determined that Virginia's Privilege and Immunity statutes will not preclude the Commonwealth from enforcing its program consistent with the Federal requirements. In any event, because EPA has also determined that a state audit privilege and immunity law can affect only state enforcement and cannot have any impact on Federal enforcement authorities, EPA may at any time invoke its authority under the CAA, including, for example, sections 113, 167, 205, 211 or 213, to enforce the requirements or prohibitions of the state plan, independently of any state enforcement effort. In addition, citizen enforcement under section 304 of the CAA is likewise unaffected by this, or any, state audit privilege or immunity law. IV. Final Action EPA is approving Virginia's CAIR SIP revision submitted on March 30, 2007, and supplemented on April 30, 2007 and June 11, 2007. Under the SIP revision, Virginia will participate in the EPA-administered cap-and-trade programs for NO <sup>X</sup> annual, NO <sup>X</sup> ozone season, and SO <sup>2</sup> annual emissions. The SIP revision meets the applicable requirements in 40 CFR 51.123(o) and (aa), with regard to NO <sup>X</sup> annual and NO <sup>X</sup> ozone season emissions, and 40 CFR 51.124(o), with regard to SO <sup>2</sup> emissions. As a consequence of the SIP approval, the Administrator of EPA will issue, without providing an opportunity for a public hearing or an additional opportunity for written public comment, a final rule to withdraw the CAIR FIPs for SO <sup>2</sup> , NO <sup>X</sup> annual, and NO <sup>X</sup> ozone season emissions for Virginia. V. Effective Date EPA finds that there is good cause for this approval to become effective on the date of publication because a delayed effective date is unnecessary due to the nature of the approval, which allows the Commonwealth to make allocations under its CAIR rules. The expedited effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rule actions may become effective less than 30 days after publication if the rule “grants or recognizes an exemption or relieves a restriction” and section 5 U.S.C. 553(d)(3), which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” CAIR SIP approvals relieve states and CAIR sources within states from being subject to allowance allocation provisions in the CAIR FIPs that otherwise would apply to them, allowing States to make their own allowance allocations based on their SIP-approved State rule. The relief from these obligations is sufficient reason to allow an expedited effective date of this rule under 5 U.S.C. 553(d)(1). VI. Statutory and Executive Order Reviews A. General Requirements 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 (Public Law 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 requirement, 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 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a state rule implementing a Federal standard. 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.). B. Submission to Congress and the Comptroller General 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** . This rule is not a “major rule” as defined by 5 U.S.C. 804(2). C. Petitions for Judicial Review 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 February 26, 2008. 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 to approve Virginia's CAIR SIP revision may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).) List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Incorporation by reference, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides. Dated: December 13, 2007. Donald S. Welsh, Regional Administrator, Region III. 40 CFR part 52 is amended as follows: PART 52—[AMENDED] 1. The authority citation for 40 CFR part 52 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* Subpart VV—Virginia 2. In § 52.2420, the table in paragraph
(c)is amended by adding the entries for Chapter 140, Sections 1010 through 3880 to read as follows: § 52.2420 Identification of plan.
(c)* * * EPA-Approved Virginia Regulations and Statutes State citation (9 VAC 5) Title/subject State effective date EPA approval date Explanation [former SIP citation] * * * * * * * Chapter 140 Regulation for Emissions Trading * * * * * * * Part II NO X Annual Trading Program Article 1 CAIR NO X Annual Trading Program General Provisions 5-140-1010 Purpose 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1020 Definitions 4/18/07 12/28/07 [Insert page number where the document begins] Except for definition of “Nonattainment condition” 5-140-1030 Measurements, abbreviations, and acronyms 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1040 Applicability 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1050 Retired Unit Exemption 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1060 Standard requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1070 Computation of time 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1080 Appeal procedures 4/18/07 12/28/07 [Insert page number where the document begins] Article 2 CAIR-designated Representative for CAIR NO X Sources 5-140-1100 Authorization and responsibilities of CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1110 Alternate CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1120 Changing CAIR-designated representative and alternate CAIR-designated representative; changes in owners and operators 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1130 Certificate of representation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1140 Objections concerning CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1150 Delegation by CAIR-designated representative and alternate CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] Article 3 Permits 5-140-1200 General CAIR NO <sup>X</sup> Annual Trading Program permit requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1210 Submission of CAIR permit applications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1220 Information requirements for CAIR permit applications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1230 CAIR permit contents and term 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1240 CAIR permit revisions 4/18/07 12/28/07 [Insert page number where the document begins] Article 5 CAIR NO X Allowance Allocations 5-140-1400 CAIR NO <sup>X</sup> Annual trading budgets 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1410 Timing requirements for CAIR NO <sup>X</sup> allowance allocations 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1420 CAIR NO <sup>X</sup> allowance allocations 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1430 Compliance supplement pool 4/18/07 12/28/07 [Insert page number where the document begins] Article 6 CAIR NO X Allowance Tracking System 5-140-1510 Establishment of accounts 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1520 Responsibilities of CAIR-authorized account representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1530 Recordation of CAIR NO <sup>X</sup> allowance allocations 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1540 Compliance with CAIR NO <sup>X</sup> emissions limitation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1550 Banking 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1560 Account error 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1570 Closing of general accounts 4/18/07 12/28/07 [Insert page number where the document begins] Article 7 CAIR, NO X Allowance Transfers 5-140-1600 Submission of CAIR NO <sup>X</sup> allowance transfers 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1610 EPA recordation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1620 Notification 4/18/07 12/28/07 [Insert page number where the document begins] Article 8 Monitoring and Reporting 5-140-1700 General requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1710 Initial certification and recertification procedures 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1720 Out of control periods 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1730 Notifications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1740 Recordkeeping and reporting 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1750 Petitions 4/18/07 12/28/07 [Insert page number where the document begins] Article 9 CAIR NO X Opt-in Units 5-140-1800 Applicability 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1810 General 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1820 CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1830 Applying for CAIR opt-in permit 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1840 Opt-in process 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1850 CAIR opt-in permit content 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1860 Withdrawal from CAIR NO <sup>X</sup> Annual Trading Program 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1870 Change in regulatory status 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-1880 CAIR NO <sup>X</sup> allowance allocations to CAIR NO <sup>X</sup> opt-in units 4/18/07 12/28/07 [Insert page number where the document begins] Part III NO X Ozone Season Trading Program Article 1 CAIR NO X Ozone Season Trading Program General Provisions 5-140-2010 Purpose 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2020 Definitions 4/18/07 12/28/07 [Insert page number where the document begins] Except for definition of “Nonattainment condition” 5-140-2030 Measurements, abbreviations, and acronyms 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2040 Applicability 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2050 Retired unit exemption 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2060 Standard requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2070 Computation of time 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2080 Appeal procedures 4/18/07 12/28/07 [Insert page number where the document begins] Article 2 CAIR- Designated Representative for CAIR NO X Ozone Season Sources 5-140-2100 Authorization and responsibilities of CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2110 Alternate CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2120 Changing CAIR-designated representative and alternate CAIR-designated representative; changes in owners and operators 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2130 Certificate of representation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2140 Objections concerning CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2150 Delegation by CAIR-designated representative and alternate CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] Article 3 Permits 5-140-2200 General CAIR NO <sup>X</sup> Ozone Season Trading Program permit requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2210 Submission of CAIR permit applications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2220 Information requirements for CAIR permit applications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2230 CAIR permit contents and term 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2240 CAIR permit revisions 4/18/07 12/28/07 [Insert page number where the document begins] Article 5 CAIR NO X Ozone Season Allowance Allocations 5-140-2400 CAIR NO <sup>X</sup> Ozone Season trading budgets 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2405 State trading budgets for nonelectric generating units 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2410 Timing requirements for CAIR NO <sup>X</sup> Ozone Season allowance allocations 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2420 CAIR NO <sup>X</sup> Ozone Season allowance allocations 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2430 CAIR NO <sup>X</sup> Ozone Season allowance allocations for individual existing nonelectric generating units 4/18/07 12/28/07 [Insert page number where the document begins] Article 6 CAIR NO X Ozone Season Allowance Tracking System 5-140-2510 Establishment of accounts 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2520 Responsibilities of CAIR-authorized account representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2530 Recordation of CAIR NO <sup>X</sup> Ozone Season allowance allocations 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2540 Compliance with CAIR NO <sup>X</sup> emissions limitation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2550 Banking 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2560 Account error 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2570 Closing of general accounts 4/18/07 12/28/07 [Insert page number where the document begins] Article 7 CAIR NO X Ozone Season Allowance Transfers 5-140-2600 Submission of CAIR NO <sup>X</sup> Ozone Season allowance transfers 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2610 EPA recordation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2620 Notification 4/18/07 12/28/07 [Insert page number where the document begins] Article 8 Monitoring and Reporting 5-140-2700 General requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2710 Initial certification and recertification procedures 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2720 Out of control periods 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2730 Notifications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2740 Recordkeeping and reporting 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2750 Petitions 4/18/07 12/28/07 [Insert page number where the document begins] Article 9 CAIR NO X Ozone Season Opt-in Units 5-140-2800 Applicability 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2810 General 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2820 CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2830 Applying for CAIR opt-in permit 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2840 Opt-in process 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2850 CAIR opt-in permit contents 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2860 Withdrawal from CAIR NO <sup>X</sup> Ozone Season Trading Program 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2870 Change in regulatory status 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-2880 CAIR NO <sup>X</sup> Ozone Season allowance allocations to CAIR NO <sup>X</sup> Ozone Season opt-in units 4/18/07 12/28/07 [Insert page number where the document begins] Part IV SO 2 Annual Trading Program Article 1 CAIR SO 2 Trading Program General Provisions 5-140-3010 Purpose 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3020 Definitions 4/18/07 12/28/07 [Insert page number where the document begins] Except for definition of “Nonattainment condition” 5-140-3030 Measurements, abbreviations, and acronyms 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3040 Applicability 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3050 Retired Unit Exemption 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3060 Standard requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3070 Computation of time 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3080 Appeal procedures 4/18/07 12/28/07 [Insert page number where the document begins] Article 2 CAIR-designated Representative for CAIR SO 2 Sources 5-140-3100 Authorization and responsibilities of CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3110 Alternate CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3120 Changing CAIR-designated representative and alternate CAIR-designated representative; changes in owners and operators 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3130 Certificate of representation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3140 Objections concerning CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3150 Delegation by CAIR-designated representative and alternate CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] Article 3 Permits 5-140-3200 General CAIR SO <sup>2</sup> Trading Program permit requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3210 Submission of CAIR permit applications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3220 Information requirements for CAIR permit applications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3230 CAIR permit contents and term 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3240 CAIR permit revisions 4/18/07 12/28/07 [Insert page number where the document begins] Article 5 CAIR SO 2 Allowance Allocations 5-140-3400 State trading budgets 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3410 Timing requirements for CAIR SO <sup>2</sup> allowance allocations 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3420 CAIR SO <sup>2</sup> allowance allocations 4/18/07 12/28/07 [Insert page number where the document begins] Article 6 CAIR SO <sup>2</sup> Allowance Tracking System 5-140-3510 Establishment of accounts 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3520 Responsibilities of CAIR-authorized account representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3530 Recordation of CAIR SO <sup>2</sup> allowances 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3540 Compliance with CAIR SO <sup>2</sup> emissions limitation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3550 Banking 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3560 Account error 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3570 Closing of general accounts 4/18/07 12/28/07 [Insert page number where the document begins] Article 7 CAIR SO 2 Allowance Transfers 5-140-3600 Submission of CAIR SO <sup>2</sup> allowance transfers 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3610 EPA recordation 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3620 Notification 4/18/07 12/28/07 [Insert page number where the document begins] Article 8 Monitoring and Reporting 5-140-3700 General requirements 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3710 Initial certification and recertification procedures 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3720 Out of control periods 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3730 Notifications 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3740 Recordkeeping and reporting 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3750 Petitions 4/18/07 12/28/07 [Insert page number where the document begins] Article 9 CAIR SO 2 Opt-in Units 5-140-3800 Applicability 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3810 General 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3820 CAIR-designated representative 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3830 Applying for CAIR opt-in permit 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3840 Opt-in process 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3850 CAIR opt-in permit contents 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3860 Withdrawal from CAIR SO <sup>2</sup> Trading Program 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3870 Change in regulatory status 4/18/07 12/28/07 [Insert page number where the document begins] 5-140-3880 CAIR SO <sup>2</sup> allowance allocations to CAIR SO <sup>2</sup> opt-in units 4/18/07 12/28/07 [Insert page number where the document begins] * * * * * * * [FR Doc. E7-24950 Filed 12-27-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 63 [EPA-HQ-OAR-2005-0171; FRL-8512-1] RIN 2060-AM14 National Emission Standards for Hospital Ethylene Oxide Sterilizers AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: EPA is issuing national emissions standards for new and existing hospital sterilizers that emit hazardous air pollutants and are area sources within the meaning of Clean Air Act section 112(a)(2). The final rule is based on EPA's determination as to what constitutes the generally available control technology or management practices for the hospital sterilizer area source category. This action is being finalized as part of EPA's obligation to regulate area sources listed for regulation pursuant to Clean Air Act section 112(c)(3). DATES: The final rule is effective on December 28, 2007. ADDRESSES: EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2005-0171. All documents in the docket are listed in the Federal Docket Management System index at *http://www.regulations.gov.* Although listed in the index, some information is not 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 the EPA Docket Center in the EPA Headquarters Library, Room Number 3334 in the EPA West Building, located at 1301 Constitution Ave., NW., Washington, DC. The EPA/DC Public Reading Room hours of operation are 8:30 a.m. to 4:30 p.m. Eastern Standard Time (EST), Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is
(202)566-1744. For the Air and Radiation Docket and Information Center, the telephone number is
(202)566-1742, the fax number is
(202)566-9744, the Web site is *http://www.epa.gov/oar/docket.html,* and the e-mail address is *a-and-r-Docket@epa.gov.* FOR FURTHER INFORMATION CONTACT: Mr. David Markwordt, Office of Air Planning and Standards, Sector Policies and Programs Division, Coatings and Chemicals Group (E143-01), Environmental Protection Agency, Research Triangle Park, NC 27711, telephone number:
(919)541-0837; fax number:
(919)541-0246; e-mail address: *markwordt.david@epa.gov.* SUPPLEMENTARY INFORMATION: *Outline.* The information presented in this preamble is organized as follows: I. General Information A. Does this action apply to me? B. Where can I get a copy of this document? C. Judicial Review II. Background Information for Final Area Source Standard III. Summary of the Final Rule and Significant Changes Since Proposal A. What is the affected source and the compliance date? B. What is required by the management practice? C. What are the testing and initial compliance requirements? D. What are the notification, recordkeeping, and reporting requirements? IV. Exemption of Certain Area Source Categories From Title V Permitting Requirements V. Summary of Comments and Responses A. Proposed Alternative 1: Management Practice B. Proposed Alternative 2: No Control C. Add-on Controls VI. Summary of Environmental, Energy, Cost, and Economic Impacts VII. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments G. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations K. Congressional Review Act I. General Information A. Does this action apply to me? The regulated categories and entities potentially affected by these final standards include: Category NAICS 1 code Example of potentially regulated entities General Medical and Surgical Hospitals 622110 Hospital sterilizers. Specialty (Except Psychiatric and Substance Abuse) Hospitals 622310 Hospital sterilizers. 1 North American Industrial Classification System. This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. To determine whether your facility is regulated by this action, you should examine the applicability criteria in 40 CFR 63.10382 of subpart WWWWW (National Emissions Standards for Hospital Ethylene Oxide Sterilizers). If you have any questions regarding the applicability of this action to a particular entity, consult either the air permit authority for the entity or your EPA regional representative as listed in 40 CFR 63.13 of subpart A (General Provisions). B. Where can I get a copy of this document? In addition to being available in the docket, an electronic copy of this final action is also available on the Worldwide Web through the Technology Transfer Network (TTN). Following signature, a copy of this final action will be posted on the TTN's policy and guidance page for newly proposed or promulgated rules at the following address: *http://www.epa.gov/ttn/oarpg/.* The TTN provides information and technology exchange in various areas of air pollution control. C. Judicial Review Under section 307(b)(1) of the Clean Air Act (CAA), judicial review of this final rule is available only by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit by February 26, 2008. Under section 307(d)(7)(B) of the CAA, only an objection to this final rule that was raised with reasonable specificity during the period for public comment can be raised during judicial review. This section also provides a mechanism for EPA to convene a proceeding for reconsideration, “[i]f the person raising an objection can demonstrate to the EPA that it was impracticable to raise such objection within [the period for public comment] or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule.” Any person seeking to make such a demonstration to us should submit a Petition for Reconsideration to the Office of the Administrator, U.S. EPA, Room 3000, Ariel Rios Building, 1200 Pennsylvania Ave., NW., Washington, DC 20460, with a copy to both the person(s) listed in the preceding FOR FURTHER INFORMATION CONTACT section, and the Associate General Counsel for the Air and Radiation Law Office, Office of General Counsel (Mail Code 2344A), U.S. EPA, 1200 Pennsylvania Ave., NW., Washington, DC 20460. Moreover, under section 307(b)(2) of the CAA, the requirements established by this final rule may not be challenged separately in any civil or criminal proceedings brought by EPA to enforce these requirements. II. Background Information for Final Area Source Standard Sections 112(c)(3) and 112(k)(3)(B) of the CAA instruct EPA to identify not less than 30 hazardous air pollutants
(HAP)which, as a result of emissions from area sources, 1 present the greatest threat to public health in the largest number of urban areas, and to list sufficient area source categories to ensure that sources representing 90 percent of the 30 listed HAP (the “urban HAP”) are subject to regulation. Consistent with these provisions, in 1999, in the Integrated Urban Air Toxics Strategy (64 FR 38706, 64 FR 38715-716, July 19, 1999), EPA identified the 30 urban HAP and listed the source categories that account for 90 percent of the urban HAP emissions. 2 1 An area source is a stationary source of HAP emissions that is not a major source. A major source is a stationary source that emits or has the potential to emit 10 tons per year
(tpy)or more of any HAP or 25 tpy or more of any combination of HAP. 2 Since its publication in the Integrated Urban Air Toxics Strategy in 1999, the area source category list has undergone several amendments. Under CAA section 112(d)(5), the Administrator may, in lieu of standards requiring maximum achievable control technology
(MACT)under section 112(d)(2), elect to promulgate standards or requirements for area sources “which provide for the use of generally available control technologies or management practices by such sources to reduce emissions of hazardous air pollutants.” As explained in the proposed national emission standards for hazardous air pollutants (NESHAP), we are setting standards for the Hospital Sterilizers Area Source category pursuant to section 112(d)(5) of the CAA. See 71 FR 64907, November 6, 2006. III. Summary of the Final Rule and Significant Changes Since Proposal This section summarizes the final rule and identifies and discusses the significant changes since proposal. For changes that were made as a result of public comments, we have provided detailed explanations of the changes and the rationale in the responses to comments in section V of this preamble. A. What is the affected source and the compliance date? This final rule applies to any existing or new hospital ethylene oxide sterilization facility that is an area source of HAP. The owner or operator of an existing area source must comply with this area source NESHAP by December 29, 2008. The owner or operator of a new area source must comply with this area source NESHAP by December 28, 2007 or upon initial startup, whichever is later. B. What is required by the management practice? In our November 6, 2006 proposal, we proposed two alternative emission standards for this area source category. As Alternative 1, we proposed to require that the affected source, as defined above, sterilize full loads of medical items having common aeration times except during emergency circumstances that dictate the use of less than full loads to protect human health. As Alternative 2, we proposed a finding that there are no generally available control technologies or management practices
(GACT)within the meaning of CAA section 112(d)(5) for the Hospital Sterilizers Area Source category. As explained in more detail in section V of this preamble, based on the comments and information we received during the public comment period, we conclude that the management practice described in Alternative 1 reflects GACT for this area source category, and we, therefore, adopt Alternative 1 as the standard for area source hospital ethylene oxide sterilization facilities. Specifically, the final rule requires that a hospital ethylene oxide sterilization facility sterilize full loads of items having a common aeration time except where medical necessity dictates the use of less than a full load to protect human health. As explained in more detail in section V.A.3 of this preamble, the determination that a medical necessity exists must be made by a hospital central services staff, 3 a hospital administrator, or a physician on duty. This management practice applies to all affected sources. As explained in more detail in section V.A.2 of this preamble, sources may demonstrate compliance with this requirement by operating their sterilizers with an air pollution control device and providing the certification required in this final rule. 3 Hospital central services staffs are healthcare professionals, including managers and technicians, who are either directly involved in or responsible for sterile processing at a hospital. C. What are the testing and initial compliance requirements? There are no performance test requirements for the management practice standard. Affected sources are required to submit an Initial Notification of Compliance Status that notifies EPA that they operate a sterilizer covered by the rule and certify that they are operating their sterilizers in accordance with the requirement of the rule. In the preamble to the proposed rule, we acknowledged that some hospitals operate their sterilizers with add-on controls and that such controls achieve reductions in ethylene oxide emissions that are at least equivalent to the ethylene oxide reductions resulting from the management practice. Therefore, the final rule includes the use of a control device as an alternative compliance option for the management practice requirement. Specifically, a source may demonstrate compliance by certifying that it is operating its sterilizer(s) with an air pollution control device. The source must certify that it is running the sterilizer(s) in accordance with any applicable State and/or local regulations, or, if there are no such regulations, with manufacturers' specifications. D. What are the notification, recordkeeping, and reporting requirements? As mentioned above, affected sources must submit an Initial Notification of Compliance Status that includes the required compliance certification described above. The final rule does not require ongoing reporting. Except for hospital ethylene oxide sterilization facilities that demonstrate compliance by using add-on controls, affected sources must maintain on site records of the date and time of each sterilization operation. If less than a full load is sterilized due to medical necessity, the operator must record this as well. These sterilization records must be kept in a form suitable and readily available for expeditious review. They must be kept for 5 years and at least the most recent 2 years on site. IV. Exemption of Certain Area Source Categories From Title V Permitting Requirements Section 502(a) of the CAA provides that the Administrator may exempt an area source category from title V if he determines that compliance with title V requirements is “impracticable, infeasible, or unnecessarily burdensome” on an area source category. See CAA section 502(a). In December 2005, in a national rulemaking, EPA interpreted the term “unnecessarily burdensome” in CAA section 502 and developed a four-factor balancing test for determining whether title V is unnecessarily burdensome for a particular area source category, such that an exemption from title V is appropriate. See 70 FR 75320, December 19, 2005 (Exemption Rule). The four factors that EPA identified in the Exemption Rule for determining whether title V is “unnecessarily burdensome” on a particular area source category include:
(1)whether title V would result in significant improvements to the compliance requirements, including monitoring, recordkeeping, and reporting, that are proposed for an area source category (70 FR 75323);
(2)whether title V permitting would impose significant burdens on the area source category and whether the burdens would be aggravated by any difficulty the sources may have in obtaining assistance from permitting agencies (70 FR 75324);
(3)whether the costs of title V permitting for the area source category would be justified, taking into consideration any potential gains in compliance likely to occur for such sources (70 FR 75325); and
(4)whether there are implementation and enforcement programs in place that are sufficient to assure compliance with the NESHAP for the area source category, without relying on title V permits (70 FR 75326). In discussing the above factors in the Exemption Rule, we explained that we considered on “a case-by-case basis the extent to which one or more of the four factors supported title V exemptions for a given source category, and then we assessed whether considered together those factors demonstrated that compliance with title V requirements would be ‘unnecessarily burdensome’ on the category, consistent with section 502(a) of the Act.” See 70 FR 75323. Thus, in the Exemption Rule, we explained that not all of the four factors must weigh in favor of exemption for EPA to determine that title V is unnecessarily burdensome for a particular area source category. Instead, the factors are to be considered in combination, and EPA determines whether the factors, taken together, support an exemption from title V for a particular source category. In the Exemption Rule, in addition to determining whether compliance with title V requirements would be unnecessarily burdensome on the hospital sterilizer area source category, we considered, consistent with the guidance provided by the legislative history of CAA section 502(a), whether exempting the Hospital Sterilizer Area Source category would adversely affect public health, welfare, or the environment. See 70 FR 15254-15255, March 25, 2005. In the proposed rule, we evaluated the four factors described above in relation to the Hospital Sterilizer Area Source category and explained our proposed conclusion that the factors collectively demonstrated that compliance with title V requirements would be unnecessarily burdensome for the source category. Among other things, we explained in the preamble to the proposed rule, that title V permitting would not result in significant improvements to the compliance requirements for the Hospital Sterilizer Area Source category. In the proposal, we further explained that title V permitting may impose a significant burden on facilities within this source category, some of which are small businesses. We explained that, for many facilities, the cost of obtaining a title V permit may far exceed the cost of complying with the final rule without significant gains in compliance. Based on the above analysis, we proposed that title V permitting would be “unnecessarily burdensome” for hospital sterilizer area sources. We also proposed that the exemptions from title V would not adversely affect public health, welfare, and the environment. In response to the proposed rule, we received two comments concerning the proposed title V exemption. However, as discussed in more detail in section V.A.7 of this preamble, neither comment addressed the above-mentioned factors that we considered in proposing the title V exemption. Accordingly, our assessment of these factors remains unchanged in light of these comments. We, therefore, finalize the proposed exemption for the Hospital Sterilizer Area Source category in this rule. Hospital sterilizer area sources are not required to obtain title V permits solely for purposes of being the subject of this final NESHAP; however, if they are otherwise required to obtain title V permits, such requirements are not affected by this exemption. V. Summary of Comments and Responses The hospital sterilizer area source rule was proposed on November 6, 2006 (71 FR 64907). The 60-day comment period ended on January 5, 2007, and we received a total of 10 comment letters on the proposed NESHAP. Comments were received from one industry trade association, a representative of one affected facility, representatives from two affected Federal agencies, one sterilant manufacturer, three State and local air pollution control agencies, one State agency association, and one private citizen. This final rule reflects our consideration of all of the comments received on the proposed action. This section summarizes the significant comments received on the proposed NESHAP and our response thereto. A summary of all of the minor comments and EPA's response thereto are presented here in this preamble and in the Response to Comments Document (RTC Document), which is available in Docket No. EPA-HQ-OAR-2005-0171. A. Proposed Alternative 1: Management Practice 1. Management Practice Approach *Comment:* Two commenters supported promulgation of the management practice approach, i.e., Regulatory Alternative 1. One of the commenters noted that EPA recognizes that, by minimizing ethylene oxide use with the management practice, hospital ethylene oxide sterilization facilities also minimize ethylene oxide emissions. Both commenters expressed that the proposed management practice alternative ensures that hospitals sterilize the most number of medical devices per pounds of ethylene oxide emitted, and it is consistent with hospital practices. Two commenters stated that the management practice is common sense. One commenter argued that EPA's proposed GACT were neither acceptable nor consistent with legal requirements. Another commenter stated that EPA's alternatives do not reflect what many sterilizers have achieved (using control technology) and are capable of achieving cost effectively. *Response:* As previously mentioned, we are setting standards for hospital sterilizer area sources based on GACT (i.e., generally available control technologies or management practices) pursuant to section 112(d)(5) of the CAA. As several commenters noted, the management practice for running sterilizers with full loads will ensure that hospitals sterilize the most number of medical devices per pounds of ethylene oxide emitted. We believe that the comments indicating that the management practice is common sense, consistent with current operating practices at many hospitals, and cost-effective, all support our determination that this management practice represents a generally available management practice that is used to control ethylene oxide emissions from area source hospital sterilizers. We, therefore, disagree with the comment that the management practice requirement in this final rule is not consistent with legal requirements. In addition, for a detailed discussion on EPA's consideration of the existing control technologies, please see section V.C of this preamble. 2. Exemption of Certain Sources From the Rule *Comment:* One commenter recommended that EPA exclude controlled sources (i.e., sources with add-on control) and sources that use an ethylene oxide concentration of less than 10 percent from all requirements associated with Alternative 1 should EPA adopt that alternative. The commenter expressed that Alternative 1 imposes no additional substantive requirements on controlled sterilizers and would only add administrative burdens with no additional environmental benefits. The commenter also asserted that sources that use an ethylene oxide concentration of less than 10 percent can be excluded with no detrimental effect. *Response:* EPA disagrees that this rule contains no substantive requirements on controlled sterilizers. As we clarify in the final rule and in section III.B of this preamble, all area source hospital sterilizers, including sources with add-on controls, are subject to the requirements in this final rule. However, the final rule provides certain compliance options. Specifically, the final rule provides sources with add-on controls the option of demonstrating compliance with the management practice requirement by certifying that they will continue to operate their sterilizers with such control. EPA also rejects the recommendation of excluding from this rule sources that use an ethylene oxide concentration of less than 10 percent. We recognize that there are hospital sterilization facilities that use sterilant gas blends with low ethylene oxide concentrations. However, we have no information suggesting that facilities using low ethylene oxide sterilant gas blends emit negligible amounts of ethylene oxide. On the contrary, it is our understanding that there is little difference in the amount of ethylene oxide usage (and, therefore, ethylene oxide emissions) between operating a sterilization cycle with pure ethylene oxide as opposed to using sterilant gas blend with less than 10 percent ethylene oxide. When we listed the Hospital Sterilizer Area Source category, we included hospital ethylene oxide sterilization facilities using sterilant gas blends and the commenter did not provide any information that suggests these facilities should not be part of the source category. Further, we have analyzed the costs and impacts associated with the management practice that we are finalizing and we believe the costs are reasonable. See section V.C.1 of this preamble. For the reasons stated above, we reject the commenter's recommendation to exclude from this regulation sources using sterilant gas blends with less than 10 percent ethylene oxide concentration. 3. Exception to the Management Practice Requirement *Comment:* One commenter stated that EPA would need to establish, based on comments received and then propose again for comment, examples of definitions of circumstances that would be acceptable for an exemption to the full load requirement. Another commenter observed that hospitals try to minimize their use of ethylene oxide and avoid exceptions to full load runs. Although the commenter stated that generating and managing an inclusive list of all the exceptions to running a full load may be difficult, it provided examples for such exceptions. Specifically, the commenter stated that, on some days, a hospital may receive back from surgery just a few devices that must be ethylene oxide-sterilized and returned as soon as possible to surgery for cases scheduled for the next morning. The commenter stated that, in these instances, the hospital can be forced to run a sterilizer with less than a full load. The commenter also stressed that hospital surgical needs can be unpredictable. The commenter stated that hospitals have reduced their use of ethylene oxide to sterilize medical devices (and its ethylene oxide emissions) by switching to single-use devices or alternative sterilizing and disinfection technologies, or by consolidating ethylene oxide sterilization. The commenter noted that, ironically, a hospital may increase the frequency with which it needs to run a partially loaded ethylene oxide sterilizer as a result. The commenter, however, emphasized that even with occasional running of less than full loads, there has been a continuing decline in hospital ethylene oxide use and emissions. Another commenter similarly noted that hospitals currently strive to run full loads unless it is medically necessary to run less than a full load. According to the commenter, often the medical devices processed by the hospital ethylene oxide sterilizer are expensive and hospitals can only afford to retain a minimal number of such devices. The commenter further noted that some of the devices are older devices and cannot be replaced. The commenter stated that these devices are typically utilized in surgical areas and, at times, these devices may need to be used on consecutive days. The commenter stated that the ethylene oxide sterilizer load is processed at the end of the day so the devices will be ready for surgery the following day. According to the commenter, by waiting to run a sterilization cycle until the end of the day, the sterilizer load has a chance to fill up. The commenter noted, however, that if a medical device is needed the following day, the load will be processed even though the load is not full. The commenter stated that the determination to process a load is based on the needs of the patient. *Response:* According to the comments, hospitals deviate from the full-load management practice only when patient safety may be at risk. EPA agrees that medical necessity warrants operating a partially loaded ethylene oxide sterilizer. To accommodate patient needs, we have incorporated in the final rule an exception based on medical necessity. EPA also agrees with the comment that developing a comprehensive list of medically necessary circumstances warranting sterilization of a partial load is difficult. EPA is concerned that such a list may inadvertently exclude some justified circumstances. Further, as reflected in our final rule, we believe that the decision to run a partially loaded sterilizer due to medical necessity should be made by authorized hospital personnel who have knowledge of patients' medical needs instead of by EPA. However, to assure that hospitals run sterilizers in full loads except during medically necessary circumstances, the final rule requires that facilities document and maintain records of every sterilization cycle, including each partially loaded sterilization, and confirm that it was medically necessary. *Comment:* One commenter noted that many university hospitals develop new and unique surgical procedures and devices that may need to be sterilized in partial loads to comply with the more stringent requirements for sterilizing a new instrument. *Response:* We believe that it is medically necessary to allow hospitals to sterilize medical devices that are under research and development without a full load. The novelty or uniqueness of the design in some instances require different sterilizing parameters than those used for regular medical devices. In addition, unlike medical devices that are regularly used for patient care, new and experimental medical devices that are under research and development do not have established or known sterilization cycles. Therefore, they may compromise the effectiveness of sterilizing other devices in the same loads. However, hospitals generally do not possess enough medical devices that are under research and development to fully load a sterilizer. To avoid compromising the sterilization process of medical devices regularly used for patient care, we believe that it is medically necessary to allow hospitals to sterilize medical devices that are under research and development in separate and partial loads. Hospitals may invoke the medical necessity exception in the final rule when sterilizing devices that are under research and development. 4. National or Urban *Comment:* Three commenters recommended that EPA apply this rule nationwide. Two of the commenters noted that hospital parking areas are typically close to the hospital and that visitors and employees are, therefore, exposed to emissions from hospital ethylene oxide sterilizers regardless of the hospital's location (i.e., urban or rural). One commenter stated that the impacts of ethylene oxide emissions are localized and would be similar for most urban and rural areas. According to the commenter, hospitals are typically located in residential areas, whether or not they are in urban areas, and that populations residing nearby would likely be exposed to the ethylene oxide emissions from a hospital ethylene oxide sterilization facility. Another commenter further stated that hospitals clearly serve more sensitive populations who could be more susceptible to impacts from exposure to ethylene oxide. The commenter similarly noted that the impacts of ethylene oxide emissions are very local and would be roughly the same for both urban and rural areas, except perhaps for hospitals located in areas with a high population density. Two commenters noted that the cost (of controlling a sterilizer) to a facility is the same for a rural hospital and an urban hospital. The commenters stated that, because the cost and impact are the same, there does not appear to be any rationale for treating rural hospitals differently from urban hospitals. *Response:* We agree that a nationwide approach is appropriate given the facts and circumstances of this particular area source category. A rule of nationwide applicability is particularly appropriate here because requiring controls nationwide provides for equitable emission reductions. Control costs are not expected to differ in rural versus urban settings, therefore, the control's cost-effectiveness is the same, and economic impacts are equally distributed. Furthermore, because hospitals are generally located in densely populated areas, we expect negligible difference in the scope of this rule's coverage between a national and an urban (i.e., Urban-1 and Urban-2 areas) rule. 4 We have received no comments recommending that we limit this rule's applicability only to hospitals in Urban-1 and Urban-2 areas. 4 In the *Integrated Urban Strategy,* EPA defined “urban areas” to include Urban-1 and Urban-2 areas. (64 FR 38724). The Urban-1 and Urban-2 definitions are based on the United States Census Bureau's most current decennial census data. Urban-1 areas are counties with metropolitan statistical areas with a population greater than 250,000. Urban-2 counties are all other counties where more than 50 percent of the population is designated urban by the United States Census Bureau. 5. Compliance Date *Comment:* One commenter stated that EPA's proposal that a source comply with the management practices within 1 year after the effective date of the final rule may not be a sufficient period of time. The commenter stated that two scenarios could result for medical facilities under the management practice alternative. According to the commenter, one scenario could be that medical facilities may need to purchase smaller ethylene oxide sterilizers to turn around medical instrumentation and equipment without having to purchase more of these medical items, and this could involve construction projects/costs to make ready additional space to accommodate the new sterilizers. The commenter stated that the other scenario could be that medical facilities may need to purchase additional medical instrumentation and equipment to allow for sufficient availability while waiting for enough items to accumulate to run a full load in an ethylene oxide sterilizer. The commenter suggested that EPA consider the costs of additional ethylene oxide sterilizer equipment and related construction, as well as the additional medical instrumentation and equipment costs in any proposed rule by EPA. *Response:* EPA does not believe that the management practice requirement in Alternative 1 will result in either of the scenarios described above. The management practice requires sterilizing full loads except during medically necessary circumstances, i.e., necessary to protect human health. As discussed above, this exception to running sterilizers in full loads is based on patient needs. Under the final rule, whether a medically necessary circumstance exists must be determined by an authorized hospital personnel. The final rule, however, requires only that the hospital personnel consider whether sterilizing a partial load is necessary to protect human health; the personnel are not required to consider whether there are viable alternatives to running a partial load, such as purchasing additional sterilizer equipment or medical devices, before invoking the exception to the management practice requirement. Therefore, we do not expect any need for construction and/or capital expenditures associated with such new purchases, as the commenter suggested. We have received no other comments suggesting that hospitals may have difficulty achieving compliance with the management practice alternative within 1 year, as we proposed. We, therefore, retain the 1-year compliance deadline in the final rule. 6. Recordkeeping *Comment:* In the proposed rule, EPA solicited comments on whether to require recordkeeping under Alternative 1. We received six comments on recordkeeping. One commenter asked that EPA specify what recordkeeping would entail if less than full loads were run and what EPA would propose to be done with these records. Another commenter stated that, regardless of the size of the load, all items sterilized are recorded following the Association for the Advancement of Medical Instrumentation standard, Ethylene Oxide Sterilization in Health Care Facilities: Safety and Effectiveness, ANSI/AAMI ST 41:1999. According to the commenter, the sterilizer records under this standard include the following: Load or lot number; item description and quantity; the department; the name of the sterilizer operator; aeration time and temperature; results of the biological monitoring (which is processed with each load to ensure that sterilization has occurred); chemical indicator results; and reports of nonresponsive chemical indicators. Two commenters stated that hospitals keep a record of each load they run for traceability. Two commenters stated that hospitals could probably add a few more items of information to their records to comply with EPA's requirements. These commenters recommended that EPA's recordkeeping requirements be consistent with hospitals' current practice in maintaining records of sterilized loads. Two commenters indicated that some State programs require keeping sterilization records, and one commenter stated that some States have required such recordkeeping for many years. The commenters indicated that some hospitals keep such records through computerized recordkeeping systems while others use handwritten records. The commenters believed that these requirements are not likely to be overly burdensome or costly to the facilities. *Response:* In light of the comments indicating that hospitals are already keeping records of each sterilization cycle and that such recordkeeping provisions are not overly costly or burdensome, we are requiring affected facilities to keep sterilization records in the final rule. Specifically, the final rule requires that a facility record the date and time of each sterilization cycle, whether each sterilization cycle contains a full load of items, and, for each partial load, state that it was medically necessary. Based on information provided during the comment period, we believe that this recordkeeping requirement is consistent with hospitals' current practice. We also believe the time required to keep these records would be offset by the time saved by the reduced cycles run. 7. Title V Permitting *Comment:* One commenter favored title V permitting. The commenter stated that, by requiring title V permits, title V funds could be used to assure compliance. The commenter noted that, according to an EPA Regional office, title V funds cannot be used for non-title V programs. The commenter stated that if, from a national perspective, EPA prefers to exempt area sources such as these from title V permitting, EPA should explain the level of effort they expect from State and local agencies, and develop a funding mechanism for that effort. The commenter further noted that, in this case, the commenter's State already has operating permits for affected facilities and that there would be little cost involved in updating these permits to reflect the Federal rule during the normal permit renewal process. *Response:* As discussed in the preamble to the proposed rule, EPA considered four factors in determining whether title V is “unnecessarily burdensome” for a particular area source category. Based on its consideration of these factors, EPA concluded that the requirements of title V would be unnecessarily burdensome for area source hospital ethylene oxide sterilization facilities. Among other things, EPA concluded that title V permitting would not result in significant improvements to the compliance requirements for the hospital ethylene oxide sterilization area source category and that title V permitting would likely impose a significant burden on facilities within the source category, some of which are small businesses. The Agency also found that, for many facilities, the cost of obtaining a title V permit may far exceed the cost of complying with the final rule without significant gains in compliance. EPA further determined that the proposed exemptions from title V would not adversely affect public health, welfare, and the environment. Although the commenter advocates title V permitting, the commenter failed to address EPA's application of the four factors described above, and its conclusion that the proposed exemptions would not adversely affect public health, welfare, and the environment. Indeed, none of the commenters disagreed with any of EPA's proposed findings described above and in the proposed rule that served as the basis for the proposed title V exemption. Instead of challenging EPA's application of the four factors relevant to determining whether title V requirements would be unnecessarily burdensome on a particular area source category, the commenter focuses on the fact that, in its State, area source hospital sterilizers have State operating permits and that adding the requirements of this rule to those permits would involve little costs. The fact that title V permitting may not be burdensome or costly in one State does not reflect the burden or costs associated with title V permitting nationwide. Once again, the commenter has not identified any flaws in EPA's application of the four factor test described above, which involve an assessment of the costs of title V reporting for the entire source category. Therefore, for the reasons discussed above and in the proposed rule, we are exempting area source hospital ethylene oxide sterilization facilities from the requirements of title V in this final rule. The commenter apparently favored title V permitting based on its belief that “by requiring title V permits, EPA would allow title V funds to be used to assure compliance.” The commenter requested that EPA explain the level of State and local efforts that may be involved in implementing and enforcing the requirements of the final rule and develop a funding mechanism for that effort. We expect such effort to be minimal. We believe that the management practice and the associated recordkeeping requirements in this final rule are straightforward and can, therefore, be easily implemented and enforced. Further, according to the comments received, the management practice requirement is consistent with hospital practices and hospitals are already keeping records of sterilization cycles. In light of the above, we do not anticipate that State and local agencies would need to spend a significant level of effort to implement and enforce this rule. EPA, however, remains committed to working with State and local agencies to implement this rule. State and local agencies that receive grants for continuing air programs under CAA section 105 should work with their project officers to determine what resources are necessary to implement and enforce this area source standard. EPA will continue to provide the resources appropriated for CAA section 105 grants consistent with the statute and the allotment formula developed pursuant to the statute. *Comment:* One commenter agreed with EPA's proposal that title V permits are not necessary for area sources. The commenter noted that some hospitals, however, already have or are covered by title V permits, and that any rulemaking has the potential to impose additional permit modification costs. The commenter asserted that EPA should minimize title V permitting cost impacts by adding a provision in this rule stating that an existing title V permit does not have to be reopened or revised to address the requirements of this rule until the next time the permit is renewed, reopened, or revised for another reason. The commenter alternatively proposed that EPA consider an exemption similar to that which was included in 40 CFR 63.7881(c)(3) of the recently finalized amendments to the Site Remediation NESHAP. *Response:* The commenter requested that EPA prescribe in this rule the time for reopening and revising existing title V permits for area source hospital sterilizers. CAA section 502(a) authorizes EPA to exempt an area source category from title V permitting if the Administrator finds that compliance with title V is impracticable, infeasible, or unnecessarily burdensome on such category; however, to the extent that some sources within this area source category are already otherwise required to obtain title V permits, CAA section 502(a) does not authorize EPA to affect in any way these sources' existing obligations under title V, including when the permits must be renewed. As discussed above, pursuant to CAA section 502(a), EPA has determined that the requirements of title V would be unnecessarily burdensome for area source hospital ethylene oxide sterilization facilities. Accordingly, this final rule exempts area source sterilization facilities from the obligation to obtain title V permits for purposes of being subject to the requirements of this rule. The commenter, however, is requesting that EPA prescribe in this rule the time for reopening and revising existing title V permits for area source hospital sterilizers. The commenter's request is unrelated to and beyond the scope of EPA's authority to issue this area source rule pursuant to CAA sections 112(c)(3) and 112(d)(5). The request is also beyond the scope of EPA's authority under CAA section 502(a) to exempt area sources from title V permitting. We, therefore, reject the commenter's request to include its recommended language in this final rule. B. Proposed Alternative 2: No Control *Comment:* One commenter recommended that EPA select Regulatory Alternative 2 (the no additional control alternative). The commenter stated that hospitals have strong economic incentives to operate sterilizers with a full load because doing so reduces both material and labor costs. According to the commenter, because economics already drive hospital ethylene oxide sterilization facilities to implement the management practice, Alternative 1 is unlikely to result in significant emission reduction. The commenter states that it has encouraged its facilities to switch to alternative sterilization methods and, therefore, there are not many ethylene oxide sterilizers at its facility. *Response:* As previously mentioned, we included two regulatory alternatives in the proposed rule. As Alternative 1, we proposed to require that hospitals sterilize full loads of medical items having common aeration times except during emergency circumstances that dictate the use of less than full loads to protect human health. However, at the time of the proposal, we had limited information to conclude that the proposed management practice in Alternative 1 reduced ethylene oxide emissions or was cost-effective. Therefore, we included an alternative proposal (Alternative 2) that there are no GACT within the meaning of CAA section 112(d)(5) for the Hospital Sterilizers Area Source category. We also solicited comments on the costs and emission reduction estimates for the management practice. As explained in more detail in section V.A.1 of this preamble, we have since received comments indicating that the management practice minimizes ethylene oxide emissions by minimizing ethylene oxide use and that the practice is cost-effective. We, therefore, conclude that the management practice requirement we proposed as Alternative 1 reflects a generally available management practice within the meaning of CAA section 112(d)(5) for this area source category. The commenter apparently agreed that the management practice is cost-effective. It stated that hospitals have economic incentives to run the sterilizers full because it reduces both labor and material costs. The commenter, nevertheless, recommended Alternative 2, claiming that Alternative 1 may not achieve significant reduction since it is already being implemented. However, the CAA does not require a GACT standard to achieve any specific level of emission reduction. As explained above, we have determined that the management practice that we proposed as Alternative 1 represents GACT for this area source category. The commenter offered no information suggesting otherwise. Having determined that our proposed Alternative 1 represents GACT, we can no longer conclude that there are no GACT within the meaning of CAA section 112(d)(5). We, therefore, reject the commenter's recommendation that we adopt the no control option (Alternative 2) in this final rule. C. Add-on Controls 1. Cost Considerations *Comment:* Four commenters recommended that EPA require add-on controls for the area source hospital ethylene oxide sterilizers. Two commenters noted that, in the preamble to the proposed rule, EPA stated that the two predominant types of control devices (i.e., acid-water scrubbers and catalytic oxidation units) reduce emissions by approximately 99 percent. One of these two commenters also noted that, according to the National Toxicology Program, researchers have demonstrated that the application of these control technologies to hospital sterilizers effectively reduce ethylene oxide concentrations. This commenter, therefore, concluded that proven control technology is readily available to control ethylene oxide emissions from hospital sterilizers and that application of this technology is practicable, feasible, prudent, and not unnecessarily burdensome. Two commenters drew the same conclusion, noting that the control technologies have been required by some State programs for many years. One commenter similarly stated that if more than half of the sources already have add-on controls, it suggests that these controls are practical and feasible. One commenter expressed that, with nearly half of the hospitals using add-on controls, it is hard to understand EPA's rationale in the proposed rule that add-on controls are too costly. One commenter suggested that, if cost is to be considered, EPA should consider a full array of alternatives, including the cost of alternatives to sterilization and alternative means of sterilization, and compare them to the cost of controlling ethylene oxide sterilization. The commenter stated that the proposed rule presumes ethylene oxide sterilization must be preserved. The commenter noted that in the Hospital, Medical, Infectious Waste Incinerator (HMIWI) standard, however, EPA recognized that there were alternatives to incineration of the wastes and, therefore, required emission controls that were not necessarily cost-effective. The commenter recommended that the same approach should be applied here. One commenter stated that installing control would be an unnecessary cost to hospitals providing no benefits. The commenter observed that hospital ethylene oxide sterilization has declined due to Occupational Safety and Health Administration regulations, new sterilization methods, and new designs and materials used in medical devices. The commenter, however, emphasized that ethylene oxide sterilization is a necessity in hospitals. The commenter explained that the medical devices processed by ethylene oxide are expensive and that hospitals can only afford minimal amounts on hand. The commenter further explained that some of the medical devices are old and cannot be replaced. The commenter noted that these devices are typically utilized in surgical areas. The commenter stated that EPA's rationale makes clear that existing ethylene oxide emission control technology will not provide the type of cost-benefit needed to justify new hospital investment in the control devices. The commenter noted that the cost of add-on control would include not just the cost of the device, but also the cost of installation, facility modification, annual testing of control devices, and utility and maintenance. *Response:* CAA section 112(d)(5) provides that, with respect to area source categories listed pursuant to CAA section 112(c), the Administrator may, in lieu of MACT, promulgate standards or requirements which provide for the use of GACT. As explained in the preamble to the proposed rule, EPA is issuing the standards for the hospital sterilizers area source category under CAA section 112(d)(5). In determining what constitutes GACT for a particular area source category, EPA evaluates the control technologies and management practices that reduce HAP emissions and are generally available for the area source category. The legislative history supporting CAA section 112(d)(5) provides that EPA may consider costs in determining what constitutes GACT for the area source category. 5 5 Additional information on the definition of “generally available control technologies or management practices”
(GACT)is found in the Senate report on the 1990 amendments to the CAA (S. Rep. No. 101-228, 101st Cong. 1st session. 171-172). That report states that GACT is to encompass: * * * methods, practices and techniques which are commercially available and appropriate for application by the sources in the category considering economic impacts and the technical capabilities of the firms to operate and maintain the emissions control systems. In considering costs, the commenters who recommended add-on control focused mainly on the actual costs to hospitals and asserted that such control is likely not too costly if many hospitals are using it under existing State or local requirements. As we stated in the preamble to the proposed rule, EPA recognizes that over half of the hospitals use add-on controls. However, the actual cost to individual hospitals is but one cost factor that we considered in this rulemaking. We also noted that the total annualized cost for add-on controls, which we estimated to be $8.5 million, exceeds the total annualized cost for the management practice, which we estimated to range from $32,000 to $61,000, by more than 100 fold. In addition, we considered the cost-effectiveness of the add-on controls. See, e.g., *Husquavarna AB* v. *EPA* , 439 U.S. App. DC 118, 254 F.3d 195, 201 (DC Cir. 2001) (finding EPA's decision to consider costs on a per ton of emissions removed basis reasonable because CAA section 213 did not mandate a specific method of cost analysis). EPA's cost analysis for the add-on controls showed poor cost-effectiveness. Specifically, EPA's cost-effectiveness estimate for add-on controls was $200,000 per ton of ethylene oxide reduced. This cost-effectiveness excludes monitoring, recordkeeping, and reporting costs. We also considered alternatives to ethylene oxide sterilization, as one commenter suggested. We learned from several commenters that, although ethylene oxide sterilization in hospitals has declined, it remains a necessity for certain medical devices that cannot be easily replaced or sterilized by other means. We agree with these commenters that, in light of the declined level of ethylene oxide sterilization and the lack of alternatives for sterilizing certain unique and expensive medical devices, the benefit of requiring add-on control is outweighed by the various costs associated with such control. Based on the foregoing, we determined that add-on controls do not represent GACT for this area source category. One commenter argued that EPA required add-on control in the HMIWI standard that were not necessarily cost-effective and that EPA should take the same approach in this final rule. 6 The HMIWI standard, however, was promulgated pursuant to section 129 of the CAA, which requires that EPA establish standards that reflect the MACT. Consistent with the requirements of CAA section 129, EPA issued the original HMIWI standards based on MACT. CAA section 129(a)(2) does not allow EPA to consider costs in setting the floor for control. By contrast, EPA is issuing this final rule pursuant to CAA section 112(d)(5), which allows EPA to consider costs, including cost-effectiveness, in establishing GACT. Thus, the HMIWI rule is not relevant, because in that rule, EPA, by statute, could not consider costs. 6 40 CFR part 60, subpart Ce—Emission Guidelines and Compliance Times for Hospital/Medical/Infectious Waste Incinerators (constructed on or before June 20, 1996). 40 CFR part 60, subpart Ec—Standards of Performance for Hospital/Medical/Infectious Waste Incinerators for Which Construction is Commenced After June 20, 1996. 2. Best Available Control Technology
(BACT)or MACT *Comment:* One commenter stated that, because ethylene oxide is a known human carcinogen, its emissions should be controlled using the BACT. The commenter stated alternatively that, due to the widespread use of control on hospital sterilizers, the MACT floor level of control would be add-on controls under CAA section 112(d)(2). The commenter stated that, based on the experience in its State, the MACT floor and associated recordkeeping are feasible and prudent and, therefore, none of EPA's proposals are in accordance with legal requirements. The commenter claimed that the proposed NESHAP must be revised to represent MACT floor of add-on emission control and recordkeeping as required by law. *Response:* CAA section 112(c)(2) requires that EPA establish emission standards under CAA section 112(d) for the categories listed under CAA section 112(c), including area source categories listed pursuant to CAA section 112(c)(3). As mentioned above, EPA may issue standards for listed area source categories based on MACT (CAA section 112(d)(2)) or GACT (CAA section 112(d)(5)). CAA Section 112(d) does not contain a standard based on BACT. Therefore, EPA rejects the commenter's request to require the use of BACT because such standard is not authorized by the CAA. The commenter also argued alternatively that neither of EPA's proposed alternatives was in accordance with legal requirements and that EPA must issue a MACT standard as required by law. The commenter, however, did not identify any legal requirement that allegedly is not satisfied by EPA's proposed alternatives or requires EPA to issue a MACT standard for the Hospital Sterilizer Area Source category. On the contrary, the commenter noted that “EPA is 'exercising discretion' in promulgating standards or requirements under section 112(d)(5) of the CAA.” Although the commenter acknowledged that EPA has discretion under CAA section 112(d)(5) to issue a GACT standard in lieu of a MACT standard for listed area source categories, it claimed that, based on its State's experience with regulating and controlling ethylene oxide emissions from hospital sterilizers, the MACT floor and associated recordkeeping are feasible and prudent. The commenter argued that, therefore, neither of EPA's proposals is acceptable in accordance with legal requirements and that EPA must issue a MACT standard as required by law. The commenter's argument seems to imply that EPA must first find that a MACT standard is infeasible, imprudent, or otherwise inappropriate before the Agency can legally issue a GACT standard for an area source category pursuant to section 112(d)(5) of the CAA. However, there is no such requirement under the CAA. In fact, the CAA does not contain any condition precedent for issuing a GACT standard under CAA section 112(d)(5). CAA section 112(d)(5), which is entitled “Alternative standard for area sources,” provides: With respect *only* to categories and subcategories of area sources listed pursuant to subsection
(c)of this section, the Administrator *may, in lieu of* the authorities provided in paragraph
(2)and subsection
(f)of this section, elect to promulgate standards or requirements applicable to sources in such categories or subcategories which provide for the use of generally available control technologies or management practices by such sources to reduce emissions of hazardous air pollutants. ( *Emphasis added* ). There are two critical aspects to CAA section 112(d)(5). First, CAA section 112(d)(5) applies only to those categories and subcategories of area sources listed pursuant to CAA section 112(c). The commenter does not dispute that EPA listed the Hospital Sterilizer Area Source category pursuant to CAA section 112(c)(3). Second, CAA section 112(d)(5) provides that, for area sources listed pursuant to CAA section 112(c), EPA “ *may, in lieu of* ” the authorities provided in CAA section 112(d)(2) and 112(f), elect to promulgate standards that provide for the use of generally available control technologies or management practices (GACT). Section 112(d)(2) provides that emission standards established under that provision “require the maximum degree of reduction in emissions” of HAP (also known as MACT). 7 Webster's dictionary defines the phrase “in lieu of” to mean “in the place of” or “instead of.” See Webster's II New Riverside University (1994). Thus, CAA section 112(d)(5) authorizes EPA to promulgate standards that provide for the use of GACT *instead of* issuing MACT standards. The statute does not set any condition precedent for issuing standards under CAA section 112(d)(5) other than that the area source category or subcategory at issue must be one that EPA listed pursuant to CAA section 112(c), which is the case here. Had Congress intended that EPA first conduct a MACT analysis for each area source category and only if cost or some other reason made applying the MACT standard inappropriate for the category would EPA be able to issue a standard under CAA section 112(d)(5), Congress would have stated so expressly in CAA section 112(d)(5). Congress did not require EPA to conduct any MACT analysis, floor analysis, or beyond-the-floor analysis before the Agency could issue a CAA section 112(d)(5) standard. Rather, Congress authorized EPA to issue GACT standards for area source categories listed under CAA section 112(c)(3), and that is precisely what EPA has done in this rulemaking. 7 CAA section 112(d)(5) also references CAA section 112(f). See CAA section 112(f)(5) (entitled “Area Sources” and providing that EPA is not required to conduct a review or promulgate standards under CAA section 112(f) for any area source category or subcategory listed pursuant to CAA section 112(c)(3) and for which an emission standard is issued pursuant to CAA section 112(d)(5)). Although EPA has no obligation to justify why it is issuing a GACT standard for an area source category as opposed to a MACT standard, we did so in the proposed rule. See 71 FR 64910, November 6, 2006. As explained in the proposed rule, we determined that the MACT floor level of control would be add-on controls if we were to develop this area source rule based on CAA section 112(d)(2). As explained in more detail in section V.C.1 of this preamble, we took costs into consideration and determined that the benefit of requiring add-on controls is outweighed by the costs associated with such control. We believe the consideration of costs is especially important for the well-controlled area sources at issue in this final action because, given current well-controlled levels, a MACT floor determination, where costs cannot be considered, could result in only marginal reductions in emission at very high costs. 3. Consideration of Health Impacts or Risks *Comment:* According to one commenter, EPA's decision not to require add-on control appears to be based on cost-effectiveness without much regard for heath impact or risk. The commenter argued that an appropriate analysis would consider the health impacts where people are exposed. Four commenters identified health risks from ethylene oxide exposure as a basis for requiring add-on control. The commenters noted that ethylene oxide is a carcinogen and described in detail health effects from ethylene oxide exposure. In addition, one commenter stated that, since these sterilization units are located in hospitals which are densely populated with staff and patients, extra care should be taken to assure their health and safety. One commenter expressed concern that people living, working, and visiting the vicinity of the uncontrolled sources (i.e., those that do not have add-on controls) are not afforded the same level of protection as those near controlled sterilizers. Two commenters stated that hospital ethylene oxide emissions are minimal and declining and that the potential risks of ethylene oxide emissions, based on the EPA analysis, are also minimal. Accordingly, both commenters stated that there is no benefit for installing ethylene oxide emission control equipment, and one commenter stated that any benefits would be insignificant and far outweighed by the real costs associated with the control. *Response:* As previously explained, pursuant to sections 112(c)(3) and 112(k)(3)(B) of the CAA, EPA identified ethylene oxide as one of 30 HAP that present the greatest threat to public health in the largest number of urban areas and listed Hospital Sterilizers Area Source as a category needed to ensure that sources representing 90 percent of area source ethylene oxide emissions are subject to regulation. In the 1990 CAA Amendments, Congress established a two-phase approach for setting HAP emission standards. *Sierra Club* v. *EPA* , 353 F.3d 976, 980 (D.C. Cir. 2004). The first phase is the initial standard setting phase, which is the phase at issue in this rulemaking. 8 In this phase, the standards are technology-based, and this is true regardless of whether we issue MACT standards under CAA section 112(d)(2) and (d)(3), or GACT standards under CAA section 112(d)(5). 9 See Senate Report at 148 (1989); *Sierra Club* v. *EPA* , 353 F.3d at 980. 8 The second phase of standard setting involves a risk-based analysis. Specifically, CAA section 112(f)(2) requires EPA to determine—8 years after issuance of the initial MACT standard—whether residual risks remain that warrant more stringent standards than achieved through MACT. CAA Section 112(f)(5) provides that the Agency shall not be required to conduct a residual risk for area sources for which EPA has issued a GACT standard. 9 CAA Section 112(d)(4) does provide, however, that with respect to pollutants for which the EPA Administrator has established a health threshold, EPA can consider such threshold in setting standards under CAA section 112(d). Ethylene oxide is a carcinogen and is, thus, not a pollutant for which the Administrator has established a health threshold, and, therefore, CAA section 112(d)(4) is not relevant to this category. In this final rule, EPA is establishing emissions standards for this area source category under CAA section 112(d)(5), which authorizes EPA to set emissions standards based on GACT for a listed area source category. The legislative history describes GACT as “methods, practices, and techniques which are commercially available and appropriate for application by sources in the category considering economic impacts and the technical capabilities of the firms to operate and maintain the emissions control systems.” S. Rep. No. 101-228, at 171
(1989)(Senate Report). Consistent with the statute and the legislative history, in determining GACT, we evaluated the control technologies and management practices that reduce HAP emissions from the ethylene oxide Hospital Sterilizer Area Source category, and we assessed the costs of implementing such approaches. We did not consider health impacts or risks in establishing the emission standards for the Hospital Sterilizer Area Source category, as the commenters recommended, nor were we required by statute to do so. However, we note that health risk did play a role in this process in that the determination of which pollutants to regulate and from which categories was governed by the statutory requirement to regulate sources accounting for 90 percent or more of the 30 HAP that present the greatest health threat in urban areas. 4. Potential Backsliding *Comment:* One commenter noted that many hospital ethylene oxide sterilizers are controlled (i.e., with add-on controls) as the result of State and local programs. The commenter stated that in the preamble to the proposed rule, EPA recognizes the contributions of the State and local programs and is apparently relying upon them to ensure adequate control of hospital sterilizers. The commenter stated that EPA's proposal to rely on these programs, in lieu of Federal requirements, is unwise and inappropriate. The commenter stated that the existence of State and local regulations does not relieve the agency of its duty to set emissions control requirements under CAA section 112. The commenter further noted that many State and local agencies are not able to be more stringent than Federal requirement and that it is conceivable that some agencies could be required to change their regulations to be consistent with those of the Federal government, resulting in relaxing of existing non-Federal rules. The commenter also claims that State and local regulations can change in the future for other reasons. The commenter stated that, in the absence of Federal requirements, there would be nothing to prevent backsliding by the sources if a State or local rule is realized or eliminated. Another commenter stated that for sources in its State, EPA's issuance of this rule means that existing sources would continue to be subject to the State air toxics rule that requires 99 percent control, but new sources would only be subject to EPA's requirement. The commenter stated that this amounts to backsliding on emission control requirements and an increase in emissions. *Response:* EPA has not shed its responsibility to set emission standards under CAA section 112 because of existing State and local regulations. On the contrary, EPA is issuing this final rule today to regulate ethylene oxide emissions from hospital sterilizers. As described above, pursuant to CAA section 112(d)(5), EPA has established in this final rule a management practice requirement that represents GACT for this area source category. EPA did not reject the add-on control option in this rulemaking because it was relying on existing State and local programs to require add-on controls, as one commenter contended. Rather, as previously explained in section V.C.1 of this preamble, EPA concludes that add-on controls do not represent GACT for this area source category. Two commenters expressed concern that certain States may require that their existing regulations be relaxed as not to be more stringent than EPA's standards. However, CAA section 112(l) only prohibits States from setting standards that are less stringent than EPA's standards; the CAA does not affect State and local emission standards that are more stringent than the requirements of this final rule. The issue of potential backsliding that the commenters raised is based on State law, which EPA has no authority to change. We, however, encourage States to revisit their State laws to address this concern. 5. Emissions From Aeration *Comment:* One commenter noted that some sterilizers only operate their catalytic control devices during the initial purge of ethylene oxide (following sterilization) and not during the entire aeration cycle. The commenter stated that the control device should be used for all discharges, not just the initial purge. *Response:* The commenter appears to be arguing that a control device should be used to control both sterilization and aeration ethylene oxide emissions instead of just sterilization emissions. The final rule does not, however, require the use of a control device. EPA has determined that the management practice in the final rule represents GACT and requires that hospitals run sterilizers in full loads except during medically necessary circumstances. This requirement will reduce both sterilization and aeration ethylene oxide emissions by reducing the amount of ethylene oxide usage. Although the final rule does not require the use of a control device, it allows the use of a control device as an alternative compliance option for the management practice requirement because the use of a control device achieves reduction in ethylene oxide emissions that are at least equivalent to the ethylene oxide reduction resulting from the management practice. This is true even if the control device is used to control ethylene oxide emissions from sterilization only. Therefore, controlling aeration emissions with a control device is not necessary under the alternative compliance option. VI. Summary of Environmental, Energy, Cost, and Economic Impacts We estimate that in 2002 there were, at most, 1,900 hospital area sources that conduct ethylene oxide sterilization, of which approximately 630 do not presently have add-on controls. The final management practice was estimated at proposal to reduce the 44 tpy emitted from ethylene oxide sterilizers by 2 to 9 tpy. We did not receive any comments that would allow us to improve this estimate. Several commenters, however, stated that they are already employing the management practice. With the management practice, we believe there is minimal effect on either air quality or non-air quality environmental impacts and there are negligible energy or economic impacts. Annualized costs to comply with the final standards are estimated to range from $32,000 to $61,000 per year. VII. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a “significant regulatory action” because it may raise novel legal or policy issues. Accordingly, EPA submitted this action to the Office of Management and Budget
(OMB)for review under Executive Order 12866, and any changes made in response to OMB recommendations have been documented in the docket for this action. B. Paperwork Reduction Act The information requirements in this rule have been submitted for approval to OMB under the Paperwork Reduction Act, 44 U.S.C. 3501, *et seq.* The information collection requirements are not enforceable until OMB approves them. The recordkeeping and reporting requirements in the final rule are based on the information collection requirements in the 40 CFR part 63 General Provisions (subpart A), some of which are incorporated into the final NESHAP. The ICR document includes the burden estimates for all applicable General Provisions. The recordkeeping and reporting requirements in the General Provisions are mandatory pursuant to section 114 of the CAA (42 U.S.C. 7414). All information submitted to EPA pursuant to the information collection requirements for which a claim of confidentiality is made is safeguarded according to CAA section 114(c) and the Agency's implementing regulations at 40 CFR part 2, subpart B. The final NESHAP for area sources requires a one-time initial notification by hospital ethylene oxide sterilization facilities certifying that the facility is in compliance with rule requirements and requires recordkeeping for each sterilization cycle for sterilizers not equipped with an air pollution control device. The annual burden for the information collection averaged over the first 3 years of this ICR is estimated to total 3,576 labor hours per year at a cost of $245,000 for the 1,900 existing hospital sterilizer area sources. Small annualized capital/startup costs and small operation and maintenance costs are associated with the requirements. No costs or burden hours are estimated for new area sources because no new sources are estimated during the next 3 years. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. When this ICR is approved by OMB, the Agency will publish a technical amendment to 40 CFR part 9 in the **Federal Register** to display the OMB control number for the approved information collection requirements contained in this final rule. C. Regulatory Flexibility Act The Regulatory Flexibility Act
(RFA)generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule would not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For the purposes of assessing the impacts of the area source NESHAP on small entities, small entity is defined as:
(1)A small business that is a hospital as defined by NAICS codes 622110 and 622310 whose parent company has less than $31.5 million in gross revenue (based on Small Business Administration
(SBA)size standards);
(2)a small governmental jurisdiction that is a government of a city, county, town, school district, or special district with a population of less than 50,000; and
(3)a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts of this final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. The final rule requires the use of a management practice to minimize the operation of the ethylene oxide sterilization unit and will, therefore, have minimal nationwide costs, i.e., range from $32,000 to $61,000 per year. We have determined that less than 3 percent of the hospitals are small businesses as defined by the SBA. We have also determined that none of these small businesses are significantly impacted by this proposal for none of them will incur annualized compliance costs of 0.1 percent of sales or greater. Although this final rule will not have a significant economic impact on a substantial number of small entities, EPA nonetheless has tried to reduce the impact of this rule on small entities. The final rule is designed to harmonize with existing State or local requirements. D. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements. EPA has determined that the final rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any one year. Thus, the final rule is not subject to the requirements of sections 202 and 205 of the UMRA. In addition, the final rule does not significantly or uniquely affect small governments. The final rule contains no requirements that apply to such governments, impose no obligations upon them, and will not result in expenditures by them of $100 million or more in any one year or any disproportionate impacts on them. Therefore, the final rule is not subject to section 203 of the UMRA. E. Executive Order 13132: Federalism Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule does not have federalism implications. It will 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. The final rule imposes requirements on owners and operators of specified area sources and not State and local governments. Thus, Executive Order 13132 does not apply to this final rule. F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments 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.” This final rule does not have tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments, 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 in Executive Order 13175. This final rule imposes requirements on owners and operators of specified area sources and not tribal governments. Thus, Executive Order 13175 does not apply to this final rule. G. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997) applies to any rule that:
(1)Is determined to be “economically significant” as defined under Executive Order 12866, and
(2)concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This final rule is not subject to Executive Order 13045 because it is based on technology performance and not on health or safety risks. H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use This final rule is not a “significant energy action” as defined in Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, and Use” (66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Further, we have concluded that the final rule is not likely to have any adverse energy effects because energy requirements would likely be less than existing levels. No additional pollution controls or other equipment that would consume energy are required by this final rule. I. National Technology Transfer and Advancement Act As noted in the proposed rule, Section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) of 1995 (Pub. L. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards
(VCS)in its regulatory activities, unless to do so would be inconsistent with applicable law or otherwise impractical. VCS are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by VCS bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable VCS. This action does not involve technical standards. Therefore, EPA did not consider the use of any VCS. J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population. This final rule establishes national standards for the area source category. K. Congressional Review Act 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 final rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to publication of the final 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). This final rule will be effective on December 28, 2007. List of Subjects in 40 CFR Part 63 Environmental protection, Air pollution control, Hazardous substances, Reporting and recordkeeping requirements. Dated: December 20, 2007. Stephen L. Johnson, Administrator. For the reasons stated in the preamble, title 40, chapter I, part 63 of the Code of Federal Regulations is amended as follows: PART 63—[AMENDED] 1. The authority citation for part 63 continues to read as follows: Authority: 42 U.S.C. 7401, *et seq.* 2. Part 63 is amended by adding subpart WWWWW to read as follows: Subpart WWWWW—National Emission Standards for Hospital Ethylene Oxide Sterilizers Sec. Applicability and Compliance Dates 63.10382 Am I subject to this subpart? 63.10384 What are my compliance dates? Standards 63.10390 What management practice standards must I meet? Initial Compliance Requirements 63.10400 How do I demonstrate initial compliance? 63.10402 By what date must I demonstrate initial compliance? Monitoring—Continuous Compliance Requirements 63.10420 How do I demonstrate continuous compliance with the management practice requirements? Notifications, Reports, and Records 63.10430 What notifications must I submit and when? 63.10432 What records must I keep? 63.10434 In what form and for how long must I keep my records? Other Requirements and Information 63.10440 What parts of the General Provisions apply to me? 63.10442 Who implements and enforces this subpart? 63.10446 Do title V permitting requirements apply to area sources subject to this subpart? 63.10448 What definitions apply to this subpart? Table to Subpart WWWWW of Part 63 Table 1 to Subpart WWWWW of Part 63—Applicability of General Provisions to Subpart WWWWW Subpart WWWWW—National Emission Standards for Hospital Ethylene Oxide Sterilizers Applicability and Compliance Dates § 63.10382 Am I subject to this subpart?
(a)You are subject to this subpart if you own or operate an ethylene oxide sterilization facility at a hospital that is an area source of hazardous air pollutant
(HAP)emissions.
(b)The affected source subject to this subpart is each new or existing sterilization facility.
(1)An affected source is existing if you commenced construction or reconstruction of the affected source before November 6, 2006.
(2)An affected source is new if you commenced construction or reconstruction of the affected source on or after November 6, 2006. § 63.10384 What are my compliance dates?
(a)*Existing source.* If you have an existing affected source, you must comply with applicable requirements in this subpart no later than December 29, 2008.
(b)*New source.* If you start up a new affected source on or before December 28, 2007, you must comply with applicable requirements in this subpart by December 28, 2007.
(c)*New source.* If you start up a new affected source after December 28, 2007, you must comply with applicable requirements in this subpart upon startup of your affected source. Standards § 63.10390 What management practice standard must I meet? You must sterilize full loads of items having a common aeration time, except under medically necessary circumstances, as that term is defined in § 63.10448. Initial Compliance Requirements § 63.10400 How do I demonstrate initial compliance?
(a)Except as provided in paragraphs
(b)and
(c)of this section, you must demonstrate initial compliance with the management practice standard in § 63.10390 by submitting an Initial Notification of Compliance Status certifying that you are sterilizing full loads of items having a common aeration time except under medically necessary circumstances.
(b)If you operate your sterilization unit(s) with an air pollution control device pursuant to a State or local regulation, you may demonstrate initial compliance with § 63.10390 by submitting an Initial Notification of Compliance Status certifying that you are operating the sterilization unit in accordance with your State or local regulation and following control device manufacturer's recommended procedures.
(c)If you operate your sterilization unit(s) with an air pollution control device but are not subject to any State or local regulation, you may demonstrate initial compliance with § 63.10390 by submitting an Initial Notification of Compliance Status certifying that you are venting the ethylene oxide emissions from each sterilization unit to an add-on air pollution control device. You must certify that you are operating the control device during all sterilization processes and in accordance with manufacturer's recommended procedures. § 63.10402 By what date must I demonstrate initial compliance? You must demonstrate initial compliance with § 63.10390 upon startup or no later than 180 calendar days after your compliance date, whichever is later. Monitoring—Continuous Compliance Requirements § 63.10420 How do I demonstrate continuous compliance with the management practice requirements? For each sterilization unit not equipped with an air pollution control device, you must demonstrate continuous compliance with the management practice standard in § 63.10390 by recording the date and time of each sterilization cycle, whether each sterilization cycle contains a full load of items, and if not, a statement from a hospital central services staff, a hospital administrator, or a physician that it was medically necessary. Notifications, Reports, and Records § 63.10430 What notifications must I submit and by when?
(a)You must submit an Initial Notification of Compliance Status that includes the information required in paragraphs (a)(1) through
(5)of this section and the applicable certification in § 63.10400.
(1)The name and address of the owner or operator.
(2)The address (i.e., physical location) of the affected source.
(3)An identification of the standard and other applicable requirements in this subpart that serve as the basis of the notification and the source's compliance date.
(4)A brief description of the sterilization facility, including the number of ethylene oxide sterilizers, the size (volume) of each, the number of aeration units, if any, the amount of annual ethylene oxide usage at the facility, the control technique used for each sterilizer, and typical number of sterilization cycles per year.
(5)A statement that the affected source is an area source.
(b)You must submit the Initial Notification of Compliance Status to the appropriate authority(ies) specified in § 63.9(a)(4). In addition, you must submit a copy of the Initial Notification of Compliance Status to EPA's Office of Air Quality Planning and Standards. Send your notification via e-mail to *CCG-ONG@EPA.GOV* or via U.S. mail or other mail delivery service to U.S. EPA, Sector Policies and Programs Division, Coatings and Chemicals Group (E143-01), Attn: Hospital Sterilizers Project Leader, Research Triangle Park, NC 27711.
(c)You must submit the Initial Notification of Compliance Status no later than 180 calendar days after your compliance date, consistent with § 63.10402. § 63.10432 What records must I keep? You must keep the records specified in paragraphs
(a)and
(b)of this section.
(a)A copy of the Initial Notification of Compliance Status that you submitted to comply with this subpart.
(b)Records required by § 63.10420 for each sterilization unit not equipped with an air pollution control device. § 63.10434 In what form and for how long must I keep my records?
(a)Your records must be in a form suitable and readily available for expeditious review.
(b)You must keep each record for 5 years following the date of each record.
(c)You must keep each record onsite for at least 2 years after the date of each record. You may keep the records offsite for the remaining 3 years. Other Requirements and Information § 63.10440 What parts of the General Provisions apply to me? Table 1 to this subpart shows which parts of the General Provisions in 40 CFR 63.1 through 63.16 apply to you. § 63.10442 Who implements and enforces this subpart?
(a)This subpart can be implemented and enforced by us, the U.S. EPA, or a delegated authority such as your State, local, or tribal agency. If the U.S. EPA Administrator has delegated authority to your State, local, or tribal agency, then that agency has the authority to implement and enforce this subpart. You should contact your U.S. EPA Regional Office to find out if this subpart is delegated to your State, local, or tribal agency.
(b)In delegating implementation and enforcement authority of this subpart to a State, local, or tribal agency under 40 CFR part 63, subpart E, the authorities contained in paragraph
(c)of this section are retained by the Administrator of the U.S. EPA and are not transferred to the State, local, or tribal agency.
(c)The authorities that will not be delegated to State, local, or tribal agencies include approval of alternatives to the applicability requirements under 40 CFR 63.10382, the compliance date requirements in 40 CFR 63.10384, and the management practice standards as defined in 40 CFR 63.10390. § 63.10446 Do title V permitting requirements apply to area sources subject to this subpart? You are exempt from the obligation to obtain a permit under 40 CFR part 70 or 40 CFR part 71, provided you are not otherwise required by law to obtain a permit under 40 CFR 70.3(a) or 40 CFR 71.3(a). Notwithstanding the previous sentence, you must continue to comply with the provisions of this subpart. § 63.10448 What definitions apply to this subpart? Terms used in this subpart are defined in the Clean Air Act (CAA), in 40 CFR 63.2, and in this section as follows: *Aeration process* means any time when ethylene oxide is removed from the aeration unit through the aeration unit vent or from the combination sterilization unit through the sterilization unit vent, while aeration or off-gassing is occurring. *Aeration unit* means any vessel that is used to facilitate off-gassing of ethylene oxide. *Air pollution control device* means a catalytic oxidizer, acid-water scrubber, or any other air pollution control equipment that reduces the quantity of ethylene oxide in the effluent gas stream from sterilization and aeration processes. *Combination sterilization unit* means any enclosed vessel in which both the sterilization process and the aeration process occur within the same vessel, *i.e.* , the vessel is filled with ethylene oxide gas or an ethylene oxide/inert gas mixture for the purpose of sterilizing and is followed by off-gassing of ethylene oxide. *Common aeration time* means that items require the same length of time to off-gas ethylene oxide. *Full load* means the maximum number of items that does not impede proper air removal, humidification of the load, or sterilant penetration and evacuation in the sterilization unit. *Hospital* means a facility that provides medical care and treatment for patients who are acutely ill or chronically ill on an inpatient basis under supervision of licensed physicians and under nursing care offered 24 hours per day. Hospitals include diagnostic and major surgery facilities but exclude doctor's offices, clinics, or other facilities whose primary purpose is to provide medical services to humans or animals on an outpatient basis. *Hospital central services staff* means a healthcare professional, including manager and technician, who is either directly involved in or responsible for sterile processing at a hospital. *Medically necessary* means circumstances that a hospital central services staff, a hospital administrator, or a physician concludes, based on generally accepted medical practices, necessitate sterilizing without a full load in order to protect human health. *State or local regulation* means a regulation at the State or local level that requires a hospital to reduce the quantity of ethylene oxide emissions from ethylene oxide sterilization units. *Sterilization facility* means the group of ethylene oxide sterilization units at a hospital using ethylene oxide gas or an ethylene oxide/inert gas mixture for the purpose of sterilizing. *Sterilization process* means any time when ethylene oxide is removed from the sterilization unit or combination sterilization unit through the sterilization unit vent. *Sterilization unit* means any enclosed vessel that is filled with ethylene oxide gas or an ethylene oxide/inert gas mixture for the purpose of sterilizing. As used in this subpart, the term includes combination sterilization units. Table to Subpart WWWWW of Part 63 As required in § 63.10440, you must comply with the requirements of the General Provisions (40 CFR part 63, subpart A) shown in the following table: Table 1 to Subpart WWWWW of Part 63.—Applicability of General Provisions to Subpart WWWWW Citation Subject Applies to subpart WWWWW Explanation § 63.1(a)(1)-(4), (6), (10)-(12), (b)(1),
(3)Applicability Yes § 63.1(a)(5), (7)-(9) [Reserved] § 63.1(b)(2) [Reserved] § 63.1(c)(1)-(2) Applicability of this part after a relevant standard has been set Yes § 63.10446 of this subpart exempts affected sources from the obligation to obtain title V operating permits for purposes of being subject to this subpart. § 63.1(c)(3)-(4) [Reserved] § 63.1(c)(5) Subject to notification requirements No § 63.1(d) [Reserved] § 63.1(e) Emission limitation by permit Yes § 63.2 Definitions Yes § 63.3 Units and abbreviations Yes § 63.4 Prohibited activities Yes § 63.5 Construction/reconstruction No § 63.6(a), (b)(1)-(5),
(7)Compliance with standards and maintenance requirements Yes § 63.6(b)(6) [Reserved] § 63.6(c)(1) Compliance dates for existing sources Yes Subpart WWWWW requires compliance 1 year after the effective date. § 63.6(c)(2),
(5)Compliance dates for CAA section 112(f) standards and for area sources that become major No § 63.6(c)(3)-(4) [Reserved] § 63.6(d) [Reserved] § 63.6(e)-(h) Alternative nonopacity emission standard No § 63.6(i)-(j) Compliance extension Yes § 63.7 Performance testing requirements No § 63.8 Monitoring requirements No § 63.9(a) Applicability and initial notifications addressees Yes § 63.9(b) Initial notifications No § 63.9(c) Request for extension of compliance Yes § 63.9(d)-(j) Other notifications No § 63.10(a)(1)-(2) Recordkeeping and reporting requirements, applicability Yes § 63.10(a)(3)-(4) General information Yes § 63.10(a)(5)-(7) Recordkeeping and reporting requirements, reporting schedules No § 63.10(b)(1) Retention time Yes § 63.10(b)(2)-(f) Recordkeeping and reporting requirements No § 63.11 Control device requirements No § 63.12 State authority and delegations Yes §§ 63.13-63.16 Addresses, Incorporations by Reference, availability of information, performance track provisions Yes [FR Doc. E7-25233 Filed 12-27-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 65 [EPA-HQ-OAR-2007-0429; FRL-8511-7] RIN 2060-A045 Revisions to Consolidated Federal Air Rule; Correction AGENCY: Environmental Protection Agency (EPA). ACTION: Correcting amendments. SUMMARY: The EPA issued a final rule on August 27, 2007 (effective date November 26, 2007) that revised the General Provisions for Consolidated Federal Air Rule to allow extensions to the deadline imposed for source owners and operators to conduct required performance tests in specified force majeure circumstances. The final rule inadvertently stated that we were revising paragraph
(c)introductory text when we actually added introductory text to paragraph (c). The purpose of this action is to correct this error. This action merely addresses a formatting issue. Thus, it is proper to issue this notice without notice and comment. Section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), provides that, when an Agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest, the Agency may issue a rule without providing notice and an opportunity for public comment. We have determined that there is good cause for making this action final without prior proposal and opportunity for comment because the change to the rule is a minor technical correction, is noncontroversial, and does not substantively change the agency actions taken in the final rule. Thus, notice and public procedure are unnecessary. We find that this constitutes good cause under 5 U.S.C. 553(b)(B). DATES: This correction is effective December 28, 2007. FOR FURTHER INFORMATION CONTACT: Ms. Lula Melton, Air Quality Assessment Division (C304-02), Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number:
(919)541-2910; fax number:
(919)541-4511; e-mail address *melton.lula@epa.gov.* SUPPLEMENTARY INFORMATION: I. Background The EPA issued a final rule on August 27, 2007 (72 FR 48938) that allows source owners or operators, in the event of a force majeure, to petition the Administrator for an extension of the deadline(s) by which they are required to conduct a performance test required by the Consolidated Federal Air Rule. A “force majeure” is defined as an event that will be or has been caused by circumstances beyond the control of the affected facility, its contractors, or any entity controlled by the affected facility that prevents the owner or operator from complying with the regulatory requirement to conduct performance tests within the specified timeframe, despite the affected facility's best efforts to fulfill the obligation. Examples of such events are acts of nature, acts of war or terrorism, or equipment failure or safety hazard beyond the control of the affected facility. II. Summary of Amendment The EPA promulgated revisions to the General Provisions for Consolidated Federal Air Rule on August 27, 2007. Afterwards, we realized that we inadvertently stated that we were revising paragraph
(c)introductory text when we actually added introductory text to paragraph (c). The purpose of this action is to correct this error. III. Statutory and Executive Order Reviews Under Executive Order 12866, Regulatory Planning and Review (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is, therefore, not subject to review by the Office of Management and Budget (OMB). This action is not a “major rule” as defined by 5 U.S.C. 804(2). The technical correction does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Because EPA has made a “good cause” finding that this action is not subject to notice and comment requirements under the APA or any other statute, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA)(Pub. L. 104-4). In addition, this action does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of the UMRA. The correction does not have a substantial direct effect on the States, or on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of Government, as specified in Executive Order 13132, Federalism (64 FR 43255, August 10, 1999). Today's action also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13175, Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000). The technical correction also is not subject to Executive Order 13045, Protection of Children from Environmental Health and Safety Risks (62 FR 19885, April 23, 1997) because this action is not economically significant. The correction is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001) because this action is not a significant regulatory action under Executive Order 12866. The correction does not involve changes to the technical standards related to test methods or monitoring requirements; thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272) do not apply. The correction also does not involve special consideration of environmental justice-related issues as required by Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994). The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 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 U.S. The EPA will submit a report containing this final action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the U.S. prior to publication of today's action in the **Federal Register** . Today's action is not a “major rule” as defined by 5 U.S.C. 804(2). The final rule will be effective December 28, 2007. List of Subjects in 40 CFR Part 65 Air pollution control, Environmental protection, Intergovernmental relations, Reporting and recordkeeping requirements. Dated: December 20, 2007. Robert J. Meyers, Principal Deputy Assistant Administrator, Office of Air and Radiation. For the reasons stated in the preamble, title 40, chapter I, part 65 of the Code of Federal Regulations is amended as follows: PART 65—[AMENDED] 1. The authority citation for part 65 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* Subpart A—[Amended] 2. In § 65.157, introductory text for paragraph
(c)is added following the paragraph
(c)heading to read as follows: § 65.157 Performance test and flare compliance determination requirements.
(c)* * * Except as specified in paragraphs (c)(1)(viii), (c)(1)(ix), (c)(1)(x), and (c)(1)(xi) of this section, unless a waiver of performance testing or flare compliance determination is obtained under this section or the conditions of another subpart of this part, the owner or operator shall perform such tests specified in the following: [FR Doc. E7-25293 Filed 12-27-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2007-0116; FRL-8342-7] Dimethenamid; Pesticide Tolerance AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: This regulation establishes tolerances for residues of dimethenamid in or on hop, dried cones; pumpkin, radish (roots and tops); rutabaga (roots and tops); turnip greens; turnip (roots and tops); and winter squash. The Interregional Research Project No. 4 (IR-4) requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA). This regulation also modifies 40 CFR 180.464, section
(b)by deleting the existing time-limited tolerance for winter squash as a permanent tolerance is being established by this action. DATES: This regulation is effective December 28, 2007. Objections and requests for hearings must be received on or before February 26, 2008, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION ). ADDRESSES: EPA has established a docket for this action under docket identification
(ID)number EPA-HQ-OPP-2007-0116. To access the electronic docket, go to *http://www.regulations.gov* , select “Advanced Search,” then “Docket Search.” Insert the docket ID number where indicated and select the “Submit” button. Follow the instructions on the regulations.gov website to view the docket index or access available documents. All documents in the docket are listed in the docket index available in regulations.gov. Although listed in the index, some information is not publicly available, e.g., Confidential Business Information
(CBI)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 in the electronic docket at *http://www.regulations.gov* , or, if only available in hard copy, at the OPP Regulatory Public Docket in Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. The Docket Facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The Docket Facility telephone number is
(703)305-5805. FOR FURTHER INFORMATION CONTACT: Sidney Jackson, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number:
(703)305-7610; e-mail address: *jackson.sidney@epa.gov* . SUPPLEMENTARY INFORMATION: I. General Information A. Does this Action Apply to Me? You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to those engaged in the following activities: • Crop production (NAICS code 111), e.g., agricultural workers; greenhouse, nursery, and floriculture workers; farmers. • Animal production (NAICS code 112), e.g., cattle ranchers and farmers, dairy cattle farmers, livestock farmers. • Food manufacturing (NAICS code 311), e.g., agricultural workers; farmers; greenhouse, nursery, and floriculture workers; ranchers; pesticide applicators. • Pesticide manufacturing (NAICS code 32532), e.g., agricultural workers; commercial applicators; farmers; greenhouse, nursery, and floriculture workers; residential users. This listing is not intended to be exhaustive, but rather to provide a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT . B. How Can I Access Electronic Copies of this Document? In addition to accessing an electronic copy of this **Federal Register** document through the electronic docket at *http://www.regulations.gov* , you may access this **Federal Register** document electronically through the EPA Internet under the “ **Federal Register** ” listings at *http://www.epa.gov/fedrgstr* . You may also access a frequently updated electronic version of EPA’s tolerance regulations at 40 CFR part 180 through the Government Printing Office’s pilot e-CFR site at *http://www.gpoaccess.gov/ecfr* . C. Can I File an Objection or Hearing Request? Under section 408(g) of FFDCA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2007-0116 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk as required by 40 CFR part 178 on or before February 26, 2008. In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit this copy, identified by docket ID number EPA-HQ-OPP-2007-0116, by one of the following methods: • *Federal eRulemaking Portal* : *http://www.regulations.gov* . Follow the on-line instructions for submitting comments. • *Mail* : Office of Pesticide Programs
(OPP)Regulatory Public Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. • *Delivery* : OPP Regulatory Public Docket (7502P), Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only accepted during the Docket’s normal hours of operation (8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays). Special arrangements should be made for deliveries of boxed information. The Docket Facility telephone number is
(703)305-5805. II. Petition for Tolerance In the **Federal Register** of April 4, 2007 (72 FR 16352) (FRL-8119-2), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 6E7152) by IR-4. The petition requested that 40 CFR 180.464 be amended by establishing a tolerance for residues of the herbicide dimethenamid, 1 (R,S)-2-chloro-N-[(1-methyl-2-methoxy) ethyl]-N-(2,4-dimethylthien-3-yl)-acetamide) in or on hop, dried cones at 0.05 parts per million (ppm); pumpkin at 0.01 ppm; radish, roots at 0.01 ppm; radish, tops at 0.01 ppm; rutabaga, roots at 0.01 ppm; rutabaga, tops at 0.1 ppm; turnip, greens at 0.1 ppm; turnip, roots at 0.01 ppm; turnip, tops at 0.1 ppm; and winter squash at 0.01 ppm. That notice referenced a summary of the petition prepared by BASF Corporation, the registrant, which is available to the public in the docket, *http://www.regulations.gov* . There were no comments received in response to the notice of filing. Based upon review of the data supporting the petition, EPA has approved regionally restricted tolerances for pumpkin and winter squash for States of Oregon and Washington only, in that supporting data are limited to EPA growing Region 12. The reason for these changes is further explained in the supporting document for this action, entitled, “Dimethenamid-P. Petition for Registration for Uses Turnips and Hops. Summary of Analytical Chemistry and Residue Data. Petition 6E7152,” in docket ID number EPA-HQ-OPP-2007-0116. III. Aggregate Risk Assessment and Determination of Safety Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .” These provisions were added to FFDCA by the Food Quality Protection Act
(FQPA)of 1996. Consistent with section 408(b)(2)(D) of FFDCA, and the factors specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for the petitioned-for tolerance for residues of dimethenamid on hop, dried cones at 0.05 ppm; pumpkin at 0.01 ppm; radish, roots at 0.01 ppm; radish, tops at 0.01 ppm; rutabaga, roots at 0.01 ppm; rutabaga, tops at 0.1 ppm; turnip, greens at 0.1 ppm; turnip, roots at 0.01 ppm; turnip, tops at 0.1 ppm; and winter squash at 0.01 ppm. EPA's assessment of exposures and risks associated with establishing the tolerance follows. A. Toxicological Profile EPA has evaluated the available toxicity data and considered the validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Specific information on the studies received and the nature of the adverse effects caused by dimethenamid as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at *http://www.regulations.gov* . The referenced document is available in the docket established by this action, which is described under ADDRESSES , and is identified as EPA-HQ-OPP-2007-0116 in that docket. B. Toxicological Endpoints For hazards that have a threshold below which there is no appreciable risk, the toxicological level of concern
(LOC)is derived from the highest dose at which no adverse effects are observed (the NOAEL) in the toxicology study identified as appropriate for use in risk assessment. However, if a NOAEL cannot be determined, the lowest dose at which adverse effects of concern are identified (the LOAEL) is sometimes used for risk assessment. Uncertainty/safety factors
(UFs)are used in conjunction with the LOC to take into account uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the acute population adjusted dose
(aPAD)and chronic population adjusted dose (cPAD). The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. Short-, intermediate-, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the margin of exposure
(MOE)called for by the product of all applicable UFs is not exceeded. For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk and estimates risk in terms of the probability of occurrence of additional adverse cases. Generally, cancer risks are considered non-threshold. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see *http://www.epa.gov/fedrgstr/EPA-PEST/1997/November/Day-26/p30948.htm* . A summary of the toxicological endpoints for dimethenamid used for human risk assessment can be found at *http://www.regulations.gov* in document, “Dimethenamid-P. Amended Human Health Risk Assessment for a Proposal for the Establishment of Tolerances for Dimethenamid-P Use on Winter Squash, Pumpkin, Radish (Roots and Tops), Rutabaga (Roots and Tops), Turnip (Roots, Tops and Greens) and on Hops, Dried Cones,” at docket ID number EPA-HQ-OPP-2007-0116. C. Exposure Assessment 1. *Dietary exposure from food and feed uses* . In evaluating dietary exposure to dimethenamid, EPA considered exposure under the petitioned-for tolerances as well as all existing dimethenamid tolerances in (40 CFR 180.464). EPA assessed dietary exposures from dimethenamid in food as follows: i. *Acute exposure* . Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. In estimating acute dietary exposure, EPA used Dietary Exposure Evaluation Model/Food Consumption Intake Database (DEEM/FCID) Version 2.03 which incorporates food consumption information from the U.S. Department of Agriculture
(USDA)1994-1996 and 1998 Nationwide Continuing Surveys of Food Intake by Individuals (CSFII). An appropriate acute endpoint attributable to a single dose was selected for the population subgroup females 13-49. The acute dietary analysis was conducted for dimethenamid assuming tolerance level residues, default processing factors, and 100% crop treated
(CT)information. ii. *Chronic exposure* . In conducting the chronic dietary exposure (food and drinking water assessment), EPA used consumption data from the USDA 1994-1996 and 1998 Nationwide CSFII. The chronic dietary exposure assessment was conducted for dimethenamid assuming tolerance level residues, default processing factors, and 100%CT information. iii. *Cancer* . Dimethenamid is a category “C” possible human carcinogen. The chronic reference dose
(cRfD)of 0.05 milligram/kilogram/day (mg/kg/day) used for risk assessment is based on non-cancer precursor effects in the liver; therefore, the cRfD is considered protective of both cancer and non-cancer effects. A separate cancer exposure assessment was not performed. 2. *Dietary exposure from drinking water* . The Agency lacks sufficient monitoring data to complete a comprehensive dietary exposure analysis and risk assessment for dimethenamid in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the environmental fate characteristics of dimethenamid. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at *http://www.epa.gov/oppefed1/models/water/index.htm* . Based on the EPA’s Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) and Screening Concentration in Ground Water (SCI-GROW) models, the estimated drinking water concentrations (EDWCs) of dimethenamid for acute exposures are estimated to be 66.7 parts per billion
(ppb)for surface water and 1.0 ppb for ground water. The EDWCs for chronic exposures are estimated to be 20.2 ppb for surface water and 1.0 ppb for ground water. Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. The EDWCs for use sites with the highest values were used. For acute dietary risk assessment, the water concentration value of 66.7 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 20.2 ppb was used to assess the contribution to drinking water. 3. *From non-dietary exposure* . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Dimethenamid is not registered for use on any sites that would result in residential exposure. 4. *Cumulative effects from substances with a common mechanism of toxicity* . Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.” Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to dimethenamid and any other substances and dimethenamid does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that dimethenamid has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at *http://www.epa.gov/pesticides/cumulative* . D. Safety Factor for Infants and Children 1. *In general* . Section 408 of FFDCA provides that EPA shall apply an additional (“10X”) tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA safety factor. In applying this provision, EPA either retains the default value of 10X when reliable data do not support the choice of a different factor, or, if reliable data are available, EPA uses a different additional FQPA safety factor value based on the use of traditional UFs and/or special FQPA safety factors, as appropriate. 2. *Prenatal and postnatal sensitivity* . There is no concern for increased qualitative and/or quantitative susceptibility following prenatal and postnatal exposure to dimethenamid in rats and rabbits. In the developmental toxicity study in rats there was an increased incidence of post-implantation loss and minor skeletal variations. In the developmental toxicity study in rabbits, late resorptions and minor skeletal variations were observed at the highest dose tested. In the rabbit, the developmental effects occurred at the same dose as maternal toxicity; whereas in the rat, the developmental effects occurred at much higher doses than in the dams. The reproduction study showed decreases in body weight in both pups and parental animals at the same dose levels. 3. *Conclusion* . EPA has determined that reliable data show that it would be safe for infants and children to reduce the FQPA safety factor to 1X. That decision is based on the following findings: i. The toxicity database for dimethenamid is complete. ii. There is no indication that dimethenamid is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity. iii. There is no evidence that dimethenamid results in increased susceptibility in *in utero* rats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study. iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100%CT and tolerance-level residues which results in very high-end estimates of dietary exposure. The dietary drinking water assessment utilizes values generated by modeland associated modeling parameters which are designed to provide health protective, high-end estimates of water concentrations. These assessments will not underestimate the exposure and risks posed by dimethenamid. E. Aggregate Risks and Determination of Safety Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the aPAD and cPAD. The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. For linear cancer risks, EPA calculates the probability of additional cancer cases given aggregate exposure. Short-, intermediate-, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the MOE called for by the product of all applicable UFs is not exceeded. 1. *Acute risk* . Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to dimethenamid will occupy <1 % of the aPAD at the 95th percentile for females 13-49 years old, the population group of concern for acute dimethenamid exposure. 2. *Chronic risk* . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to dimethenamid from food and water will utilize 3% of the cPAD for all infants (<1 year old), the subpopulation group with greatest exposure. There are no residential uses for dimethenamid that result in chronic residential exposure to dimethenamid. 3. *Short-term risk* . Short-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Dimethenamid is not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which do not exceed the Agency's level of concern (LOC). A short-term aggregate risk assessment is not required. 4. *Intermediate-term risk* . Intermediate-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Dimethenamid is not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which do not exceed the Agency's level of concern. An intermediate-term aggregate risk assessment is not required. 5. *Aggregate cancer risk for U.S. population* . The chronic reference dose
(cRfD)of 0.05 mg/kg/day used for risk assessment is based on non-cancer precursor effects in the liver; therefore, the cRfD and chronic risk assessment are considered protective of both cancer and non-cancer effects. 6. *Determination of safety* . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population or to infants and children from aggregate exposure to dimethenamid residues. IV. Other Considerations A. Analytical Enforcement Methodology Adequate enforcement methodology (gas chromatography with a nitrogen phosphorus detector (GC/NPD) Method AM-0884-0193-1) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number:
(410)305-2905; e-mail address: *residuemethods@epa.gov* . B. International Residue Limits There are no established or proposed Codex, Canadian or Mexican maximum residue limits
(MRLs)for dimethenamid on any of the crops/commodities being proposed in this petition. V. Conclusion Therefore, tolerances are established for residues of the herbicide dimethenamid, 1 (R,S)-2-chloro-N-[(1-methyl-2-methoxy) ethyl]-N-(2,4-dimethylthien-3-yl)-acetamide) in or on hop, dried cones at 0.05 parts per million (ppm); pumpkin at 0.01 ppm; radish, roots at 0.01 ppm; radish, tops at 0.01 ppm; rutabaga, roots at 0.01 ppm; rutabaga, tops at 0.1 ppm; turnip, greens at 0.1 ppm; turnip, roots at 0.01 ppm; turnip, tops at 0.1 ppm; and winter squash at 0.01 ppm. The existing time-limited tolerance for winter squash shall be deleted as a permanent tolerance is being established by this action. VI. Statutory and Executive Order Reviews This final rule establishes a tolerance under section 408(d) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget
(OMB)has exempted these types of actions from review under Executive Order 12866, entitled *Regulatory Planning and Review* (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866, this rule is not subject to Executive Order 13211, *Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use* (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled *Protection of Children from Environmental Health Risks and Safety Risks* (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 *et seq* ., nor does it require any special considerations under Executive Order 12898, entitled *Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations* (59 FR 7629, February 16, 1994). Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act
(RFA)(5 U.S.C. 601 *et seq* .) do not apply. This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled *Federalism* (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled *Consultation and Coordination with Indian Tribal Governments* (65 FR 67249, November 6, 2000) do not apply to this rule. In addition, This rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995
(UMRA)(Public Law 104-4). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). VII. Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 *et seq* ., generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report 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 this final rule in the **Federal Register** . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2). List of Subjects in 40 CFR Part 180 Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements. Dated: December 14, 2007. Lois Rossi, Director, Registration Division, Office of Pesticide Programs. Therefore, 40 CFR chapter I is amended as follows: PART 180—[AMENDED] 1. The authority citation for part 180 continues to read as follows: Authority: 21 U.S.C. 321(q), 346a and 371. 2. Section 180.464 is amended by alphabetically adding the following commodities to the table in paragraph (a), removing the text in paragraph (b), and reserving it, and adding text to paragraph
(c)to read as follows: § 180.464 Dimethenamid; tolerances for residues.
(a)* * * Commodity Parts per million * * * * * Hop, dried cones 0.05 * * * * * Radish, roots 0.01 Radish, tops 0.01 Rutabaga, roots 0.01 Rutabaga, tops 0.1 * * * * * Turnip, greens 0.1 Turnip, roots 0.01 Turnip, tops 0.1 * * * * *
(b)*Section 18 emergency exemptions* . [Reserved]
(c)*Tolerances with regional registrations* . Tolerances with regional registration are established for residues of dimethenamid, 1 (R,S)-2-chloro-N-[(1-methyl-2-methoxy) ethyl]-N-(2,4-dimethylthien-3-yl)-acetamide) in or on the following raw agricultural commodities: Commodity Parts per million Pumpkin 0.01 Squash, winter 0.01 [FR Doc. E7-25090 Filed 12-27-07; 8:45 am] BILLING CODE 6560-50-S ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2007-0114; FRL-8343-2] Fluroxypyr; Pesticide Tolerance AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: This regulation establishes tolerances for combined residues of fluroxypyr and its metabolite in or on pome fruit, group 11; millet (grain, forage, hay and proso millet straw). Interregional Research Project Number 4 (IR-4) requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA). DATES: This regulation is effective December 28, 2007. Objections and requests for hearings must be received on or before February 26, 2008, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION ). ADDRESSES: EPA has established a docket for this action under docket identification
(ID)number EPA-HQ-OPP-2007-0114. To access the electronic docket, go to *http://www.regulations.gov* , select “Advanced Search,” then “Docket Search.” Insert the docket ID number where indicated and select the “Submit” button. Follow the instructions on the regulations.gov website to view the docket index or access available documents. All documents in the docket are listed in the docket index available in regulations.gov. Although listed in the index, some information is not publicly available, e.g., Confidential Business Information
(CBI)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 in the electronic docket at *http://www.regulations.gov* , or, if only available in hard copy, at the OPP Regulatory Public Docket in Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. The Docket Facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The Docket Facility telephone number is
(703)305-5805. FOR FURTHER INFORMATION CONTACT: Barbara Madden, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number:
(703)305-6463; e-mail address: *madden.barbara@epa.gov* . SUPPLEMENTARY INFORMATION: I. General Information A. Does this Action Apply to Me? You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to those engaged in the following activities: • Crop production (NAICS code 111), e.g., agricultural workers; greenhouse, nursery, and floriculture workers; farmers. • Animal production (NAICS code 112), e.g., cattle ranchers and farmers, dairy cattle farmers, livestock farmers. • Food manufacturing (NAICS code 311), e.g., agricultural workers; farmers; greenhouse, nursery, and floriculture workers; ranchers; pesticide applicators. • Pesticide manufacturing (NAICS code 32532), e.g., agricultural workers; commercial applicators; farmers; greenhouse, nursery, and floriculture workers; residential users. This listing is not intended to be exhaustive, but rather to provide a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT . B. How Can I Access Electronic Copies of this Document? In addition to accessing an electronic copy of this **Federal Register** document through the electronic docket at *http://www.regulations.gov* , you may access this **Federal Register** document electronically through the EPA Internet under the “ **Federal Register** ” listings at *http://www.epa.gov/fedrgstr* . You may also access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's pilot e-CFR site at *http://www.gpoaccess.gov/ecfr* . C. Can I File an Objection or Hearing Request? Under section 408(g) of FFDCA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2007-0114 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk as required by 40 CFR part 178 on or before February 26, 2008. In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit this copy, identified by docket ID number EPA-HQ-OPP-2007-0114, by one of the following methods: • *Federal eRulemaking Portal* : *http://www.regulations.gov* . Follow the on-line instructions for submitting comments. • *Mail* : Office of Pesticide Programs
(OPP)Regulatory Public Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. • *Delivery* : OPP Regulatory Public Docket (7502P), Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only accepted during the Docket's normal hours of operation (8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays). Special arrangements should be made for deliveries of boxed information. The Docket Facility telephone number is
(703)305-5805. II. Petition for Tolerance In the **Federal Register** of April 4, 2007 (72 FR 16352) (FRL-8119-2), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 6E7168) by Interregional Research Project Number 4 (IR-4), 500 College Road East, Suite 201 W, Princeton, NJ 08540. The petition requested that 40 CFR 180.535 be amended by establishing tolerances for combined residues of the herbicide fluroxypyr, 1-methylheptyl ester [1-methylheptyl ((4-amino-3,5-dichloro-6-fluoro-2-pyridinyl)oxy)acetate] and its metabolite fluroxypyr [((4-amino-3,5-dichloro-6-fluoro-2-pyridinyl)oxy)acetic acid], in or on pome, fruit, group 11 at 0.02 parts per million (ppm); millet, grain at 0.5 ppm; millet, forage at 12.0 ppm; millet, hay at 20.0 ppm; millet, proso, grain at 0.5 ppm; millet, proso, straw at 12.0 ppm; millet, proso, forage at 12.0 ppm; millet, proso, hay at 20.0 ppm; millet, pearl, grain at 0.5 ppm; millet, pearl, forage at 12.0 ppm; and millet, pearl, hay at 20.0 ppm. That notice referenced a summary of the petition prepared by Dow AgroSciences, the registrant, which is available to the public in the docket, *http://www.regulations.gov* . There were no comments received in response to the notice of filing. Based upon review of the data supporting the petition, EPA has determined that separate tolerances for proso and pearl millet grain, forage, and hay are not needed since these commodities are covered by the tolerances being established for millet grain, millet forage and millet hay. EPA is also deleting all the tolerances in § 180.535(b) for field and sweet corn, onion, and sorghum commodities that are no longer needed since they have expired. The deletions under § 180.535(b) are time-limited tolerances that were established under section 18 emergency exemptions that have since expired and have been superceded by the establishment of general tolerances for the same commodities under § 180.535(a). III. Aggregate Risk Assessment and Determination of Safety Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .” These provisions were added to FFDCA by the Food Quality Protection Act
(FQPA)of 1996. Consistent with section 408(b)(2)(D) of FFDCA, and the factors specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for the petitioned-for tolerance for combined residues of fluroxypyr, 1-methylheptyl ester [1-methylheptyl ((4-amino-3,5-dichloro-6-fluoro-2-pyridinyl)oxy)acetate] and its metabolite fluroxypyr [((4-amino-3,5-dichloro-6-fluoro-2-pyridinyl)oxy)acetic acid] on fruit, pome, group 11 at 0.02 ppm; millet, grain at 0.5 ppm; millet, forage at 12.0 ppm; millet, hay at 20.0 ppm and millet, proso, straw at 12.0 ppm. EPA's assessment of exposures and risks associated with establishing the tolerance follows. A. Toxicological Profile EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Specific information on the studies received and the nature of the adverse effects caused by fluroxypyr as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at *http://www.regulations.gov* in document *Fluroxypyr: Human Health Risk Assessment to Support Proposed New Uses on Pome Fruits and Millet* at Attachment #2 page 27 - 30 in docket ID number EPA-HQ-OPP-2007-0114. Fluroxypyr has low acute toxicity by the oral and dermal routes and moderate acute toxicity by the inhalation route. The kidney is the target organ for fluroxypyr following oral exposure to rats, mice, and dogs. In the rat, increased kidney weight and death were observed in both sexes in the 90-day feeding study, increased kidney weight and chronic progressive glomerulonephropathy were observed in both sexes in the chronic study. Increased kidney weight was observed in the maternal rat in the developmental toxicity study, and kidney effects (deaths due to renal failure; increased kidney weight, and microscopic kidney lesions) were observed in both sexes in the 2-generation reproduction study. Although kidney toxicity (early signs of acute tubular nephrosis) was observed in dogs in the 28-day feeding study, no kidney effects or other treatment related toxicity was seen in the chronic feeding study in dogs. Increased kidney lesions (increased incidences of renal papillary necrosis and regenerative nephrosis in females) were observed in mice following long-term exposure. Treatment related deaths were noted in maternal rats (600 milligrams/kilograms/day (mg/kg/day)) and rabbits (400 mg/kg/day). Endpoints for risk assessment were based on kidney effects seen in the database. There was no evidence of increased susceptibility (quantitative/qualitative) following *in utero* exposure to the acid and the ester in rats and rabbits, or following prenatal and/or postnatal exposure in rats. There are no neurotoxicity concerns from the acute and subchronic neurotoxicity studies, and the weight of the evidence indicates a lack of concern for developmental neurotoxicity. Therefore, a developmental neurotoxicity study
(DNT)is not required. Fluroxypyr is classified as “not likely” as a human carcinogen and there was no concern for its mutagenicity potential. B. Toxicological Endpoints For hazards that have a threshold below which there is no appreciable risk, the toxicological level of concern
(LOC)is derived from the highest dose at which no adverse effects are observed (the NOAEL) in the toxicology study identified as appropriate for use in risk assessment. However, if a NOAEL cannot be determined, the lowest dose at which adverse effects of concern are identified (the LOAEL) is sometimes used for risk assessment. Uncertainty/safety factors
(UFs)are used in conjunction with the LOC to take into account uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the acute population adjusted dose
(aPAD)and chronic population adjusted dose (cPAD). The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. Short-, intermediate-, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the margin of exposure
(MOE)called for by the product of all applicable UFs is not exceeded. For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk and estimates risk in terms of the probability of occurrence of additional adverse cases. Generally, cancer risks are considered non-threshold. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see *http://www.epa.gov/fedrgstr/EPA-PEST/1997/November/Day-26/p30948.htm* . A summary of the toxicological endpoints for fluroxypyr used for human risk assessment can be found at *http://www.regulations.gov* in document *Fluroxypyr: Human Health Risk Assessment to Support Proposed New Uses on Pome Fruits and Millet* at page 11 in docket ID number EPA-HQ-OPP-2007-0114. C. Exposure Assessment 1. *Dietary exposure from food and feed uses* . In evaluating dietary exposure to fluroxypyr, EPA considered exposure from the petitioned-for tolerances as well as all existing fluroxypyr tolerances in (40 CFR 180.535). EPA assessed dietary exposures from fluroxypyr in food as follows: i. *Acute exposure* . Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a single exposure. No such effects were identified in the toxicological studies for fluroxypyr; therefore, a quantitative acute dietary exposure assessment is unnecessary. ii. *Chronic exposure* . In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA 1994-1996 and 1998 Nationwide Continuing Surveys of Food Intake by Individuals (CSFII). As to residue levels in food, assumed all foods for which there are tolerances were treated and contain tolerance-level residues. iii. *Cancer* . Based on the results of carcinogenicity studies in rats and mice, EPA has concluded that fluroxypyr is “not likely to be carcinogenic to humans.” Consequently, a quantitative cancer exposure and risk assessment is not appropriate for fluroxypyr. 2. *Dietary exposure from drinking water* . The Agency lacks sufficient monitoring data to complete a comprehensive dietary exposure analysis and risk assessment for fluroxypyr in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the environmental fate characteristics of fluroxypyr. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at *http://www.epa.gov/oppefed1/models/water/index.htm* . Based on the Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) and Screening Concentration in Groundwater (SCI-GROW) models, the estimated environmental concentrations
(EECs)of fluroxypyr for chronic exposures are estimated to be 3.28 ppb for surface water and 0.04 ppb for ground water. Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For chronic dietary risk assessment, the water concentration value of 3.28 ppb was used to assess the contribution to drinking water. 3. *From non-dietary exposure* . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Fluroxypyr is currently registered for the following residential non-dietary sites: Application to residential turf grass and recreational sites such as golf courses, parks, and sports fields. EPA assessed residential exposure using the following assumptions: Residential handlers may receive short-term dermal and inhalation exposure to fluroxypyr when mixing, loading and applying the formulations. However, toxicity by the dermal route of exposure is not expected; therefore only inhalation daily doses for residential handlers were calculated. Adults and children may be exposed to fluroxypyr residues from dermal contact with turf during post-application activities. Toddlers may receive short- and intermediate-term oral exposure from incidental ingestion during post-application activities. A dermal risk assessment for post-application exposures was not conducted because a dermal endpoint was not selected. Therefore, only the following post-application exposure scenarios resulting from lawn treatment were assessed: i. Toddlers' incidental ingestion of pesticide residues on lawns from hand-to-mouth transfer, ii. Object-to-mouth transfer from mouthing of pesticide-treated turfgrass, and iii. Incidental ingestion of soil from pesticide-treated residential areas. 4. *Cumulative effects from substances with a common mechanism of toxicity* . Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.” Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to fluroxypyr and any other substances and fluroxypyr does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that fluroxypyr has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at *http://www.epa.gov/pesticides/cumulative* . D. Safety Factor for Infants and Children 1. *In general* . Section 408 of FFDCA provides that EPA shall apply an additional (“10X”) tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA safety factor. In applying this provision, EPA either retains the default value of 10X when reliable data do not support the choice of a different factor, or, if reliable data are available, EPA uses a different additional FQPA safety factor value based on the use of traditional UFs and/or special FQPA safety factors, as appropriate. 2. *Prenatal and postnatal sensitivity* . There was no evidence of increased susceptibility (quantitative/qualitative) following *in utero* exposure to the fluroxypyr in rats and rabbits, or following prenatal and/or postnatal exposure in rats. There are no neurotoxicity concerns from the acute and subchronic neurotoxicity studies, and the weight of the evidence indicates a lack of concern for developmental neurotoxicity. 3. *Conclusion* . EPA has determined that reliable data show that it would be safe for infants and children to reduce the FQPA safety factor to 1X. That decision is based on the following findings: i. The toxicity database for fluroxypyr is complete. ii. There is no indication that fluroxypyr is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity. iii. There is no evidence that fluroxypyr results in increased susceptibility in *in utero* rats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study. iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100% crop treated and tolerance-level residues. Conservative ground and surface water modeling estimates were used. EPA used similarly conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by fluroxypyr. E. Aggregate Risks and Determination of Safety Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the aPAD and cPAD. The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. For linear cancer risks, EPA calculates the probability of additional cancer cases given aggregate exposure. Short-, intermediate-, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the MOE called for by the product of all applicable UFs is not exceeded. 1. *Acute risk* . None of the toxicology studies available for fluroxypyr indicated the possibility of an effect of concern occurring as a result of a single exposure; therefore, fluroxypyr is not expected to pose an acute risk. 2. *Chronic risk* . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to fluroxypyr from food and water will utilize 1.4% of the cPAD for children 1-2 years old, the subpopulation group with greatest exposure. Based on the use patterns, chronic residential exposure to residues of fluroxypyr is not expected. 3. *Short-term risk and intermediate-term* . Short-term and intermediate-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Fluroxypyr is currently registered for uses that could result in short-term and intermediate-term residential exposure and the Agency has determined that it is appropriate to aggregate chronic food and water and short-term exposures for fluroxypyr. Using the exposure assumptions described in this unit for short-term and intermediate-term exposures, EPA has concluded that food, water, and residential exposures aggregated result in aggregate MOEs of 4,400 to 53,000. The MOE for the U.S. population is 8,200. The most highly exposed subgroup was Children, 1-2 years old, with an MOE of 4,400. 4. *Aggregate cancer risk for U.S. population* . There was no evidence of carcinogenicity in two carcinogenicity studies in rats and mice with fluroxypyr. Therefore, fluroxypyr is considered “Not likely to be carcinogenic to humans.” Fluroxypyr is not expected to pose a cancer risk. 5. *Determination of safety* . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to fluroxypyr residues. IV. Other Considerations A. Analytical Enforcement Methodology Adequate enforcement methodology (gas chromatography/mass-selective detector (GC/MSD)) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number:
(410)305-2905; e-mail address: *residuemethods@epa.gov* . B. International Residue Limits There are no Codex, Canadian or Mexican MRLs for fluroxypyr for pome fruits or millet. V. Conclusion Therefore, tolerances are established for combined residues of fluroxypyr, 1-methylheptyl ester [1-methylheptyl ((4-amino-3,5-dichloro-6-fluoro-2-pyridinyl)oxy)acetate] and its metabolite fluroxypyr [((4-amino-3,5-dichloro-6-fluoro-2-pyridinyl)oxy)acetic acid] in or on fruit, pome, group 11 at 0.02 ppm; millet, grain at 0.5 ppm; millet, forage at 12.0 ppm; millet, hay at 20.0 ppm and millet, proso, straw at 12.0 ppm. Time-limited tolerances were established in 40 CFR 180.535(b) for residues of fluroxypyr on field and sweet corn, onion, and sorghum commodities in connection with FIFRA section 18 emergency exemptions granted by the EPA. All of these time-limited tolerances have expired and are no longer in force. Permanent tolerances have been established on these commodities in § 180.535(a). Because expired, time-limited tolerances for residues of fluroxypyr are without effect, this final rule removes them from EPA's regulations. EPA finds there is good cause to make this latter change without prior notice and comment because it eliminates obsolete portions of the regulation. EPA concludes notice and comment are unnecessary on such changes. VI. Statutory and Executive Order Reviews This final rule establishes a tolerance under section 408(d) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget
(OMB)has exempted these types of actions from review under Executive Order 12866, entitled *Regulatory Planning and Review* (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866, this rule is not subject to Executive Order 13211, *Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use* (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled *Protection of Children from Environmental Health Risks and Safety Risks* (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 *et seq* ., nor does it require any special considerations under Executive Order 12898, entitled * Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations * (59 FR 7629, February 16, 1994). Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act
(RFA)(5 U.S.C. 601 *et seq* .) do not apply. This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled *Federalism* (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled *Consultation and Coordination with Indian Tribal Governments* (65 FR 67249, November 6, 2000) do not apply to this rule. In addition, This rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995
(UMRA)(Public Law 104-4). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). VII. Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 *et seq* ., generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report 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 this final rule in the **Federal Register** . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2). List of Subjects in 40 CFR Part 180 Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements. Dated: December 14, 2007. Lois Rossi, Director, Registration Division, Office of Pesticide Programs. Therefore, 40 CFR chapter I is amended as follows: PART 180—[AMENDED] 1. The authority citation for part 180 continues to read as follows: Authority: 21 U.S.C. 321(q), 346a and 371. 2. Section 180.535 is amended by alphabetically adding the following commodities to the table in paragraph (a), removing the expired time-limited tolerances in paragraph (b), and reserving it to read as follows: § 180.535 Fluroxypyr 1-methylheptyl ester; tolerances for residues.
(a)* * * Commodity Parts per million * * * * * Fruit, pome, group 11 0.02 * * * * * Millet, forage 12.0 Millet, grain 0.5 Millet, hay 20.0 Millet, proso, straw 12.0 * * * * *
(b)*Section 18 emergency exemptions* . [Reserved] [FR Doc. E7-25092 Filed 12-27-07; 8:45 am] BILLING CODE 6560-50-S DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 431, 433, and 440 [CMS-2287-F] RIN 0938-AP13 Medicaid Program; Elimination of Reimbursement Under Medicaid for School Administration Expenditures and Costs Related to Transportation of School-Age Children Between Home and School AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: Under the Medicaid program, Federal payment is available for the costs of administrative activities “as found necessary by the Secretary for the proper and efficient administration of the State plan.” This final rule eliminates Federal Medicaid payment for the costs of certain school-based administrative and transportation activities because the Secretary has found that these activities are not necessary for the proper and efficient administration of the Medicaid State plan and are not within the definition of the optional transportation benefit. Based on these determinations, under this final rule, Federal Medicaid payments will no longer be available for administrative activities performed by school employees or contractors, or anyone under the control of a public or private educational institution, and for transportation from home to school. In addition, this final rule responds to public comments received on the September 7, 2007 proposed rule. EFFECTIVE DATE: These regulations are effective on February 26, 2008. FOR FURTHER INFORMATION CONTACT: Sharon J. Brown,
(410)786-0673, Judi Wallace,
(410)786-3197. SUPPLEMENTARY INFORMATION: We published a proposed rule in the **Federal Register** on September 7, 2007, at 72 FR 51397 that would eliminate Federal Medicaid payment for school-based administrative activities, based on a Secretarial finding that such activities are not necessary for the proper and efficient administration of the Medicaid State plan. Moreover, the proposed rule would also eliminate Federal Medicaid payment based on a finding that transportation from home to school and back for school-age children is neither necessary for the proper and efficient administration of the Medicaid State plan, nor within the scope of the optional medical transportation benefit. We received 1,240 timely public comments on the proposed rule. After careful consideration of these comments, we are adopting the rule as proposed without change. We discuss later in this preamble our response to comments and our reasons for going forward with the proposed rule. Below, we first summarize the background and provisions of the proposed rule. I. Background A. Administrative Activities and Transportation Services Under the Medicaid Program Title XIX of the Social Security Act (the Act) authorizes Federal grants to States for Medicaid programs, operated by each State under an approved Medicaid State plan that provide medical assistance to needy individuals including low-income families, the elderly, and persons with disabilities. Federal payment is available to a State for a proportion of expenditures for medical assistance under the approved Medicaid State plan, and of expenditures necessary for administration of the State plan. This joint Federal-state financing of expenditures is described in section 1903(a) of the Act, which sets forth the rates of Federal financing for different types of expenditures. Under section 1903(a)(7) of the Act, Federal payment is currently available at a rate of 50 percent of amounts expended by a State “as found necessary by the Secretary for the proper and efficient administration of the State plan.” In addition, OMB Circular A-87, which contains the cost principles for State, local and Indian tribal governments for the administration of Federal awards, states that, “Governmental units are responsible for the efficient and effective administration of Federal awards.” Under either of these provisions, administrative expenditures must be reasonable and necessary for the performance of functions funded by the Federal award. Transportation to and from providers is not expressly mentioned in the Medicaid statute, but States can claim Federal matching dollars for such transportation in one of two ways. Since the inception of the program the Federal government has recognized that transportation is essential to the administration of the Medicaid State plan, to ensure that beneficiaries have access to covered services. Federal regulations at 42 Code of Federal Regulations
(CFR)431.53 require that Medicaid State plans “specify that the Medicaid agency will ensure necessary transportation for recipients to and from providers” and describe the methods for doing so. Under 42 CFR 440.170(a), States are afforded the option of furnishing transportation as an optional covered medical service recognized under section 1905(a)(28) of the Act as defined and specified. Under this section, transportation is defined as “expenses for transportation and other related travel expenses determined necessary by the agency *to secure medical examination and treatment* (emphasis added) for a recipient.” Travel expense is defined to include the cost of the actual transportation necessary to the medical service, meals and lodging en route to medical care and the cost of attendees to the beneficiary if necessary. Whether transportation is furnished as an administrative activity under 42 CFR 431.53 or as an optional covered medical service could affect the Federal Medicaid matching rate and the flexibility available to the State, but these issues are not relevant for purposes of this final regulation. B. Medicaid and Schools A wide range of medical services may be furnished to students in school settings. In particular, pursuant to requirements under the Individuals with Disabilities Education Act (IDEA), schools deliver a broad range of educational and related services (e.g., educational, social, and medical services) to students with disabilities to address their diverse needs. Section 1903(c) of the Act prohibits the Secretary from denying or restricting Federal Medicaid payment to States for covered services furnished to a child with a disability on the basis that the services are included in the child's Individualized Education Program
(IEP)or Individualized Family Services Plan
(IFSP)established pursuant to the IDEA. Some of the special education and related services required by the IDEA may be within the scope of medical assistance services covered under the Medicaid program. Medicaid covers medically necessary direct medical services included in an IEP or IFSP that are in a Medicaid covered category under the approved State Medicaid plan (such as speech therapy or physical therapy, but also including Early and Periodic Screening Diagnosis and Treatment), and that meet all other Federal and State Medicaid regulations (including provider qualifications and any amount, duration and scope limitations). Schools and school districts perform a myriad of administrative activities that arise directly from the educational mission of the schools. Though these activities may include coordinating the delivery of Medicaid services with educational services, they are primarily associated with educational program requirements including IDEA requirements. Transportation to and from the school for most students is also part of the schools' educational responsibility. C. Prior Agency Experience With School-Based Administration and Transportation As detailed in the proposed rule, CMS had previously issued several guidance documents on school-based administration and transportation. In those interpretive guidance documents, CMS set forth a complex set of principles permitting State claims for school-based administration and transportation. The claims that resulted from this guidance were the subject of several audits by the Office of the Inspector General finding widespread fraud and abuse as well as improper claiming of costs to the Medicaid program that were incurred to meet mandates under educational programs. II. Provisions of the Proposed Regulations We published a proposed rule on September 7, 2007, at 72 FR 51397, that would eliminate Federal Medicaid payment for school-based administrative activities, based on a Secretarial finding that such activities are not necessary for the proper and efficient administration of the State plan. Moreover, the proposed rule would also eliminate Federal Medicaid payment based on a Secretarial finding that transportation from home to school and back for school-age children is neither necessary for the proper and efficient administration of the State plan, nor within the scope of the optional medical transportation benefit. Based on these findings, the proposed rule specified that Federal financial participation
(FFP)under the Medicaid program will not be available for school-based administrative and certain transportation costs, with the exception of administrative activities conducted by employees of the State or local Medicaid agency. Under the proposed rule, the following changes would apply to the costs of the following activities or services: • FFP would no longer be available for the costs of school-based administrative activities under Medicaid. By administrative activities, we referred to activities that are not properly included in the scope of a covered service. School-based administrative expenditures are expenditures under the administrative control of a public or private educational institution and that are conducted by school employees or contractors, or anyone under the control of a public or private educational agency. • FFP would no longer be available for the costs of transportation from home to school and back for school-age children with an IEP or IFSP established pursuant to the IDEA. The proposed rule would supersede all previous guidance, including guidance on school-based administrative claiming and school-based transportation. Under the proposed rule, CMS would continue to reimburse States for school-based direct Medicaid services in their approved State plans. That is, the proposed rule would not affect the treatment of expenditures for direct medical services that are included in the approved State Medicaid plan and provided in schools, nor did it affect transportation of school-aged children from school or home to a non-school-based direct medical service provider that bills under the Medicaid program, or from the non-school-based provider to school or home. Furthermore, under the proposed rule, CMS would continue to reimburse States for transportation costs related to children who are not yet school-age and are being transported from home to another location, including a school, and back to receive direct medical services, as long as the visit does not include an educational component or any activity unrelated to the covered direct medical service. Federal funding would also continue to be available for administrative overhead costs that are integral to, or an extension of, a direct medical service and, as such, are claimed as medical assistance. These activities are properly reimbursed at the applicable Federal medical assistance percentage
(FMAP)rate for the related direct medical service, and include patient follow-up, assessment, counseling, education, parent consultations, and billing activities. Furthermore, school-based administrative activities, such as Medicaid outreach and eligibility intake, that are conducted by employees of the State or local Medicaid agency would remain eligible for FFP under the proposed rule. The proposed rule was based on a determination that administrative activities performed by schools, and transportation of school-age children from home to school and back, are not necessary for proper and efficient administration of the State Medicaid plan, and are not within the scope of the transportation services recognized by the Secretary under 42 CFR 440.170(a), for the following reasons:
(1)The activities or services support the educational program and do not specifically benefit the Medicaid program;
(2)The activities or services are performed by school systems to further their educational mission and/or to meet requirements under the IDEA, even in the absence of any Medicaid payment;
(3)The types of school-based administrative activities for which claims are submitted to Medicaid largely overlap with educational activities that do not directly benefit the Medicaid program; and
(4)Transportation from home to school and back is not properly characterized as transportation to or from a medical provider. III. Analysis of and Responses to Public Comments We received approximately 1,240 timely comments from State officials, school districts and consortia, educational organizations, child advocacy groups, health care organizations, school nurses, parents, teachers, school officials, providers, and other interested individuals. The largest group of comments came through a write-in campaign initiated by an organization titled the Council for Exceptional Children (CEC). The State with which the largest number of commenters identified themselves was California. All comments were reviewed and analyzed. After associating like comments, we placed them in categories based on subject matter. Summaries of the public comments received and our responses to those comments are set forth below. General Most commenters opposed the proposed regulation, for the reasons specified below. Of the commenters supporting the proposed rule, they either concurred that Medicaid funds should not be used to fulfill educational requirements or appreciated the potential for savings in Federal expenditures. The categorized comments and our responses are listed below. Funding Issues *Comment:* The largest number of comments focused on funding issues, arguing that any loss of funding would potentially “* * * reduce the funds available to our already strained special education budgets,” according to one commenter. Another commenter argued that “* * * if States cannot take up the slack, and most of them are struggling to provide non-medical transportation to get children to school, as well as to satisfy other Federal requirements, this funding cut will be yet another unfunded * * * mandate.” Many commenters noted that in their districts, schools are already strapped with tight budgets, some even specifying the exact amount of revenue they believed would be lost under the proposed regulation. One commenter noted that “Should administrative claiming be eliminated, we would have to shift funds from other areas in our budgets to cover the cost or raise taxes if this proposal should become a reality.” And: “Our school division struggles daily with dwindling local resources and increasing demand * * *. Loss of these funds * * * would unfairly exacerbate a dire situation.” It is unrealistic, many commenters argued, to assume that any State or school would be able to replace the loss of Federal Medicaid reimbursement that would result from finalization of the proposed rule. *Response:* Such comments appear to support our view and concern that Title XIX funds are being used as a funding source without specific benefit to the Medicaid program. Constrained local and State funding for education is not the basis for determining whether a cost is properly claimed under Medicaid. Specifically, administrative expenditures must be deemed necessary for the proper and efficient administration of the Medicaid State plan in order for reimbursement to be available. The need for schools to obtain additional funding in itself does not justify continued Federal Medicaid reimbursement. Limitation of Medicaid claims to administrative and transportation activities that are directly related to the furtherance of the Medicaid State plan is necessary to maintain the financial integrity of the Medicaid program. None of these commenters provided any factual basis to conclude that the activities in question were, indeed, necessary for the proper and efficient administration of the Medicaid State plan (or transportation necessary to ensure that individuals obtain access to Medicaid providers). *Comment:* Some commenters focused on the fact that Medicaid reimbursement is used to meet other educational needs and augment underfunded budgets. Commenters noted that reimbursement for school-based administrative activities is used for a wide variety of unrelated, but important, purposes, such as instructional materials and equipment, or to fund staff positions, and that schools rely on this funding for such purposes. According to one commenter, Medicaid reimbursement is used to allow service staff to attend workshops and to purchase “* * * needed technology and materials to better educate our children.” Some asked how States and schools would make up for any funding shortfalls that result from finalization of the proposed rule. As one commenter noted: “* * * this * * * action by the Federal government would force us to make cuts in other essential educational programs to ensure that federally required services can continue, despite the lack of funding,” such as electives, after-school activities, or arts and music programs. The loss of Medicaid payments could also result in schools having to lay off staff or curtail referral services, according to some commenters. *Response:* Federal matching funds under Medicaid are only available for Medicaid services provided to Medicaid eligible individuals as described in the Medicaid State plan. The commenters expressly identified non-Medicaid costs that are clearly educational in nature. Constrained local and State funding for education is not the basis for determining whether a cost is properly claimed under Medicaid. We believe the final rule is necessary to maintain the financial integrity of the Medicaid program and there is nothing in this final rule which would eliminate funding for necessary direct medical services eligible for Medicaid funding. *Comment:* Some commenters noted the fact that Congress has never fully funded the IDEA, and in lieu of such funding, Medicaid reimbursement must be used. One commenter stated the following: “At a time when the Federal government is funding barely 18 percent of the national average per-pupil expenditures for each child in special education instead of the 40 percent that Congress promised to pay when IDEA was first enacted, major cutbacks in Medicaid reimbursements will severely restrict the ability of State and local school districts to provide much-needed health care services to disabled children.” Without a commensurate increase in funding for IDEA-related requirements to offset cuts resulting from the proposed rule, they argue, critical services may be cut. The proposed rule makes no attempt to explain how States and school districts might compensate for the reduction in funding under Medicaid and the inadequate funding of IDEA-related mandates, they noted. *Response:* The desire for supplemental funds to augment IDEA funding does not justify Medicaid payments that are not authorized by the Medicaid statute, regulations and applicable cost accounting principles. Under Office of Management and Budget Circular A-87, “governmental units are responsible for the efficient and effective administration of Federal awards.” It is not consistent with efficient and effective administration of the Medicaid program to pay for administrative activities (including transportation from home to school and back) that are performed as part of a school's educational mission, do not specifically benefit the Medicaid program, are neither controlled nor supervised by the Medicaid program, and would be performed by the schools even in the absence of the Medicaid program. As stated earlier, we believe the final rule is necessary to maintain the financial integrity of the Medicaid program. Such comments appear to support our view and concern that Title XIX funds are being used for non-Medicaid purposes and that the request for additional funding for educational activities should be more appropriately directed to other Federal, State, and local funding sources. Provision of Services *Comment:* Some commenters worried that the proposed rule would adversely impact the provision of needed services to school-age children. One commenter noted that “* * * schools are providing necessary medical/psychological services and/or referrals that others are able to be reimbursed for, so this should not be cut.” Some argued that any changes to the Medicaid program would have a detrimental effect on the medical care provided to students. *Response:* The provision of, and reimbursement for, school-based medical services are not affected by the changes specified in the final rule. CMS will continue to recognize schools as valid settings for the delivery of direct medical services recognized in the Medicaid State plan. Medicaid reimbursement would remain available for covered services provided to children pursuant to an IEP or IFSP, whether they are provided in school or in the community. That is, CMS will continue to reimburse States for school-based Medicaid service costs authorized in their approved Medicaid State plans, including transportation of school-aged children from school or home to a non-school-based direct medical service provider that bills under the Medicaid program, and from the non-school-based provider to school or home. CMS will also continue to reimburse States for transportation costs related to children who are not yet school-age and are being transported from home to another location, including a school, and back to receive direct medical services, as long as the transportation is not primarily for purposes other than gaining access to a Medicaid provider for covered services (such as when it is regularly scheduled transportation to a day care program). We do not believe the final rule will impact children eligible for Medicaid. IDEA mandates that services prescribed by a child's IEP or IFSP be provided to children. Section 1903(c) of the Act provides clearly that Medicaid reimbursement be made available for such services, when provided to Medicaid-eligible children, covered under the State plan, and provided by qualified providers that properly bill the Medicaid program. These requirements will not change as a result of the final rule. As a result, these services will continue to be provided to children pursuant to their IEP or IFSP, and will continue to be paid by Medicaid. *Comment:* One commenter noted that “* * * while the proposed regulation does not directly affect reimbursement for these services, a school district's inability to be reimbursed for administrative services related to the provision of the medically necessary services will in fact have a chilling effect on a school district's ability to deliver these services.” To deny Federal Medicaid matching for administrative activities provided by school employees or its contractors would, in the words of one commenter, “* * * improperly shift the cost of allowable Medicaid services entirely to State and localities, without regard for the reduction in service that would result.” *Response:* Federal funding would continue to be available for administrative overhead costs that are integral to, or an extension of, a direct medical service and, as such, are claimed as medical assistance. These activities are properly reimbursed at the applicable FMAP rate for the related direct medical service, and can include administrative activities under the direction of the medical service provider, such as patient follow-up, parent consultations, and billing activities, when included in the negotiated rate paid for direct medical services. *Comment:* In certain comments, it was noted that Medicaid funding helps school pay for other types of services, such as mental health services, which would not otherwise be available to students. One commenter argued that if the proposed rule is promulgated, school-based services will be less effective and more costly for CMS, State Medicaid agencies, and schools. Another commenter noted that while the proposed rule does not explicitly restrict access to services in schools, it would make it less desirable for Medicaid programs to use school settings to provide services, and could inadvertently make it more difficult to meet Medicaid's original intent to fund necessary medical assistance “* * * to promote growth and development and prevent or ameliorate disabilities and conditions.” *Response:* Medicaid payment remains available for all covered services furnished in a school setting and for children. These covered services include the broadest possible range of services under the mandatory Medicaid covered benefit for early and periodic screening, diagnostic and treatment (EPSDT) services. As Medicaid will still provide funding for such services that qualify under the Medicaid State plan, this will likely mean that the availability of such services in a school setting will not diminish as a result of this rule. *Comment:* A few commenters pointed to past and ongoing litigation over the failure to provide mandated services to children with disabilities and suggested that the likely consequences of the proposed rule would be a reduction in funding for necessary services they have fought in court to secure for these children. Specifically, some commenters cited the ruling in the *Bowen* v. *Massachusetts* case (487 U.S. 879
(1988)No. 87-712), in which an appellate court ruled that “* * * it is the nature of the services, not what the services are called or who provided them” that determines whether the services qualify for Medicaid reimbursement. By eliminating Federal Medicaid reimbursement for administrative activities engaged in by school employees, the proposed rule goes against Federal court interpretations of the Medicaid statute, they argue. Others interpret that ruling to mean that any attempt to eliminate Medicaid reimbursement for transportation as a covered service in a State plan based solely on the child's participation in an educational program would be in violation of the court's ruling in Bowen. The court ruling, they contend, nullifies CMS's attempts to justify elimination of reimbursement for school-based administrative and transportation service expenditures by labeling such expenditures as “educational” in nature. *Response:* The final rule clarifies that Federal Medicaid funding is available for direct medical services provided by schools. To the extent that a State elects to reimburse transportation as an optional medical service, Federal reimbursement will still be available to the extent that the primary purpose of that transportation is access to a medical service. That is, CMS will continue to reimburse States for transportation of school-aged children from school or home to a non-school-based direct medical service provider that bills under the Medicaid program, and from the non-school-based provider to school or home. Furthermore, CMS will continue to reimburse States for transportation costs related to children who are not yet school-age and are being transported from home to another location, including a school, and back to receive direct medical services, as long as the transportation is not primarily for purposes other than gaining access to a Medicaid provider (such as when it is regularly scheduled transportation to a day care program). However, routine transportation from home to school and back for school age children is primarily educational in nature and will not be eligible for Medicaid reimbursement as part of a medical service. Potential Impact on EPSDT *Comment:* Some commenters argued that the proposed rule will make it difficult for States to fulfill requirements under the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit specified in section 1905(a) of the Act. This mandate, they note, requires States to inform families about the availability of EPSDT services and assist them in accessing services. Many school systems have contracted with States so that school nurses and staff inform families about EPSDT. As currently written, the proposed rule would limit reimbursement for these activities to employees of the State Medicaid agency. This potential conflict between the EPSDT mandate and the proposed rule, they argue, would severely restrict the ability for States to meet their responsibility under ESPDT and hamper access to necessary services for children. Under EPSDT requirements, one commenter noted, States are urged to make use of other public, health, mental health and educational programs in order to ensure an effective child health program. They cited the State Medicaid Manual as not only encouraging State Medicaid agencies to coordinate EPSDT administrative activities with “school health programs of State and local health agencies,” but also offering FFP to cover the costs to public agencies of providing direct support to the Medicaid agency in administering the EPSDT program. *Response:* Under the final rule, States will still be required to meet EPSDT requirements and are afforded flexibility in meeting these requirements. We do not believe it is consistent with proper and efficient administration of the Medicaid State plan, however, to commingle EPSDT outreach functions with other school administrative or direct service activities. We continue to encourage States to coordinate Medicaid EPSDT programs with school health programs and State, local and other Federal health care or social welfare programs. Schools employ health care providers and other educational staff as information points for a variety of medical and social services far beyond simply the Medicaid program. This function is specific to the nature of a school-based provider and is not directly related to the administration of the Medicaid State plan. Coordination and information dissemination efforts that are not under the control and supervision of the State agency and are performed by schools, however, are fundamentally functions that further the mission of the schools to ensure that students receive necessary services using available Medicaid resources. Such activities are not directly for administration of the State Medicaid plan. Support for School-Based Administration *Comment:* A substantial number of commenters urged CMS to continue its support for school-based Medicaid administrative activities because, they argued, it can be an effective way to reach children in need of services and to ensure adequate medical care for disabled students and their families, who are often low-income and uninsured. One commenter noted that: “Families are familiar and comfortable with the people and the school, which makes schools a logical place to families to access health care. The unique role played by schools as a health service portal is irreplaceable.” Some thought the proposed regulation would decrease the opportunities for children and families to learn about the availability of Medicaid, and the services provided to those eligible for coverage. As a result, the proposed rule could result in increased health care costs through missed opportunities to enroll eligible children in Medicaid and connect them to needed services before they become catastrophic. A recurring theme was that the proposed rule fails to recognize that certain administrative activities performed by school-based staff are instrumental to ensuring access to covered Medicaid services for eligible low-income children. *Response:* We acknowledge the importance of outreach and referral activities, and in no way preclude State or local Medicaid agencies from engaging in such activities. Nor do we preclude school employees from conducting activities that inform individuals of the availability of Medicaid services. But we disagree that such school employee activities are properly considered administration of the State plan. Such activities are performed as part of the normal operation of the school to ensure that students receive educational and related services, and to coordinate with other payers for those services. These activities are not performed for the purpose of State Medicaid plan administration. Moreover, this rule protects the financial integrity of the Medicaid program from the improper claiming and cost shifting found in Inspector General audits. *Comment:* Other commenters cited the success of their school-based Medicaid programs and provided specific examples of such successes, noting the number of children enrolled in Medicaid as a result of their efforts and the ability to connect such children to needed services. One commenter stated that “* * * the proposed rule goes beyond reducing waste and abuse among the few by eliminating for all schools the positive benefits the program was designed to achieve.” Another noted that the proposed rule does not take into account the appropriateness of schools providing administrative activities, especially to students with disabilities. *Response:* CMS applauds the numerous examples of successful school-based Medicaid outreach and referral programs submitted by commenters. The success of these programs, however, does not compel a finding that school-based administration activities are a proper and efficient method for administration of a Medicaid State plan. In determining that these activities are not a proper and efficient method for administration of a State Medicaid program, we considered the extent to which such activities are conducted as a normal part of the operation of school education programs. We further considered the costs of improper Medicaid claiming because these activities are commingled with other school administrative activities and cannot be accurately allocated to Medicaid. Because these activities should occur in schools regardless of the availability of Medicaid funding and because the primary purpose of these activities is not the administration of the Medicaid program, we believe Medicaid should not provide funding for them. *Comment:* Some commenters pointed to the May 2003 CMS Medicaid School-Based Administrative Claiming Guide, which states that “* * * the school setting provides a unique opportunity to enroll * * * and to assist” Medicaid eligible children “access the benefits available to them” as evidence that school-based Medicaid administrative claims should remain eligible for FFP. Another quote cited by commenters can be found in the 1997 CMS Medicaid and School Health: A Technical Assistance Guide, which stated: “Because of the proximity of schools to the target population, HCFA (now CMS) has always encouraged the participation of schools in the Medicaid program * * * [s]chool-based health services can represent an effective tool which can be used to bring more Medicaid-eligible children into preventive and appropriate follow-up care. In addition, schools present a wonderful opportunity for Medicaid outreach. That is, because schools are by definition “in the business of serving children,” they can be a catalyst for encouraging otherwise eligible Medicaid children to obtain primary and preventive services as well as other necessary treatment services * * * we encourage efforts to inform potential eligibles about the Medicaid program and the EPSDT benefit.” The proposed rule, they believe, will force many States to curtail successful school-based initiatives to identify and enroll eligible low-income children in Medicaid that were encouraged by CMS itself, which is now promulgating a regulation to discontinue funding. Some commenters argued the proposed rule is a misguided approach and that it contradicts CMS’ position that States should enroll eligible children. *Response:* Schools remain a gateway for the delivery of health services for many children. As our response to the prior comment indicated, the issue is whether school-based administrative activities are a proper and efficient methodology for administration of the Medicaid State plan. We expect the central role of schools to continue, and we expect that many of these school-based administrative activities will continue as a normal part of the operation of a school program. We also expect that State or local Medicaid agencies will continue outreach efforts under their direction and control. This rule simply sets forth a clear test for the administrative activities that are appropriately claimed as necessary for the proper and efficient administration of the Medicaid State plan, and distinguishes those activities from the administration of a school program. Better Guidance Needed *Comment:* Some commenters argued that the solution to evidence of improper claiming for costs related to school-based Medicaid administration and transportation from home to school and back should be increased oversight, enforcement, and/or additional guidance, rather than elimination of reimbursement for such costs. They encouraged CMS to review the program and identify strategies for eliminating improper claiming practices without eliminating reimbursement for administrative costs. One commenter stated that “* * * Numerous alternative solutions exist, the most obvious of which is to install safeguards and auditing procedures that would eliminate the possibility of such fraudulent activity taking place in the future, thereby solving the problem while keeping the services intact.” Many believe that clarifying guidance and controls on claiming are better alternatives to promulgating the proposed regulation, which was seen as draconian and dismissive of medical necessity. They believe the proposed rule is “* * * an overreaction to perceived problems in the past.” CMS should focus its efforts on working with States to ensure proper claiming rather than promulgating new regulations. One commenter stated the following: “If CMS eliminates funding for every type of service, activity, or delivery system where it identifies inappropriate or even abusive claiming practices by some providers, funds would no longer be available for any benefits under the Medicaid program today.” *Response:* As described in Section VII of the responses, titled Alternatives Considered, we ultimately rejected the types of alternatives suggested by many of the commenters because the intervening years have proven that administrative activities cannot be adequately regulated or overseen within the resource limits available to CMS and the States. Plainly stated, we have concluded that it is not an effective approach to administration of the Medicaid State plan to rely on audits and monitoring to ensure that all claims are allowable. *Comment:* One commenter recommended that “* * * CMS use its rulemaking authority in a more constructive manner by defining clear guidance, criteria and limitations” and suggested applying the results of OIG's previous audits of States’ school-based Medicaid claiming programs to develop better guidance and more effective oversight. That, they argue, would preserve the original intent of the program to reimburse States for legitimate activities performed by schools in support of Medicaid. As an alternative to the proposed rule, some suggested that CMS revisit past guidance and improve reporting requirements for school and States. One commenter suggested that “* * * Congress and the Administration * * * work together to achieve consensus on the appropriate policies and procedures.” According to one commenter, CMS should work with representatives from State Medicaid agencies, schools systems, and other interested parties to “* * *resolve questions and areas of confusion” stemming from the 2003 Guide, develop clear claiming protocols, and reach consensus on related issues. According to some commenters, many of the claiming problems, stemmed from differing interpretations of Federal guidelines for claiming administrative and transportation costs based on inconsistent guidance from CMS Central and Regional Offices, and a lack of detailed guidelines on how to implement the programs. Commenters also recommended that CMS identify claiming issues in particular States and work with the appropriate State agencies to improve those programs rather than eliminating reimbursement for programs that are compliant with Federal requirements. *Response:* Schools repeatedly complained that CMS guidance and oversight was burdensome and added substantially to the cost of activities that the schools were undertaking to fulfill their educational mission. More fundamentally, however, we disagree with the commenters’ assumption that the problem is related to Federal oversight. Instead, we believe there is an inherent structural conflict of interest in commingling school administrative activities with Medicaid administrative activities. Better Data Needed *Comment:* Some commenters believe there needs to be clear set of data demonstrating the need to eliminate such reimbursement before the proposed regulation takes effect. They asked for data supporting the Secretary's finding that school-based administrative activities are not necessary for the proper and efficient administration of the State plan. One commenter stated: “[The proposed rule] does not provide evidence * * * in the form of an estimated dollar amount of fraudulent claims that have continued to occur after 2003.” These commenters requested specific examples of the noted fraud and abuse, and suggested a clear, chronological accounting of improper billing is required before promulgating new regulations. One commenter urged CMS to “* * * examine thoroughly and report on the current effects of policies implementation through” its 2003 Guide before promulgating new regulations. There is no evidence, they note, to suggest that the 2003 Guide was inadequate. Other commenters pointed to the fact that the Senate Finance Committee hearings cited in the preamble were held more than five years ago, and preceded the issuance of new guidance by CMS in 2003, which was intended to improve compliance with claiming requirements. CMS should carefully scrutinize current claims for school-based administrative expenditures, they argue, which would put the agency in a better position to establish regulations to ensure proper claiming. *Response:* Detailed data on school-based Medicaid claiming is not available to CMS, due to limitations with respect to reporting requirements. Reporting for school-based Medicaid expenditures is voluntary; therefore, the data CMS used in calculating the projected cost savings may not match actual current spending. The proposed rule specifically requested public comment on potential fiscal impact. Commenters did not provide any clear data that were at variance with CMS assumptions. The limited data of which CMS is aware support the findings underlying the final rule. *Comment:* Many commenters found it disingenuous for CMS to use as the rationale for the proposed rule OIG and GAO reports regarding alleged abuses that occurred in the early 1990s, prior to the issuance of any directives or guidelines on school-based Medicaid claiming. Furthermore, some commenters argued, these audits only took into account an insignificant number of schools, and the findings should not be extrapolated to all schools and claiming programs nationwide. Some commenters were troubled by “* * * dubious enforcement actions and audits” that have appeared “* * * more focused on limiting Federal expenditures than improving the appropriateness or effective administration” of the Medicaid State plan. Moreover, one commenter contended, the instances of inappropriate billing fall within the low to moderate range of similar billing problems elsewhere in overall Medicaid claiming. Another commenter noted that the proposed rule does not highlight the fact that their have been OIG audits of school-based Medicaid administrative claiming programs that did not identify any significant claiming errors. Commenters highlighted the fact that the proposed rule refers to negative audit findings from a few States without indicating the prevalence CMS has found such practices among all States. Nor does the proposed rule describe the efforts CMS and the offending States have taken since those audit to remediate noncompliance. One commenter suggested that CMS conduct compliance audits on school-based administrative activities that have been conducted pursuant to the 2003 Guide before promulgating new regulations. As one commenter stated: “CMS has not yet fulfilled its own responsibility to conduct appropriate, consistent, and complete oversight and to provide reliable localized guidance.” Overall, these commenters believe the negative audit findings referred to in the proposed rule do not establish an appropriate basis to eliminate a nationwide program. Some focused on references in the proposed rule to OIG and GAO findings and Congressional concern over the dramatic increase in Medicaid claims for school-based costs. They argued that Congress expressed more concern for how CMS was administering the program, rather than how they were being operated, with the overall conclusion from the Senate Finance Committee hearings held in June 1999 and April 2000 being that there was a need for greater Federal oversight. *Response:* The final rule is not based on any particular audit findings; but rather, the overall claiming trends and improper billing practices. We disagree with the premise that more Federal oversight could address the basic structural conflict of interest in commingling school administration with Medicaid administration; there is a strong incentive to shift costs to Medicaid for activities that would have been performed by schools in the normal course of their operation. As important, the activities are not under the supervision or control of the State or local Medicaid agency, and are not undertaken for the purpose of administration of the Medicaid State plan. *Comment:* One commenter suggested that as an alternative to the proposed regulation, CMS should consider investing resources from the Medicaid Integrity Program (MIP), established in the Deficit Reduction Act of 2005 (Pub. L. 109-432), to address school-based policy and reimbursement concerns and strengthen the integrity of the Medicaid program rather than impose a general prohibition on such reimbursement. They believe MIP resources could assist State agencies in determining when it is reasonable to bill Medicaid and develop cost-effectiveness guidelines related to school-based administration and transportation services. *Response:* CMS may in the future utilize MIP funding to address school-based Medicaid issues. But this approach alone would not be sufficient to address the underlying problems with school-based administrative claiming and transportation. There is an inherent structural conflict of interest in commingling school administrative activities with Medicaid administrative activities and, as a result, we do not believe an audit approach would be adequate or the most efficient use of limited Federal resources in addressing these issues. Statutory Intent *Comment:* Some commenters argued that the proposed rule contradicts the intent of the Medicaid statute and other Federal regulations by reversing a policy that made Federal matching funds available for transportation provided to children with special health care needs who receive health care services while they are at school. Others argue that the policy determination underlying the provisions of the proposed rule contradicts the Medicaid statute insofar as it allows States flexibility in administering their Medicaid plans and collaborating with other State agencies. One commenter stated that “* * * singling out children and school districts is an arbitrary application of the “efficiency and economy” tenets central to Medicaid law and the administration of the State plan within it.” Another commenter suggested the proposed rule would contradict existing law and circumvent Congressional intent were CMS to promulgate the regulations without specific legislative guidance. A number of commenters focused on the intent of the Medicare Catastrophic Coverage Act of 1988 (Pub. L. 100-360), which amended the Medicaid statute to allow States to begin receiving Medicaid reimbursement for services delivered to Medicaid-eligible children in schools pursuant to the IDEA. Therefore, they argue, Congressional intent is clear that Medicaid reimbursement should not be refused for activities performed in school settings. According to one commenter, the proposed rule “* * * obstruct[s] the Congressional directive establishing Medicaid funds to share in the cost of providing health care services to children in conjunction with their educational program.” These commenters believe there to be firm legal standing for the allowable use of Medicaid claiming for the costs of transportation and administration, and that the proposed rule contradicts current law, citing section 1903(c) of the Act, which prohibits payment for covered services provided pursuant to the IDEA. Historically, they note, Congress and the Federal government have encouraged Medicaid to share in schools” costs for meeting the medical needs of students with disabilities. Some commenters argued that the proposed rule would arbitrarily and capriciously reverse legal and historical precedents. They note that the underlying statutory basis for such activities has not changed in any way, and, as a result, CMS should not seek to reinterpret statutory basis to enforce new definitions for necessity and proper and efficient administration of the Medicaid State plan. *Response:* Section 1903(c) of the Social Security Act authorized Medicaid funding for covered medical services included in an individualized education program
(IEP)under the IDEA and covered in the Medicaid State plan, it does not, however authorize Medicaid funding for administrative activities that schools conduct in implementing their IDEA responsibilities. As a result, the final rule does not contradict the Medicaid statute. Nor does the Medicaid statute specifically authorize payment for transportation to and from school. Transportation from home to school and back is central to the operation of a school program and, as such, Federal Medicaid payment will not be available for the transportation services to and from school. However, Medicaid payment will remain available for direct medical services that might be required under an IEP or IFSP in the course of such transportation. For example, if a student with a disability needs to be accompanied by a personal care attendant or a home health aide during transportation from home to school and back, Federal Medicaid payment would be available to the extent that the service was covered under the approved Medicaid State plan. *Comment:* Some commenters suggested that with the proposed rule, CMS is attempting to base policy determination on how a State subdivides its functions, which is contrary to the Medicaid statute. The distinction in the proposed rule between education and Medicaid personnel is in conflict with the Medicaid statute because funding cannot be denied based on what arm of the State conducts the Medicaid activity, they argue. *Response:* This rule is not based on the way the State subdivides its functions, but on the inherent structural problems in commingling administrative functions of the Medicaid program with school administration. Secretarial Authority *Comment:* Some commenters believe the Secretary is without authority under section 1903(a)(7) of the Act to find that amounts expended for administrative activities are not necessary for the proper and efficient administration of the Medicaid State plan solely because they are carried out by school personnel or staff under the control of a school rather by State or local Medicaid agency staff. One commenter argued that States are accorded the administrative flexibility in operating their Medicaid programs to have reimbursable activities performed by school personnel and that the Secretary may not limit that flexibility with an unsupported findings that conditions FFP by finding certain activities necessary only when carried out by certain employees. Furthermore, they argue, CMS cites no authority for eliminating FFP completely for all providers in response to adverse audit findings related to a few States. The Secretarial finding that school-based administrative and transportation are not necessary for the proper and efficient administration of the Medicaid State plan “* * * fails to include any analysis of fixed criteria or standards for which the Secretary would typically apply to reach that “not necessary” conclusion,” according to one commenter. *Response:* Under section 1903(a)(7), of the Act, it is the Secretary, not the State, that determines whether amounts expended are necessary for the proper and efficient administration of the Medicaid State plan. Therefore, it is within the Secretary's discretion to make a determination that certain administrative activities (including transportation from home to school and back) are not eligible for reimbursement. Specifically, section 1903(a)(7) states that Federal Medicaid funding is available for administrative expenditures “as found necessary by the Secretary for the proper and efficient administration of the State plan.” In this section, the statute explicitly imbues the Secretary with the ultimate authority and ability to make such determinations. As a result, we do not believe the provisions of the final rule exceed Secretarial authority. *Comment:* Some commenters suggested that the activities targeted by the proposed rule are specifically authorized by the approved Medicaid State plan and that it is the State that should determine whether activities are proper and efficient within the approved plan. The proposed rule, they argue, would needlessly hinder the ability of States to provide essential services in a manner in which it deems most effective. *Response:* As a matter of practice, States generally do not include reimbursement for administrative services as part of their approved Medicaid State plan. The relevant portions of the Medicaid State plan as mentioned in the comment describes covered services eligible for Medicaid payments and the reimbursement methodologies for those services. The rule will not affect medical services as defined in the Medicaid State plan nor the States” ability to offer those services in schools. *Comment:* Some commenters questioned CMS’ assertion that section 1903(c) of the Act contains no provision authorizing claiming for the costs of school-based Medicaid administration. They argue that because section 1903(c) does not specifically prohibit administrative claiming, the general practice is (and should be) to allow it to continue under current practice unless explicitly forbidden. Because the Medicaid statute specifically provides that the Secretary cannot prohibit or restrict coverage of Medicaid services simply because those services are included in an IEP or IFSP, the Secretary should not be allowed to impinge on States’ abilities to claim for related costs. *Response:* The rule does not prohibit States from claiming Federal matching funds for covered medical services pursuant to a child's IEP or IFSP. States may also claim for administrative costs directly related to the provision of a medical service, such as billing costs as part of the medical service reimbursement. Section 1903(c) specifically discusses medical services and does not address claiming for the administrative costs associated with the administration of the State's Medicaid program. The statute provides the Secretary with considerable discretion to determine allowable administrative activities. Under section 1903(a)(7), of the Act, it is the Secretary, not the State, that determines whether amounts expended are necessary for the proper and efficient administration of the Medicaid State plan. Therefore, it is within the Secretary's discretion to make a determination that certain administrative activities (including transportation from home to school and back) are not eligible for Federal Medicaid reimbursement. Reversal of Policy *Comment:* Some commenters argued that the proposed rule represents a significant reversal of long-standing policy and a revision of long-standing Medicaid regulations, policies, and guidance, noting that CMS first developed detailed guidance in 1997 regarding school-based Medicaid program. Three years later, a report issued by HHS in collaboration with the U.S. Department of Agriculture and the U.S. Department of Education and cited by many commenters stated that schools are a “natural setting” for conducting children's health insurance program outreach, and that “State Medicaid and SCHIP agencies seeking the best return on outreach investments often find that working with schools simplifies targeting audiences, distributing information, reaching families, and enrolling children.” (Report to the President on School-Based Outreach for Children's Health Insurance, July 2000). The proposed rule, they argue, would directly contradict this July 2000 report, which sought to encourage agreements between States Medicaid agencies and schools so that the latter could receive financial assistance for administrative activities to enroll eligible children. The proposed rule, they argue, would be “* * * regressive and a departure from acknowledged best practices in identifying and serving Medicaid beneficiaries.” Several commenters cited the 1999 and 2000 Senate Finance Committee hearings on school-based Medicaid claiming as a evidence of CMS’ recognition that schools play an important role in ensuring that children receive needed health care services. *Response:* The statute provides the Secretary with considerable discretion to determine allowable administrative activities and the scope of covered transportation services. Consistent with the Administrative Procedure Act, this final rule supersedes prior statements and issuances to establish a new policy concerning school based administration activities and covered transportation services. This final rule reflects careful consideration of years of experience, and of the public input provided in the rulemaking process. CMS believes this final rule is necessary to maintain the financial integrity of the Medicaid program. Differential Treatment of Schools *Comment:* Many commenters opposed the rule in its entirety because, they argued, it reflects a differential, more restrictive treatment of schools in comparison to other settings in which the same Medicaid-related activities are provided and for which funding would continue. There is no way to justify the inference in the proposed rule that school employees are deemed capable and necessary for the delivery of covered services, but are somehow incapable and unnecessary to conduct associated administrative activities, according to one commenter. If the proposed rule is promulgated, they argue, schools alone would be designated as ineligible for reimbursement as a provider of Medicaid administrative functions while other entities would remain eligible to receive reimbursement as the State Medicaid agency's designee. School employees would still be eligible for reimbursement for covered medical services, so it is inconsistent to deem them ineligible to conduct Medicaid administrative activities, they argue. Certain commenters argued that allowable activities should be deemed necessary for the proper and efficient administration of the Medicaid State plan regardless of who employs the individuals performing the activities. The proposed rule, they argue, unfairly and incorrectly suggested that a State agency employee public health nurse can conduct Medicaid administrative activities, but a school nurse, who has the same qualifications, cannot. The proposed rule, they note, contains no recognition of the comparable professional qualifications of both school and employees and State Medicaid agency employees conducting these activities. One commenter noted that it is unfair to infer, as the proposed rule does, that only the school-based claiming methodology is invalid, while CMS will continue to permit similar claiming procedures in various other contexts. *Response:* Under the rule, CMS will continue to recognize schools as valid settings for the delivery of Medicaid services. As a result, CMS will continue to reimburse States for covered school-based Medicaid service costs pursuant to a child's IEP or IFSP. The final rule reflects a determination that schools are unique settings, and that there is an inherent structural conflict when school administrative responsibilities and Medicaid administrative activities are commingled that precludes accurate claims. As a result, the final rule reflects a conclusion that school-based administrative activities are only necessary for the proper and efficient administration of the Medicaid State plan when conducted by employees of the State or local Medicaid agency. Due to inconsistent application of Medicaid requirements by schools to the types of administrative activities conducted in the school setting, the Secretary has determined that such activities can only be properly conducted, overseen and appropriately claimed under Medicaid when conducted by employees of the State or local Medicaid agency. School staff may continue to perform these types of administrative activities. The final rule will merely limit the availability of Federal matching funds based on the finding that it is not necessary for the proper and efficient administration of the Medicaid State plan for school staff to do so. We believe the final rule is necessary to maintain the financial integrity of the Medicaid program. The final rule does not question the importance of these types of administrative activities when performed by employees of the State Medicaid agency and still recognizes schools as valid settings for the delivery of Medicaid services. *Comment:* One commenter argued that Office of Management and Budget Circular A-87 (OMB A-87) contradicts the proposed rule by including school districts in its definition of local governments eligible to participate in Federal awards. Insofar as school districts are defined as units of government, they should not be excluded from Medicaid participation in any way. Furthermore, it represents a reversal of recent Federal guidance on school participation in Medicaid claiming and contradictions of Federal definitions of “governmental units” and “local governments” that may participate in Medicaid claiming. *Response:* This rule in no way addresses the status of schools and school districts as units of government. OMB Circular A-87 describes cost allocation requirements for units of government that receive Federal grants and must account for costs associated with those grants. OMB Circular A-87 does not, however, supplant the determination of the program agency as to the administrative activities necessary for the proper and efficient administration of the Medicaid program. *Comment:* Some commenters pointed to Section 5230 of the State Medicaid Manual, which requires Medicaid agencies to coordinate services with local education agencies, title VI grantees, providers, and other public and private agencies, as support for the role of schools in helping the State administer the Medicaid program. The statute is replete with examples of the extent to which State agencies are expected to rely on other public agency staff to carry out Medicaid State plan obligations, one commenter noted. As another stated: “Collaboration with other public agencies is a consistent statutory theme; indeed, the statute both contemplates the involvement of other public agencies and give[s] States broad discretion over plan administration.” The proposed rule would, in the words of one commenter, “* * * establish an operational barrier to using schools as a venue for performing administrative activities that support the Medicaid program.” Singling out schools, school contractors, and school districts and eliminating their ability to receive reimbursement for Medicaid administrative activities will result in a less effective, less efficient Medicaid outreach and referral system. A number of commenters took issue with the statement in the proposed rule that administrative activities provided in schools “* * * largely overlap with educational activities that do not directly benefit the Medicaid program.” In reality, they argue, such activities do directly benefit the Medicaid program insofar as they help Medicaid eligible children to access covered services. One commenter stated the following: “The Secretary is * * * remiss in failing to consider that compulsory school attendance laws provide schools with a captive audience of underserved Medicaid eligible school-based children, thus providing an optimal setting for addressing their * * * needs.” From a public policy perspective, they note, providing Medicaid activities in schools should be encouraged, rather than restricted, yet the proposed rule singles out schools settings for disparate restrictions and prohibitions that are not imposed on other eligible providers. *Response:* The final rule clarifies that Medicaid is not the appropriate funding source for school-based administrative activities or for transportation from home to school and back. These activities or services are fundamentally undertaken for the educational mission of the school, rather than for administration of the Medicaid State plan. Based on our experience, we do not believe it is possible to develop and implement claiming methodologies that accurately allocate costs to Medicaid. The costs of such accounting exceed any incremental benefits to the Medicaid program from these activities and services, and we have concluded that it would be more efficient for States not to commingle Medicaid and school administration and transportation. Potential for Outstationed State Medicaid Agency Employees *Comment:* Some commenters argued that State Medicaid agencies are unlikely to send their own employees into schools to conduct administrative activities, and that to do so would be inefficient. These commenters believe that school-based outreach and enrollment efforts are successful precisely because of the involvement of school staff who are trusted by families and already in contact with children and their families. These commenters believe State and local Medicaid agencies can more efficiently carry out Medicaid administrative activities through relationships with other public entities, including schools. One commenter believes that States would have to hire thousands of eligibility workers to do the work currently carried out by school employees, at a far greater cost. To the extent State agency employees were outstationed in schools, they argue, this would establish a duplicative bureaucracy at State and Federal levels for activities that are more efficiently performed by school staff. They argue that this scenario would be financially and operationally inefficient compared to the current system. *Response:* CMS cannot direct State or local Medicaid agencies to utilize their own staff to provide Medicaid administrative activities in schools, as each State Medicaid program differs, and States have flexibility in administering their programs. However, there is precedent to use agency outstation workers in alternative service delivery venues to administer the Medicaid State plan. Furthermore, outstationing eligibility workers is likely to result in enrolling eligible children more rapidly as they can make the actual eligibility determination, while school employees cannot. While we agree that school employees often enjoy a special trust relationship with the families of students, this special relationship is more likely based on an employees” broad knowledge of a variety of health, education and social service programs. Because of the difficulty in determining specific administrative activities that are for the purpose of administration of the Medicaid State plan, we have determined that it is not proper and efficient to use school employees” for the administration of the State Medicaid program. *Comment:* One commenter cited the Family Educational Rights and Privacy Act (FERPA), 20 U.S.C. Section 1232(g), under which schools must keep student records confidential, as a serious impediment to having non-school employees (i.e., State Medicaid agency employees) engage in Medicaid outreach, enrollment, and other administrative functions. *Response:* CMS does not believe the final rule will, in any way, impact education mandates under FERPA, with which schools must continue to comply. Furthermore, we believe non-school employees can conduct effective Medicaid outreach and enrollment for students without access to individual student school records. Transportation-Specific Issues *Comment:* Some commenters focused on the impact of the proposed rule on Medicaid reimbursement for costs related to transportation from home to school and back. These commenters asserted that specialized transportation to school is necessary for a special needs student and is necessary for the proper and efficient administration of the Medicaid State plan, as required by 1903(a)(7) of the Act. One commenter argued that CMS should preserve authority for States to submit claims in limited situations, specifically for transporting Medicaid eligible children from home to school and back if the child's health status requires monitoring or medical related services during transport. These commenters argued that the proposed rule ignores the needs of many students with disabilities who require specialized transportation between home and school to facilitate frequent contact with school-based Medicaid services providers to treat chronic health conditions that are most cost-effectively treated during the course of the school day. *Response:* Medical services provided in schools or as part of transportation to school are eligible for Medicaid reimbursement. However, Medicaid will not reimburse the school for actual transportation to school. Some comments seem to suggest that children with disabilities are in school systems primarily to receive medical services rather than to receive an education. Schools are educational institutions, and children are transported to schools to receive an education. Schools are required to provide access to medical care to allow children with medical needs to participate as fully in the educational system as children without special medical needs. Children are already in the school for the purpose of receiving their education when medical services are received and no additional transportation is medically necessary. Characterizing transportation from home to school as being for the purpose of obtaining medical services overlooks the fundamental purpose of the transportation. *Comment:* Some commenters pointed to CMS’ assertion that schools are required to provide transportation from home to school and back. On the contrary, they argue that there is no State or Federal requirement for schools to provide transportation from home to school and back for all in students in every State. For example, one commenter noted, some schools do not provide bus transportation for students who live within walking distance. Some commenters argue that the proposed rule incorrectly compares specialized transportation services for children with significant health problems and traditional school bus transportation. They argue that States set forth conditions that must be met in order for a student to qualify for the transportation benefit. For these reasons, they note, schools throughout the country have utilized Federal funding through Medicaid to transport children to school for medical appointments and provide bus aides when deemed necessary. The proposed rule, however, would prohibit Medicaid funding for these expenditures. *Response:* Schools are educational institutions that may be required, under an Individualized Education Program to provide transportation to and from school for any individual child that may require transport to participate in the public education system even if that school does not provide transportation to other children in the community. Medicaid will not reimburse school districts for transportation requirements to and from school that the school must meet as part of the IEP. Once at the school, a student may obtain medical services but no additional transportation is required at that point. With respect to transportation to and from school, however, Medicaid payment will remain available for direct medical services that might be required under an IEP or IFSP in the course of such transportation. For example, if a disabled individual needs to be accompanied by a personal care attendant or a home health aide, Federal Medicaid payment would be available to the extent that the service was covered under the approved Medicaid State plan. *Comment:* Others argued that there was no basis to change previous CMS guidance, such as a May 2003 Guide and a 1997 technical assistance guide, that supported and offered guidelines for claiming costs related to transportation. These commenters pointed to section 1903(c) of the Social Security Act, which requires Medicaid to be primary to the U.S. Department of Education for payment of covered health-related services that are included in an IEP or IFSP, as support for reimbursing costs related to transportation from home to school and back. They noted that transportation is often prescribed in a child's IEP or IFSP. *Response:* This regulation is not inconsistent with section 1903(c) of the Social Security Act because it addresses whether transportation between home and school is a covered Medicaid service, and does not affect the general obligation of the Medicaid program to pay for covered Medicaid services that are prescribed in an IEP or IFSP primary to education programs. This regulation departs from previous guidance because it properly acknowledges that the purpose of the transportation between home and school is for education rather than medical services. Such transportation is for the purpose of securing attendance at the school for educational reasons, and not for the purpose of obtaining access to medical providers. As such, we do not believe that such transportation is within the scope of covered Medicaid transportation, either as an administrative activity or as a covered medical assistance benefit in the approved Medicaid State plan. *Comment:* Some commenters asserted that, in exempting from the proposed rule the costs of transportation from home to school and back for children who are not yet school age, that CMS is acknowledging the potential for schools to provide Medicaid services and perform Medicaid activities not solely to serve an educational purpose, which undercuts this provision of the proposed rule. Additionally, some commenters noted, Federal Medicaid funding remains available for the transportation of all other groups of Medicaid-covered individuals to medical services providers; it is only school-age children receiving medical services at school whose transportation will not be reimbursable. They argue that this funding exception violates Federal regulations that require comparability in the amount, duration, and scope of services for all those who qualify for Medicaid services 42 CFR Section 440.240. As one commenter noted, Medicaid policy regarding medical transportation does not restrict the beneficiary from participating in any other activity before returning home from the place of treatment, as is the case in schools. And still another commenter argued that the proposed regulatory text is contradictory by continuing to make Federal Medicaid reimbursement available “for recipients to and from providers,” while ignoring the fact that a school district can be a qualified Medicaid provider. *Response:* For school-aged children, transportation between home and school is for the purpose of attending an educational institution, and not for the purpose of obtaining access to medical providers. This reasoning does not apply for individuals who are not yet school-aged, and thus we did not include this population in the rule's prohibition. The commenters err in assuming that transportation obtained for purposes other than to obtain access to medical providers is within the scope of covered Medicaid transportation. For instance, when an individual needs transportation for the purpose of attending a medical appointment in a nearby city, transportation to that provider would be covered even if the individual also shopped or engaged in other incidental activities on the trip. But when an individual is employed in that nearby city and commutes on a daily basis for the purpose of engaging in employment, the daily commute would not become covered Medicaid transportation when the individual attends a medical appointment at work. While this distinction is not always clear, it is clear in the instance of transportation between home and school for school-aged children. *Comment:* Some commenters suggested that the proposed regulation may create new, unanticipated transportation costs if children begin to receive more services with a community-based provider, rather than in school, because many school districts will not be able to absorb transportation costs that were once matched with Medicaid funds. Other commenters asserted that the cost of providing specialized transportation is significantly more expensive than transportation provided to regular students, and should be reimbursable for that reason. *Response:* This final rule will not interfere in any way with the ability of States to determine school transportation policy, but simply recognizes that routine school transportation from home to school and back and related administrative activities are not authorized under the Medicaid statute as necessary for the proper and efficient administration of the Medicaid State plan, nor do they meet the definition of an optional transportation benefit under Medicaid. Children are transported to school primarily to receive an education, not to receive medical services. The final rule will merely eliminate Medicaid as a funding source; it will not affect the provision of such transportation. Moreover, this rule will not affect the status of covered medical services furnished in the course of transportation such as services of a personal care attendant or a home health aide. *Comment:* One commenter suggested that CMS may have overlooked the fact that, in some cases, a child's disability is so severe that he or she is unable to attend a mainstream district school, or even a special day class within the district. In those cases, the child must attend an out-of-district public school, a non-public school placement, or a residential facility, to-and-from which districts are not automatically providing transportation. In cases where children would receive covered medical services at one of these sites, and the district must send the child to these placements because of their particular medical needs, the proposed regulations would preclude billing for the costs of such transportation, they note. *Response:* We do not believe a school district's election to educate students in one location or another affects the basic purpose of the transportation to ensure attendance at an educational institution. Even in these circumstances, the transportation to and from school is for educational purposes. We agree, however, that when an individual is transported for the provision of medical services to a location that is not a school, such as a community provider, the transportation would be covered because that transportation was necessary to access a medical service that is not available at the school. *Comment:* Another commenter pointed to Executive Order 13330, issued February 24, 2004, which directs the Secretary of the U.S. Department of Health and Human Services to promote interagency cooperation in the provision of transportation services and argued that the proposed rule contradicts this Executive Order. The commenter stated: “To determine that transportation is only necessary when performed by employees of the State or local Medicaid agency fails to recognize the efficiencies available when transportation is a coordinated effort.” *Response:* The quoted language reflects confusion about this rule. This rule reflects a determination that transportation to and from school is not for the purpose of administration of the Medicaid State plan, nor is such transportation necessary to ensure beneficiary access to medical providers. We encourage the coordination of covered Medicaid transportation with other programs, but Medicaid reimbursement of transportation services is limited to ensuring beneficiary access to medical providers in the community. It does not include transportation routinely provided for other purposes. *Comment:* Some commenters noted that school districts often rely on Medicaid reimbursements for the costs of outfitting buses with specialized equipment. These commenters urged that such funding remain available. *Response:* Medicaid payment will continue to be available to pay for medical equipment, appliances and supplies that are covered under the home health benefit, to the extent medically necessary for a particular individual and, when furnished by schools, included in an IEP or IFSP. Medical necessity is determined under State-established medical necessity criteria. Nothing in the final rule will affect claiming under Medicaid for these types of expenditures. Medicaid reimbursement will not be available, however, for costs of permanently outfitting buses with equipment for general use in accommodating individuals with disabilities or other medical issues. Such costs are not within the scope of a covered Medicaid benefit. Instead such costs are integral to the uncovered transportation between home and school. Impact Analysis *Comment:* Some commenters argued that the estimated savings represents a cost shifting, rather than a cost savings, from the Federal government to State and local school districts that are obligated to provide these services. As a result, they believe the projected cost savings specified in the proposed rule are misleading. Another commenter argued that it is disingenuous to state that the proposed rule would not have a “significant economic impact on local school districts.” Schools may lose up to $600 million in the first year of the proposed rule's implementation, one commenter noted in referencing the projected cost savings. While this may be a very small component of the overall Medicaid budget, they contend, it is not insignificant to the school districts and States that rely on this funding to maintain the quality of services provided to students with disabilities. Still other commenters question the projected savings resulting to the proposed rule, suggesting that these savings could be primarily attributable to one of the two issues addressed in the proposed rule; specifically, transportation for school-age children. As a result, they argue the two parts of the proposed rule should be considered separately and their potential impact separately calculated. There is also no estimate in the impact analysis of the number of children who would not be identified and enrolled in Medicaid if States cannot maintain school-based outreach programs without Federal support, one commenter was disappointed to find. *Response:* The final rule anticipates Federal savings of approximately $635 million in the first year following implementation, but does not require States to replace that Federal funding with State funding or take any other particular steps. Any mandates regarding school transportation spending arise under State constitutions, or other Federal or State laws. School-based Medicaid administrative activities and transportation from home to school and back are not required activities under the Medicaid statute. As stated in the proposed and final versions of the rule, there is admitted uncertainty in the projected cost savings to the extent that State-reported expenditures related to school-based administration and transportation may not match actual current spending, and to the extent that the impact of the proposed rule is greater than or less than assumed. The cost savings are based upon State voluntary reporting of quarterly expenditures to CMS. Since this reporting for school-based activities is voluntary, these estimates may not match actual current spending. Furthermore, claims related to the costs of transportation from home to school and back as a direct service are included in the total amount claimed for all medical assistance. Therefore, it is difficult, if not impossible, to determine the impact of the final rule on the types of transportation costs that would be affected. *Comment:* One commenter believed the rationale for the estimated cost savings is flawed because not all school districts currently claim or receive FFP for administrative and transportation services, and that Federal funding is spread unevenly among States, districts, and schools. Therefore, they suggest, comparing the costs of the proposed rule to overall nationwide spending for elementary and secondary education minimizes its financial impact. Instead, one commenter argued that a more realistic financial analysis is necessary, one which would: 1. Examine the financial impact of the proposed cuts only on districts that actually claim for reimbursements; 2. Take into consideration the unique aspects (such as fixed costs) of school district budgets; and 3. Include the likely loss of State Medicaid funding that would result from schools no longer being able to sustain these programs. *Response:* The proposed and final rules reference total elementary and secondary spending in 2004, as defined by the Bureau of the Census, in determining the projected impact on expenditures. It is difficult, if not impossible, to reach consensus on a single expenditure total to be used as the basis for calculating the potential impact of the proposed rule. We determined the Census data to be the most reliable and accurate data available. As stated in Section VI., the estimated annual Federal savings under this final rule is only about one eighth of one percent of total annual spending on elementary and secondary schools (in 2004 total elementary and secondary spending was $453 billion according to the *Statistical Abstract of the United States* , Table 245, at *http://www.census.gov/compendia/statab/education* ). *Comment:* Other commenters disagreed with the assessment in the proposed rule that it would not have a significant impact on a substantial number of small entities, either disagreeing with the threshold definition of significant impact or that of small governmental jurisdictions. This was an issue for which CMS specifically solicited public comment. Under the definition of small governmental jurisdiction used by CMS, that is, those with a population of less than fifty thousand, nearly every school district in certain States would qualify as small entities, according to one commenter. This commenter went on to note that these smaller districts are often rural with a high percentage of students receiving free or reduced priced lunches. As a result, schools that are poor, rural, isolated and small will be disproportionately impacted due to existing budget constraints and extremely limited resources. Certain commenters believe the cost benefit analysis to be flawed. One commenter stated that the analysis presumes that most school districts are uniform in size, which is not the case. Another argued that the proposed rule aggregates all Federal spending on elementary and secondary education “* * * as a means to minimize the rule's financial impact on school districts.” Some stated that the proposed rule inaccurately minimizes the fiscal impact the proposed rulemaking would have on school districts, stating that it is “* * * misleading and inaccurate for CMS to compare the cost of school-based health care to the entire budgets for K-12 education.” Rather than “one eighth of one percent of total annual spending, the proposed rule, they argue, would impose a 50 percent impact insofar as the matching rate for allowable administrative expenditures is 50 percent FFP. *Response:* As noted in Section VI., for purposes of the Regulatory Flexibility Act, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions, including school districts. “Small” governmental jurisdictions are defined as having a population of less than fifty thousand. Admittedly, there is uncertainty in this estimate to the extent that State-reported expenditures related to school-based administration and transportation may not match actual current spending and to the extent that the impact of the proposed rule is greater than or less than assumed. We nevertheless believe, as indicated in our calculations and in the absence of reliable data to the contrary, that the impact of this rule will be only a small percentage of administrative and transportation expenditures by such entities. Furthermore, the input we received in response to the solicitation for public comments on the potential impact on small entities offered only speculation and did not provide sufficient quantitative data to argue for a reassessment of the potential impact. *Comment:* One commenter believes the discussion in the Impact Analysis of Executive Order 13132 is flawed by a failure to accurately assess the impact on State and local governments and by the factual error inherent in characterizing as “routine” the transportation needs of school-based children receiving Medicaid services in a school setting pursuant to an IEP. *Response:* As stated in Section VI., with respect to transportation specifically, States and/or schools will be required under the final rule to continue funding transportation of school-age children from home to school and back to the extent it is required by education statute(s). That is because schools provide transportation to and from school for all students, not just (or even primarily) special education or Medicaid eligible students. Regulatory Text *Comment:* One commenter asked for clarification of what is meant in the proposed Section 433.20 by “under the control of” a public or private educational institution. This commenter also asked for clarification in the regulatory text that activities required to support the provision of medical services are eligible for FFP if they are included in the rate paid for direct medical services, and requested a definition for “administrative overhead costs” to appear in the regulatory text. *Response:* The reference in Section 433.20 to anyone “under the control of” a public or private educational institution is meant to incorporate any and all subcontracting arrangements that schools or other educational institutions may enter into for the provision of services or administrative activities in schools. The definition of administrative overhead costs cannot be specified in the regulatory text because it is dependent upon the types of costs that are included in the rate paid for direct medical services, which is negotiated by each State and specified in the approved Medicaid State plan. These reimbursement rates are set by the State Medicaid agency and, therefore, any discussions regarding the appropriateness of such rates on the part of providers must be conducted at the State level. Furthermore, CMS does not believe it is necessary to specify in the regulatory text that administrative activities that are integral to, or an extension of, a direct medical service remain eligible for FFP insofar as they are reimbursed through the rate paid for the service. This is because the regulatory text only limits the availability of FFP for Medicaid administration, not services (except insofar as transportation from home to school and back is defined as a service). That is, the final rule does not affect Federal reimbursement for the costs of allowable direct medical service expenditures. *Comment:* One commenter requested that the regulatory text explicitly note the continued availability of FFP for the costs of transporting school-age children from school or home to a non-school based direct medical service provider that bills under the Medicaid program or from the non-school based provider to school or home. Another commenter asked for language to be included in the regulatory text specifying that FFP is available for transportation services provided to children who are “not yet school-age” to and from providers, even if the site of service is a school. *Response:* CMS does not believe it is necessary to specify in the regulatory text that Federal Medicaid reimbursement remains available for transportation provided to children who are not yet school-age to and from providers, even if the site of service is a school, because the regulatory text lists only those costs for which reimbursement will not be available. Similarly, it is not necessary to note in the regulatory text the continued availability of FFP for the costs of transporting school-age children from school or home to a non-school based direct medical service provider that bills under the Medicaid program or from the non-school based provider to school or home. Any such costs not included in the regulatory text are thereby exempt from the general prohibition on reimbursement. *Comment:* One commenter requested a definition of “school-age” and “not yet school-age.” *Response:* The regulatory text purposely does not provide a definition for “school-age” and “not yet school-age” because such definitions may differ by State and no such distinction exists in the Medicaid statute; rather, such determinations are based on education requirements. We do intend the term “school-age children” to be defined by age. It is specifically worded as such to differentiate between children who are of the age to attend school for education and children who are not yet school-age. *Comment:* One commenter asked for clarification in proposed Section 431.53 of whether transportation is only available to and from services that are included in a child's IEP or whether transportation is also available to and from other Medicaid services that are not included in a child's IEP. *Response:* Federal Medicaid reimbursement for school-based services is generally available only for covered services provided pursuant to an IEP or IFSP, because non-IEP services are typically subject to Medicaid third party liability rules and “free care” policies, which limit the ability of schools to bill Medicaid for some of these health services and associated administrative costs. Third party liability requirements preclude Medicaid from paying for Medicaid coverable services provided to Medicaid beneficiaries if another third party (e.g., other third party health insurer or other Federal or state program) is legally liable and responsible for providing and paying for the services. The “free care” principle precludes Medicaid programs from recognizing as a cost of Medicaid-coverable services and activities any amount for services and activities which are available without charge or liability, and for which no other sources for reimbursement are pursued. IV. Provisions of the Final Regulations This final rule incorporates the provisions of the proposed rule in its entirety and does not in any way differ from the proposed rule. V. Collection of Information Requirements This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35). VI. Regulatory Impact Statement A. Overall Impact We have examined the impact of this rule as required by Executive Order 12866 (September 1993, Regulatory Flexibility Act
(RFA)(September 19, 1980, Pub. L. 96-534), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. Executive Order 12866 (as amended by Executive Order 13258 and Executive Order 13422) directs agencies to assess all costs and benefits of all available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis
(RIA)must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This final rule's savings will exceed this economic threshold and it is therefore considered a major rule. The final rule is estimated to reduce Federal Medicaid outlays by $635 million in FY 2009 and by a total of $3.6 billion over the first five years (FY 2009-2013). The RFA requires agencies to analyze options for regulatory relief of small entities if final rules have a “significant economic impact on a substantial number of small entities.” For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions, including school districts. “Small” governmental jurisdictions are defined as having a population of less than fifty thousand. Individuals and States are not included in the definition of a small entity. Although many school districts have populations below this threshold and are therefore considered small entities for purposes of the RFA, we have determined the impact on local school districts as a result of the final rule will not exceed the threshold of “significant” economic impact under the RFA, as discussed below. States have the option under the final rule to continue funding school-based administrative activities using State-only funds; this rule simply eliminates the availability of Federal Medicaid matching funds for these expenditures when they are performed by employees of the school or contractors, or anyone under the control of a public or private educational institution, rather than employees of the Medicaid agency. However, with respect to transportation specifically, States and/or schools will continue transporting school-age children from home to school and back to the extent it is required by education statute(s). That is because schools provide transportation to and from school for all students, not just (or even primarily) special education or Medicaid eligible students. The Individuals with Disabilities Education Act
(IDEA)requires public schools to provide a free appropriate public education to children with disabilities. The IDEA authorizes funding through the U.S. Department of Education (not Medicaid) for special education and related services for children with disabilities. While section 1903(c) of the Social Security Act authorized Medicaid funding for covered services included in an Individualized Education Program
(IEP)under the IDEA, section 1903(c) does not expressly authorize Medicaid funding for administrative activities that schools conduct in implementing their IDEA responsibilities. The estimated annual Federal savings under this final rule are only about one eighth of one percent of total annual spending on elementary and secondary schools (in 2004 total elementary and secondary spending was $453 billion according to the *Statistical Abstract of the United States* , Table 245, at *http://www.census.gov/compendia/statab/ education)* . According to the “Guidance on Proper Consideration of Small Entities in Rulemakings of the U.S. Department of Health and Human Services (May 2003),” if the average annual impact on small entities is 3 to 5 percent or more, it is to be considered significant. Because we used a threshold of 3 to 5 percent of annual revenues or costs in determining whether a proposed or final rule has a “significant” economic impact on small entities, we have determined that this final rule will not have a significant economic impact on a substantial number of small entities. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined, and the Secretary certifies, that this rule would not have a direct impact on the operations of a substantial number of small rural hospitals. Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold level is currently approximately $127 million. This final rule contains no mandates that will impose spending costs on State, local, or tribal governments in the aggregate, or by the private sector, of $127 million. The final rule anticipates Federal savings of approximately $635 million in the first year following implementation, but does not require States to replace that Federal funding with State funding or take any other particular steps. Any mandates regarding school transportation spending arise under State constitutions, or other Federal or State laws. School-based Medicaid administrative activities and transportation from home to school and back are not required activities under the Medicaid statute. Executive Order 13132 on Federalism establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirements on State and local governments, preempts State law, or otherwise has Federalism implications. EO 13132 focuses on the roles and responsibilities of different levels of government, and requires Federal deference to State policy making discretion when States make decisions about the uses of their own funds or otherwise make State-level decisions. We find that this rule will not have a substantial effect on State or local government policy discretion. While this final rule would eliminate the ability of States to claim Federal Medicaid funding for school-based administrative and certain transportation costs, notably routine home-to-school and back bus transportation, it will not impose any requirement as to how States or localities administer or pay for such activities, or interfere in any way with the ability of States to determine school transportation policy. The rule will simply recognize that routine school transportation from home to school and back and related administrative activities are not authorized under the Medicaid statute as necessary for the proper and efficient administration of the Medicaid State plan, nor do they meet the definition of an optional transportation benefit under Medicaid. B. Anticipated Effects The final rule is a major rule because it is estimated to result in $635 million in savings during the first year and $3.6 billion in savings over the first five years. The following chart summarizes our estimate of the anticipated effects of this final rule. Table I.—Estimated Reduction in Federal Medicaid Outlays Resulting From the Elimination of Reimbursement for School-Based Administration and Certain Transportation Costs in Proposed Rule [Amounts in millions per Federal fiscal year] 2009 2010 2011 2012 2013 2009-2013 School-Based Costs: Eliminate Reimbursement for Administration/Transportation −$635 −$675 −$720 −$770 −$820 −$3620 Conclusion These estimates assume implementation beginning in the 2008-09 school year and are based on recent reviews of State reported school-based administrative and direct medical service expenditures reported on the quarterly CMS expenditure forms (MBES/CBES Form 64.10I and Form 64.10PI Information Forms for School-Based ADM and MAP claims). From these voluntary State claiming reports, an estimate of the total amount of claims under the Medicaid program that would be affected by the final rule was developed and then projected forward using the most recent assumptions available. There is uncertainty in this estimate to the extent that State-reported expenditures related to school-based administration and transportation may not match actual current spending and to the extent that the impact of the proposed rule is greater than or less than assumed. Furthermore, claims related to the costs of transportation from home to school and back as a direct service are included in the total amount claimed for all medical assistance. Therefore, it is difficult, if not impossible, to determine the impact of the final rule on the types of transportation costs that would be affected. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget. VII. Alternatives Considered In developing this regulation, various alternatives were considered. We considered the possibility of conducting stronger review of reimbursement methodologies for the costs of Medicaid administrative activities provided in schools and transportation from home to school and back. We also considered seeking to implement policies requiring greater accountability and oversight responsibility for school-based administrative and transportation expenditures, and clarification of Federal requirements without any new regulation (using existing statutory and regulatory authority). In addition, we considered developing standard parameters applicable to claiming for all school-based Medicaid administration and transportation costs. However, we attempted, by issuing the May 2003 Medicaid School-Based Administrative Claiming Guide, to provide specific guidance on the requirements for claming costs related to school-based activities. In the end, we ultimately rejected these alternatives because the intervening years have proven that such activities cannot be adequately regulated or overseen. We determined that the rulemaking process was the most effective method of implementing these policies because the rulemaking process was the best way to inform affected parties, allow for public input, and make clear that the requirements set forth are uniform, fair and consistent with the underlying statutory intent. A. Accounting Statement As required by OMB Circular A-4 (available at *http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf* ), in the table below, we have prepared an accounting statement showing the classification of the expenditures associated with the provisions of this final rule. This table provides our best estimate of the decrease in Federal Medicaid outlays resulting from the elimination of reimbursement for school-based administration and certain transportation costs that will be implemented by this final rule. The sum total of these expenditures is classified as savings in Federal Medicaid spending. Table II.—Accounting Statement Category Transfers Accounting Statement: Classification of Estimated Expenditures, From Fiscal Year 2009 to Fiscal Year 2013 (in millions) Negative Transfer-Estimated decrease in expenditures: Annualized Monetized Transfers 3% Units Discount Rate 7% Units Discount Rate $721 $718 From Whom To Whom? Federal Government to States List of Subjects 42 CFR Part 431 Grant programs—health, Health facilities, Medicaid Privacy Reporting and recordkeeping requirements. 42 CFR Part 433 Administrative practice and procedure, Child support Claims, Grant programs—health, Medicaid Reporting and recordkeeping requirements. 42 CFR Part 440 Grant programs—health, Medicaid. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR Chapter IV as set forth below: PART 431—STATE ORGANIZATION AND GENERAL ADMINISTRATION 1. The authority citation for part 431 continues to read as follows: Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302). 2. Section 431.53 is revised to read as follows: § 431.53 Assurance of Transportation.
(a)A State plan must—
(1)Specify that the Medicaid agency will ensure necessary transportation for recipients to and from providers; and
(2)Describe the methods that the agency will use to meet this requirement.
(b)For purposes of this assurance, necessary transportation does not include transportation of school-age children between home and school. PART 433—STATE FISCAL ADMINISTRATION 3. The authority citation for part 433 continues to read as follows: Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302). 4. Part 433 is amended by adding a new § 433.20 to read as follows: § 433.20 Rates of FFP for Administration: Reimbursement for School-Based Administrative Expenditures. Federal financial participation under Medicaid is not available for expenditures for administrative activities by school employees, school contractors, or anyone under the control of a public or private educational institution. PART 440—SERVICES: GENERAL PROVISIONS 5. The authority citation for part 440 continues to read as follows: Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302). 6. Section 440.170(a)(1) is revised to read as follows: § 440.170 Any other medical care or remedial care recognized under State law and specified by the Secretary.
(a)*Transportation.*
(1)“Transportation” includes expenses for transportation and other related travel expenses determined to be necessary by the agency to secure medical examinations and treatment for a recipient. Such transportation does not include transportation of school-age children from home to school and back. (Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program) Dated: December 13, 2007. Kerry Weems, Acting Administrator, Centers for Medicare & Medicaid Services. Approved: December 14, 2007. Michael O. Leavitt, Secretary. [FR Doc. 07-6220 Filed 12-21-07; 10:00 am]
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  • 21 CFR 211
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  • 5 USC 601-612
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  • 44 USC 3501-3520
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  • 15 USC 1451-1561
  • Pub. L. 105-115
  • 111 Stat. 2322
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  • 40 CFR 63.10382
  • 40 CFR 63.7881(c)(3)
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  • 40 CFR 2
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  • Pub. L. 104-113
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  • 40 CFR 63.10390
  • 40 CFR 70
  • 40 CFR 71
  • 40 CFR 70.3(a)
  • 40 CFR 71.3(a)
  • 40 CFR 65
  • 40 CFR 180
  • 40 CFR 180.464
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Interim final rule; request for comments
U.S.C.§ 247d–6b
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U.S.C.§ 360bbb–3
C.F.R.§ 610.60
C.F.R.§ 201.17
C.F.R.§ 801.109
C.F.R.§ 201.26
U.S.C.§ 353
U.S.C.§ 262
SCOTUS470 U.S. 821
SCOTUS496 U.S. 72
SCOTUS373 U.S. 132
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