Unknown. Final rule

52,954 words·~241 min read·/register/2008/02/22/08-808

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

--- schema: federal-register doc_type: fedreg source_file: FR-2008-02-22.xml --- 73 36 Friday, February 22, 2008 Contents Advisory Advisory Council on Historic Preservation See Historic Preservation, Advisory Council Agriculture Agriculture Department See Food and Nutrition Service See Forest Service See Natural Resources Conservation Service Army Army Department See Engineers Corps NOTICES Availability of Final Environmental Impact Statement: Permanent Stationing of 2nd Brigade, 25th Infantry Division Stryker Brigade Combat Team, 9779-9780 08-793 Arts Arts and Humanities, National Foundation See National Foundation on the Arts and the Humanities Blind Blind or Severely Disabled, Committee for Purchase From People Who Are See Committee for Purchase From People Who Are Blind or Severely Disabled Centers Centers for Disease Control and Prevention NOTICES Meetings:

Clinical Laboratory Improvement Advisory Committee, 9807 08-824 Centers Centers for Medicare & Medicaid Services RULES Medicaid Program: Health Care-Related Taxes, 9685-9699 E8-3207 Medicare Program: Changes to the Hospital Outpatient Prospective Payment System and CY 2008 Payment Rates, et al. Correction, 9860-9933 08-671 Medicare Secondary Payer

(MSP)Amendments, 9679-9685 E8-2938 Prior Determination for Certain Items and Services, 9672-9679 E8-2811 PROPOSED RULES Medicaid Program: Premiums and Cost Sharing, 9727-9740 E8-3211 State Flexibility for Medicaid Benefit Packages, 9714-9727 E8-3206 NOTICES Medicare Program: Extension of Certain Hospital Wage Index Reclassifications, 9807-9810 E8-2798 Indian Health Service; Outpatient Diabetes Self-Management Training, 9811-9812 E8-2803 Request for Nominations to the Advisory Panel on Ambulatory Payment Classification Groups, 9810-9811 E8-2806 Meetings: Advisory Panel on Medicare Education, 9812-9814 E8-2790 Medicare Program; Public Meetings in Calendar Year 2008 for All New Public Requests for Revisions to the Healthcare Common Procedure Coding System, etc., 9814-9816 E8-2837 Children Children and Families Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9816 08-796 Commerce Commerce Department See International Trade Administration See National Oceanic and Atmospheric Administration Committee for Purchase Committee for Purchase From People Who Are Blind or Severely Disabled NOTICES Procurement List; Additions and Deletions, E8-3328 9766-9768 E8-3329 Defense Defense Department See Army Department See Engineers Corps Education Education Department NOTICES Jacob K. Javits Gifted and Talented Students Education Program, 9781 E8-3383 Employment Employment and Training Administration NOTICES Amended Certification Regarding Eligibility, etc.: Kimberly-Clark Corp. et al., Neenah, WI, 9833-9834 E8-3216 Determinations Regarding Eligibility, etc., 9834-9836 E8-3215 Eligibility for Worker Adjustment Assistance and Negative Determination Regarding Eligibility to Apply for Alternative Trade Adjustment Assistance: Boston Communications Group, Inc., 9836 E8-3219 Motor Wheel Commercial Vehicle Systems Full Cast/Assembly Area, Berea, Kentucky, 9836-9837 E8-3220 Revised Determination on Reconsideration: Flexsteel Industries, Inc., Dubuque, IA, 9837 E8-3218 Oregon Cutting Systems Group, Clackamas, OR, 9837-9838 E8-3217 Termination of Investigation: Inverness Corp., Fairlawn, NJ, 9838 E8-3214 Energy Energy Department See Federal Energy Regulatory Commission NOTICES Application for Presidential Permit; Baja Wind U.S. Transmission, LLC, 9782 E8-3333 Engineers Engineers Corps NOTICES Environmental Impact Statement: Updated Water Control Manuals; Apalachicola-Chattahoochee-Flint River Basin, 9780-9781 E8-3315 Meetings: Inland Waterways Users Board, 9781 E8-3317 EPA Environmental Protection Agency NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9793-9797 E8-3372 E8-3376 E8-3378 Draft Integrated Science Assessment for Oxides of Nitrogen and Sulfur; Environmental Criteria and Annexes, 9797-9798 E8-3370 Environmental Impact Statements and Regulations; Availability of EPA Comments, 9798-9799 E8-3406 Meetings: Farm, Ranch, and Rural Communities Committee, 9799 E8-3402 Good Neighbor Environmental Board, 9799-9800 08-807 National Advisory Committee for Acute Exposure Guideline Levels for Hazardous Substances, 9800-9801 E8-3400 Prevention of Significant Deterioration Final Determination: Christian County Generation, 9801 E8-3340 Public Water System Supervision Program Revisions: North Carolina, 9801-9802 E8-3341 Tennessee, 9802-9803 E8-3342 Settlement: Ecusta Mill Site; Pisgah Forest, Transylvania County, North Carolina, 9803 E8-3337 Weekly Receipt of Environmental Impact Statements; Availability, 9803-9804 E8-3423 Farm Farm Credit Administration NOTICES Consideration and Referral of Supervisory Strategies and Enforcement Actions, 9804-9805 08-821 FAA Federal Aviation Administration RULES Airworthiness Directives: ATR Model ATR42 and ATR72 Airplanes, 9663-9666 E8-3188 Boeing Model 707 Airplanes, and Model 720 and 720B Series Airplanes, 9666-9672 E8-3189 Boeing Model 727 Airplanes, 9668-9670 E8-3069 Bombardier Model CL 600 2B19 (Regional Jet Series 100 & 440) Airplanes, 9661-9663 E8-3070 Model SAAB SF340A and SAAB 340B Airplanes, 9659-9661 E8-3068 Taylorcraft A, B, and F Series Airplanes, 9655-9659 E8-3074 NOTICES Noise Exposure Map Notice: Receipt of Noise Compatibility Program and Request for Review for Centennial Airport, Eagle, CO, 9847-9849 08-788 Petition for Exemption; Summary of Petition Received, 9849 E8-3398 Federal Emergency Federal Emergency Management Agency RULES Final Flood Elevation Determinations, 9699-9707 E8-3347 PROPOSED RULES Proposed Flood Elevation Determinations, 9740-9750 E8-3362 9750-9754 E8-3366 Proposed Flood Elevation Determinations; Correction, 9754-9755 E8-3368 Federal Energy Federal Energy Regulatory Commission NOTICES Amended Complainant: America West Airlines, Inc., et al., 9782-9783 E8-3280 Application Ready for Environmental Analysis and Soliciting Comments, Recommendations, etc.: Pacific Gas and Electric Co., 9783-9784 E8-3282 Combined Notice of Filings, 9784-9787 E8-3285 E8-3286 Intent to Prepare an Environmental Assessment: Caledonia Energy Partners, L.L.C., 9788-9789 E8-3283 Issuance of Order: Patriot Partnership, LLC, 9789-9790 E8-3278 Watson Cogeneration Co., 9790 E8-3279 Notice of Filing: ISO New England Inc., 9790-9791 E8-3276 South Feather Water and Power Agency, 9791-9793 E8-3281 The Borough of Chambersburg, Pennsylvania, 9793 E8-3277 Federal Highway Federal Highway Administration NOTICES Final Federal Agency Action on Proposed Highway in California, 9849-9850 E8-3303 Meetings: National Safe Routes to School Task Force to the Secretary of Transportation; Teleconference, 9850-9851 E8-3311 Federal Reserve Federal Reserve System NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9805-9806 E8-3293 Change in Bank Control Notices; Acquisition of Shares of Bank or Bank Holding Companies, 9806 E8-3312 Formations, Acquisitions, and Mergers of Bank Holding Companies, 9806 E8-3313 Fish Fish and Wildlife Service PROPOSED RULES Endangered and Threatened Wildlife and Plants: Establishment of Nonessential Experimental Population of Rio Grande Silvery Minnow; Big Bend Reach, Rio Grande, TX, 9755-9756 E8-3385 NOTICES Public Scoping and Intent to Prepare a Joint Environmental Impact Statement: Fruit Growers Supply Co. Multispecies Habitat Conservation Plan, Siskiyou County, CA, 9776-9777 E8-3365 Food Food and Nutrition Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9757-9760 E8-3318 Forest Forest Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9760 E8-3373 Environmental Impact Statement: Nebraska National Forest, 9760-9762 E8-2880 Recreation Fee Areas: Sumter National Forest, SC; FORKS Mountain Bike Trail, 9763 08-760 Health Health and Human Services Department See Centers for Disease Control and Prevention See Centers for Medicare & Medicaid Services See Children and Families Administration See National Institutes of Health See Substance Abuse and Mental Health Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9806-9807 E8-3294 Historic Historic Preservation, Advisory Council NOTICES Meetings: Advisory Council on Historic Preservation, 9757 08-789 Homeland Homeland Security Department See Federal Emergency Management Agency See U.S. Immigration and Customs Enforcement Housing Housing and Urban Development Department NOTICES Federal Property Suitable as Facilities to Assist the Homeless, 9822-9823 08-767 Indian Indian Affairs Bureau NOTICES Environmental Impact Statement: Oneida Indian Nation of New York; Oneida and Madison Counties, New York, 9823-9824 E8-3247 Interior Interior Department See Fish and Wildlife Service See Indian Affairs Bureau See Land Management Bureau IRS Internal Revenue Service RULES Release of Lien or Discharge of Property; Correction, 9672 E8-3103 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9857-9858 E8-3349 E8-3351 International International Trade Administration NOTICES Exemption of Foreign Air Carriers from Customs Duties and Excise Taxes: Review of Findings of Reciprocity Eligibility, 9768 E8-3306 Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review: Polyethylene Terephthalate Film, Sheet, and Strip From India, 9768-9769 E8-3360 E8-3391 Preliminary Results of Antidumping Duty Changed Circumstances Review etc.: Certain Pasta From Italy, 9769-9772 E8-3387 Stainless Steel Sheet and Strip in Coils from Mexico; Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review, 9772-9773 E8-3381 Justice Justice Department See National Institute of Corrections NOTICES Consent Decree: United States v. Kennecott Utah Copper Corp., 9825 E8-3231 Labor Labor Department See Employment and Training Administration See Occupational Safety and Health Administration Land Land Management Bureau NOTICES Alaska Native Claims Selection, 9824 E8-3319 Invitation to Participate In Coal Exploration License, Utah, 9824-9825 E8-3322 Maritime Maritime Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, E8-3308 9851-9853 E8-3309 E8-3310 E8-3316 NASA National Aeronautics and Space Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9839 E8-3295 National Foundation National Foundation on the Arts and the Humanities NOTICES Meetings: Arts Advisory Panel, 9839 E8-3301 National Highway National Highway Traffic Safety Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9853-9854 E8-3269 Meetings: Crash Injury Research and Engineering Network, 9854 E8-3314 National Institute National Institute of Corrections NOTICES Solicitation for a Cooperative Agreement; Evidence Based Decision Making for Local Criminal Justice Systems, 9825-9833 E8-3264 NIH National Institutes of Health NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9817 E8-3273 Government-Owned Inventions; Availability for Licensing, 9818-9819 E8-3274 Meetings: National Cancer Institute, 9819-9820 08-794 08-795 National Institute of Child Health and Human Development, 9820 08-791 08-792 NOAA National Oceanic and Atmospheric Administration RULES Fisheries of the Exclusive Economic Zone Off Alaska: Pacific Cod by Vessels Catching Pacific Cod for Processing by the Inshore Component in the Central Regulatory Area of the Gulf of Alaska, 9707-9708 08-808 NOTICES Gulf of Mexico Fishery Management Council; Public Hearings, 9773 E8-3297 Meetings: Caribbean Fishery Management Council, 9773-9774 E8-3299 Pacific Fishery Management Council, 9774-9776 E8-3300 Public Scoping and Intent to Prepare a Joint Environmental Impact Statement: Fruit Growers Supply Co. Multispecies Habitat Conservation Plan, Siskiyou County, CA, 9776-9777 E8-3365 Western Pacific Fishery Management Council; Public Meetings, 9777-9779 E8-3298 NRCS Natural Resources Conservation Service NOTICES Finding of No Significant Impact: Kaycee Flood Protection Project, Middle Fork Powder River Watershed, Johnson County; Wyoming, 9763-9765 E8-3296 Proposed Change to Section IV of the North Carolina State Technical Guide, 9765 E8-3382 Proposed Change to Section IV of the Virginia State Technical Guide, 9765 E8-3384 Webber Pond Fish Passage, Webber Pond Watershed, Vassalboro, ME, 9765-9766 08-801 Nuclear Nuclear Regulatory Commission NOTICES Meetings: Advisory Committee on Reactor Safeguards (ACRS), 9840-9841 E8-3335 Advisory Committee on Reactor Safeguards; Subcommittee on Wolf Creek Plant License Renewal, 9839-9840 E8-3331 Advisory Committee on Reactor Safeguards Subcommittee on Planning and Procedures, 9840 E8-3332 The ACRS Subcommittee on Reliability and Probabilistic Risk Assessment, 9841 E8-3334 Occupational Occupational Safety and Health Administration NOTICES Revocation of Recognition; Applied Research Laboratories, Inc., 9838-9839 E8-3324 Peace Peace Corps PROPOSED RULES Debt Collection, 9709-9714 E8-3268 SEC Securities and Exchange Commission NOTICES Meetings; Sunshine Act, 9841-9842 E8-3343 Self-Regulatory Organizations; Proposed Rule Changes: American Stock Exchange LLC, 9842 E8-3254 Depository Trust Co.; Correction, 9842 E8-3307 National Futures Association, 9843-9844 E8-3255 NYSE Arca, Inc., 9844-9845 E8-3326 SBA Small Business Administration NOTICES Disaster Declaration: Tennessee, 9845-9846 E8-3336 State State Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, E8-3361 9846-9847 E8-3369 Culturally Significant Objects Imported for Exhibition Determinations: El Greco to Velazquez: Art During the Reign of Philip III, 9847 E8-3344 Substance Substance Abuse and Mental Health Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9820-9821 E8-3321 Transportation Transportation Department See Federal Aviation Administration See Federal Highway Administration See Maritime Administration See National Highway Traffic Safety Administration Treasury Treasury Department See Internal Revenue Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, E8-3275 9854-9857 E8-3304 E8-3305 Immigration U.S. Immigration and Customs Enforcement NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 9821-9822 08-809 08-810 Separate Parts In This Issue Part II Health and Human Services Department, Centers for Medicare & Medicaid Services, 9860-9933 08-671 Reader Aids Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws. To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions. 73 36 Friday, February 22, 2008 Rules and Regulations DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-0286; Directorate Identifier 2007-CE-086-AD; Amendment 39-15381; AD 2008-04-09] RIN 2120-AA64 Airworthiness Directives; Taylorcraft A, B, and F Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

(AD)to supersede AD 2007-16-14, which applies to all Taylorcraft (Taylorcraft) A, B, and F series airplanes. AD 2007-16-14 currently requires you to do an initial visual inspection of the left and right wing front and aft lift struts for cracks and corrosion and replace any cracked strut or strut with corrosion that exceeds certain limits. If the strut is replaced with an original design vented strut, AD 2007-16-14 requires you to repetitively inspect those struts thereafter. Since we issued AD 2007-16-14, we determined that the eddy current inspection method does not address the unsafe condition for the long term. We also determined that Models FA-III and TG-6 airplanes are not equipped with the affected struts. Consequently, this AD retains the actions required in AD 2007-16-14, except it removes the eddy current inspection method (provides 24-month credit if already done using this method), adds the radiograph method as an inspection method, changes the Applicability section, and changes the compliance time between the repetitive inspections. We are issuing this AD to detect and correct cracks and corrosion in the left and right wing front and aft lift struts. This condition, if not corrected, could result in failure of the lift strut and lead to in-flight separation of the wing. DATES: This AD becomes effective on March 28, 2008. On March 28, 2008, the Director of the Federal Register approved the incorporation by reference of Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007, listed in this AD. As of August 20, 2007 (72 FR 45153, August 13, 2007), the Director of the Federal Register approved the incorporation by reference of Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision A, dated August 1, 2007, listed in this AD. ADDRESSES: For service information identified in this AD, contact Taylorcraft Aviation, LLC, 2124 North Central Avenue, Brownsville, Texas 78521; telephone: 956-986-0700. To view the AD docket, go to U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, or on the Internet at *http://www.regulations.gov.* The docket number is FAA-2007-0286; Directorate Identifier 2007-CE-086-AD. FOR FURTHER INFORMATION CONTACT: Andrew McAnaul, Aerospace Engineer, ASW-150 (c/o MIDO-43), 10100 Reunion Place, Suite 650, San Antonio, Texas 78216; telephone:

(210)308-3365; fax:

(210)308-3370. SUPPLEMENTARY INFORMATION: Discussion On December 3, 2007, we issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to certain Taylorcraft (Taylorcraft) A, B, and F series airplanes. This proposal was published in the **Federal Register** as a notice of proposed rulemaking

(NPRM)on December 10, 2007 (72 FR 69630). The NPRM proposed to supersede AD 2007-16-14 with a new AD that would: • Retain the actions required in AD 2007-16-14, except it removes the eddy current inspection method (provides 24-month credit if already done using this method); • Adds the radiograph method as an inspection method; • Changes the Applicability section to remove Models FA-III and TG-6 airplanes; and • Changes the compliance time between the repetitive inspections. Comments We provided the public the opportunity to participate in developing this AD. The following presents the comments received on the proposal and FAA's response to each comment: Comment Issue No. 1: Approve Installing Univair Part Numbers (P/N) UA-A815 and UA-854 as a Terminating Action for the Repetitive Inspection Requirement for All Affected Taylorcraft Airplanes Univair Aircraft Corporation (Univair) requests that we expand the airplane model applicability for installation of P/Ns UA-A815 and UA-854 as a terminating action for the repetitive inspection requirement from Taylorcraft Models BC12-D/D1 and BCS12-D/D1 airplanes (as currently approved in an alternative method of compliance

(AMOC)to AD 2007-16-14) to include all affected Taylorcraft airplanes. On January 2, 2008, Univair received parts manufacturer approval

(PMA)under PMA Supplement Numbers 198 and 199 expanding the eligibility to install P/Ns UA-A815 and UA-854 on all Taylorcraft airplane models affected by the proposed AD. Installation of these sealed struts provides an acceptable level of safety for terminating action to the AD for all affected Taylorcraft airplane models. We agree with the commenter. We will change the final rule AD action to incorporate this change. Comment Issue No. 2: Extend or Eliminate Repetitive Inspection Intervals Richard W. Gross and seven other commenters request that the repetitive inspection interval be either extended from 4 years to 10 years or terminated altogether if no corrosion is found during the initial inspection. Some of the commenters base their request on service history of some struts having been in service for 60 years without any signs of corrosion. We do not agree with the commenters. We have not received any data to support extending the repetitive inspection interval. We have received reports of several corroded vented wing lift struts from different Taylorcraft series airplanes. Repetitive inspections are necessary to detect and correct corrosion that can develop after the initial inspection. Based on the inspection methods used and the application of corrosion inhibitor at each inspection, 48 months is the appropriate repetitive inspection interval. We are not changing the final rule AD action based on these comments. Comment Issue No. 3: Remove F-Model Airplanes From the Applicability Section Shawn Coleman and three other commenters request that the newer F-Model Taylorcraft airplanes be removed from the Applicability section. This request is based on these models being the most recent airplanes produced and the expectation that they should not have a corrosion problem. We do not agree with the commenters. We do not have any data to support excluding these airplane models from the AD. These models use the same strut design and material as the earlier produced Taylorcraft model airplanes. We have received reports of one Model F-21 airplane and three Model F-22 airplanes having one or more struts that failed inspection due to corrosion. We are not changing the final rule AD action based on these comments. Conclusion We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed except for the changes previously discussed and minor editorial corrections. We have determined that these minor corrections: • Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and • Do not add any additional burden upon the public than was already proposed in the NPRM. Costs of Compliance We estimate that this AD will affect 3,119 airplanes in the U.S. registry. We estimate the following costs to do the visual inspection: Labor cost Parts cost Total cost per airplane Total cost on U.S. operators 1 work-hour × $80 per hour = $80 Not applicable $80 $249,520 We estimate the following costs to do the repetitive ultrasound or radiograph inspection: Labor cost Parts cost Total cost per airplane 4 work-hours × $80 per hour = $320 Not applicable $320 We estimate the following costs to do any necessary replacements that will be required based on the results of the inspections. We have no way of determining the number of airplanes that may need this replacement: Labor cost Parts cost Total cost per airplane to replace all 4 wing lift struts 4 work-hours to replace all 4 struts × $80 per hour = $320 Sealed front lift strut: $835 per strut. Two per airplane = $1,670 Sealed aft lift strut: $638 per strut. Two per airplane = $1,276. $1,670 + $1,276 + $320 = $3,266. Original design vented lift struts are no longer manufactured. We have no way of determining the cost associated with obtaining a useable vented strut. The estimated total cost on U.S. operators includes the cumulative costs associated with AD 2007-16-14 and any actions being added in this AD. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this AD. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a summary of the costs to comply with this AD (and other information as included in the Regulatory Evaluation) and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES . Include “Docket No. FAA-2007-0286; Directorate Identifier 2007-CE-086-AD” in your request. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the Federal Aviation Administration amends part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by removing Airworthiness Directive

(AD)2007-16-14, Amendment 39-15153 (72 FR 45153, August 13, 2007), and adding the following new AD: **2008-04-09 Taylorcraft:** Amendment 39-15381; Docket No. FAA-2007-0286; Directorate Identifier 2007-CE-086-AD. Effective Date

(a)This AD becomes effective on March 28, 2008. Affected ADs

(b)This AD supersedes AD 2007-16-14, Amendment 39-15153. Applicability

(c)This AD applies to all serial numbers of Taylorcraft Models A, BC, BCS, BC-65, BCS-65, BC12-65 (Army L-2H), BCS12-65, BC12-D, BCS12-D, BC12-D1, BCS12-D1, BC12D-85, BCS12D-85, BC12D-4-85, BCS12D-4-85, (Army L-2G) BF, BFS, BF-60, BFS-60, BF-65, (Army L-2K) BF 12-65, BFS-65, BL, BLS, (Army L-2F) BL-65, BLS-65, (Army L-2J) BL12-65, BLS12-65, 19, F19, F21, F21A, F21B, F22, F22A, F22B, and F22C airplanes that:

(1)Are certificated in any category; and

(2)Do not incorporate sealed wing front lift struts, part number (P/N) MA-A815, Univair P/N UA-A815, or FAA-approved equivalent P/N, and sealed aft lift struts, P/N MA-A854, Univair P/N UA-854, or FAA-approved equivalent P/N, for all struts. Note 1: This AD applies to all Taylorcraft models listed above, including those models not listed in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007. If there are any other differences between this AD and the above service bulletin, this AD takes precedence. Note 2: For the purposes of this AD, a used strut that has been inspected using the ultrasound or radiograph inspection method, meets the Acceptance/Rejection Criteria specified in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007, and is treated with internal corrosion protection, is considered a new strut. Unsafe Condition

(d)This AD results from our determination that the radiograph inspection method should be used in place of the eddy current inspection method currently required in AD 2007-16-14. We are issuing this AD to detect and correct corrosion or cracks in the left and right wing front and aft lift struts, which could result in failure of the lift strut and lead to in-flight separation of the wing with consequent loss of control. Compliance

(e)To address this problem, you must do the following, unless already done: Actions Compliance Procedures

(1)Visually inspect the left and right wing front and aft lift struts, (P/N A-A815 and P/N A-A854, or FAA-approved equivalent P/Ns), along the entire bottom 12 inches of each strut for cracks and corrosion. Within the next 5 hours TIS after August 20, 2007 (the effective date of AD 2007-16-14), unless one of the following conditions is met:

(i)The struts have been replaced with parts specified in paragraph (e)(2)(i) of this AD. No further action is required on those struts. Follow Part 1 of the Instructions in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision A, dated August 1, 2007; or Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007.

(ii)The struts have been replaced with parts specified in paragraph (e)(2)(ii) of this AD and have been installed for less than 48 months. No visual inspection is required. These parts are now subject to the repetitive inspection requirement specified in paragraph (e)(4) of this AD.

(2)If any cracks are found during the visual inspection required in paragraph (e)(1) of this AD, replace the cracked strut with the following applicable strut:

(i)A sealed front lift strut, P/N MA-A815, Univair P/N UA-A815, or FAA-approved equivalent P/N, a sealed aft lift strut, P/N MA-A854, Univair P/N UA-854, or FAA-approved equivalent P/N. Installing these lift struts terminates the repetitive inspections required by this AD for that strut and no further action is required. Before further flight after the visual inspection required in paragraph (e)(1) of this AD. Following the Instructions in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007.

(ii)A new vented front lift strut, P/N A-A815, a new vented aft lift strut, P/N A-A854, or FAA-approved equivalent P/Ns, that is treated with internal corrosion protection specified in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007. Installing one of these lift struts is subject to the repetitive inspections required in paragraph (e)(4) of this AD.

(3)If corrosion is found during the inspection required in paragraph (e)(1) of this AD, do an ultrasound or radiograph inspection to determine if the corrosion exceeds the Acceptance/Rejection Criteria specified in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007. Before further flight after the visual inspection required in paragraph (e)(1) of this AD. Follow Part 2 of the Instructions in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007. All ultrasound or radiograph inspections required by this AD must be done by one of the following:

(i)A Level II or III inspector certified in the applicable ultrasound or radiograph inspection method using the guidelines established by the American Society of Nondestructive Testing or NAS 410 (formerly MIL-STD-410);

(ii)An inspector certified to specific FAA or other acceptable government or industry standards, such as Air Transport Association

(ATA)Specifications 105-Guidelines for Training and Qualifying Personnel in Nondestructive Testing Methods; or

(iii)An FAA Repair Station or a Testing/ Inspection Laboratory qualified to do ultrasound or radiograph inspections.

(4)If no corrosion or cracks are found during the visual inspection required in paragraph (e)(1) of this AD, or if the inspection required in paragraph (e)(3) reveals that the corrosion does not exceed the Acceptance/Rejection Criteria specified in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007, repetitively inspect thereafter using the ultrasound or radiograph inspection method and treat with internal corrosion protection until all struts are replaced with the sealed struts specified in paragraph (e)(2)(i) of this AD. If any cracks are found or corrosion is found that exceeds the Acceptance/Rejection Criteria specified in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007, during any of the repetitive inspections required by this AD, take the necessary corrective actions as applicable in paragraph (e)(5) of this AD.

(i)Initially inspect within the next 3 months after August 20, 2007 (the effective date of AD 2007-16-14) or within 48 months after installing a lift strut specified in paragraph (e)(2)(ii) of this AD, whichever occurs later.

(ii)Repetitively inspect thereafter at intervals not to exceed 48 months, except as required by paragraph (e)(4)(iii) of this AD.

(iii)If the initial inspection was done using the eddy current method as specified in AD 2007-16-14, the first ultrasound or radiograph repetitive inspection must be done within the next 24 months after doing the eddy current inspection. Repetitively inspect thereafter at intervals not to exceed 48 months using the ultrasound or radiograph inspection method. Follow Part 2 of the Instructions in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007, using the ultrasound or radiograph inspection method.

(5)If, during any inspection required in paragraphs (e)(3) or (e)(4) of this AD, any cracks are found or it is determined that the corrosion exceeds the Acceptance/Rejection Criteria specified in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007, replace the lift strut with the applicable lift strut specified in paragraph (e)(2)(i) or (e)(2)(ii) of this AD. Before further flight after the inspection required in paragraph (e)(3) or (e)(4) of this AD. Following the Instructions in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007.

(6)Do not install P/N A-A815, P/N A-A854, or FAA-approved equivalent P/N, unless:

(i)Within the last 48 months it has been inspected using the ultrasound or radiograph method; As of 5 hours TIS after March 28, 2008 the effective date of this AD. Not applicable.

(ii)It meets the Acceptance/Rejection Criteria; and

(iii)It is treated with internal corrosion protection as specified in Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007.

(7)As a terminating action for the repetitive inspections required by this AD, all vented lift struts (P/Ns A-A815, A-A854, and FAA-approved equivalent P/Ns) may be replaced with sealed lift struts (P/Ns MA-A815, UA-A815, MA-A854, UA-854, or FAA-approved equivalent P/Ns). At any time after March 28, 2008 the effective date of this AD. Not applicable. Alternative Methods of Compliance (AMOCs)

(f)The Manager, Fort Worth Airplane Certification Office, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Andrew McAnaul, Aerospace Engineer, ASW-150 (c/o MIDO-43), 10100 Reunion Place, Suite 650, San Antonio, Texas 78216; telephone:

(210)308-3365; fax:

(210)308-3370. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

(g)AMOCs approved for AD 2007-16-14 are approved for this AD. Material Incorporated by Reference

(h)You must use Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision A, dated August 1, 2007; and Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007, to do the actions required by this AD, unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision B, dated October 15, 2007, under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)On August 20, 2007 (72 FR 45153, August 13, 2007), the Director of the Federal Register approved the incorporation by reference of Taylorcraft Aviation, LLC Service Bulletin No. 2007-001, Revision A, dated August 1, 2007.

(3)For service information identified in this AD, contact Taylorcraft Aviation, LLC, 2124 North Central Avenue, Brownsville, Texas 78521; telephone: 956-986-0700.

(4)You may review copies at the FAA, Central Region, Office of the Regional Counsel, 901 Locust, Kansas City, Missouri 64106; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html* . Issued in Kansas City, Missouri, on February 13, 2008. David R. Showers, Acting Manager, Small Airplane Directorate, Aircraft Certification Service. [FR Doc. E8-3074 Filed 2-21-08; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-0333; Directorate Identifier 2007-NM-236-AD; Amendment 39-15379; AD 2008-04-07] RIN 2120-AA64 Airworthiness Directives; Saab Model SAAB SF340A and SAAB 340B Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

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

(MCAI)originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as: Subsequent to accidents involving Fuel Tank System explosions in flight * * * and on ground, the FAA has published Special Federal Aviation Regulation 88 (SFAR88) * * * [which] required * * * [conducting] a design review against explosion risks. The unsafe condition is the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. We are issuing this AD to require actions to correct the unsafe condition on these products. DATES: This AD becomes effective March 28, 2008. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of March 28, 2008. ADDRESSES: You may examine the AD docket on the Internet at *http://www.regulations.gov* or in person at the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC. FOR FURTHER INFORMATION CONTACT: Shahram Daneshmandi, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1112; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: Discussion We issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the **Federal Register** on December 17, 2007 (72 FR 71271). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states: Subsequent to accidents involving Fuel Tank System explosions in flight * * * and on ground, the FAA has published Special Federal Aviation Regulation 88 (SFAR88) in June 2001. In their Letters referenced 04/00/02/07/01-L296 dated March 4, 2002 and 04/00/02/07/03-L024, dated February 3, 2003, the JAA (Joint Aviation Authorities) recommended the application of a similar regulation to the National Aviation Authorities (NAA). Under this regulation, all holders of type certificates for passenger transport aircraft with either a passenger capacity of 30 or more, or a payload capacity of 7,500 pounds (3402 kg) or more, which have received their certification since January 1, 1958, are required to conduct a design review against explosion risks. This Airworthiness Directive, which renders mandatory the modification [3162] to separate wiring of Fuel Quantity Indication System [FQIS], is a consequence of the design review. The unsafe condition is the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. Modification 3162 includes parking (stowing) of the existing wiring to the FQIS, installing new wires with shields to the FQIS, and operational and functional tests of the FQIS. You may obtain further information by examining the MCAI in the AD docket. Comments We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public. Conclusion We reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are highlighted in a NOTE within the AD. Costs of Compliance We estimate that this AD will affect about 218 products of U.S. registry. We also estimate that it will take about 80 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $80 per work-hour. Required parts will cost about $12,900 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $4,207,400, or $19,300 per product. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify this AD: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov;* or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone

(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2008-04-07 Saab Aircraft AB:** Amendment 39-15379. Docket No. FAA-2007-0333; Directorate Identifier 2007-NM-236-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective March 28, 2008. Affected ADs

(b)None. Applicability

(c)This AD applies to Saab Model SAAB SF340A and SAAB 340B airplanes, all serial numbers, certificated in any category. Subject

(d)Air Transport Association

(ATA)of America Code 28: Fuel. Reason

(e)The mandatory continuing airworthiness information

(MCAI)states: Subsequent to accidents involving Fuel Tank System explosions in flight * * * and on ground, the FAA has published Special Federal Aviation Regulation 88 (SFAR88) in June 2001. In their Letters referenced 04/00/02/07/01-L296 dated March 4, 2002, and 04/00/02/07/03-L024, dated February 3, 2003, the JAA (Joint Aviation Authorities) recommended the application of a similar regulation to the National Aviation Authorities (NAA). Under this regulation, all holders of type certificates for passenger transport aircraft with either a passenger capacity of 30 or more, or a payload capacity of 7,500 pounds (3402 kg) or more, which have received their certification since January 1, 1958, are required to conduct a design review against explosion risks. This Airworthiness Directive, which renders mandatory the modification [3162] to separate wiring of Fuel Quantity Indication System, is a consequence of the design review. The unsafe condition is the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. Modification 3162 includes parking (stowing) of the existing wiring to the FQIS, installing new wires with shields to the FQIS, and operational and functional tests of the FQIS. Actions and Compliance

(f)Within 72 months after the effective date of this AD, unless already done, do modification 3162 in accordance with the Accomplishment Instructions of Saab Service Bulletin 340-28-024, Revision 01, dated May 21, 2007. Actions done before the effective date of this AD in accordance with Saab Service Bulletin 340-28-024, dated February 26, 2007, are considered acceptable for compliance with the requirements of this AD. FAA AD Differences Note 1: This AD differs from the MCAI and/or service information as follows: No differences. Other FAA AD Provisions

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

(1)Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Shahram Daneshmandi, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1112; fax

(425)227-1149. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

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

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

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

(h)Refer to MCAI EASA Airworthiness Directive 2007-0170, dated June 15, 2007; and Saab Service Bulletin 340-28-024, Revision 01, dated May 21, 2007; for related information. Material Incorporated by Reference

(i)You must use Saab Service Bulletin 340-28-024, Revision 01, dated May 21, 2007, to do the actions required by this AD, unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact Saab Aircraft AB, SAAB Aircraft Product Support, S-581.88, Linköping, Sweden.

(3)You may review copies at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, Washington; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call

(202)741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html* . Issued in Renton, Washington, on February 11, 2008. Stephen P. Boyd, Assistant Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E8-3068 Filed 2-21-08; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-0335; Directorate Identifier 2007-NM-292-AD; Amendment 39-15380; AD 2008-04-08] RIN 2120-AA64 Airworthiness Directives; Bombardier Model CL-600-2B19 (Regional Jet Series 100 & 440) Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

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

(MCAI)originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as: Bombardier Aerospace has completed a system safety review of the CL-600-2B19 aircraft fuel system against new fuel tank safety standards, introduced in Chapter 525 of the Airworthiness Manual through Notice of Proposed Amendment

(516)228-7331; fax

(516)794-5531. SUPPLEMENTARY INFORMATION: Discussion We issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the **Federal Register** on December 17, 2007 (72 FR 71273). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states: Bombardier Aerospace has completed a system safety review of the CL-600-2B19 aircraft fuel system against new fuel tank safety standards, introduced in Chapter 525 of the Airworthiness Manual through Notice of Proposed Amendment

(NPA)2002-043. The identified non-compliances were assessed using Transport Canada Policy Letter No. 525-001 to determine if mandatory corrective action is required. The assessment and lightning tests showed that certain fuel tube self-bonded couplings do not provide sufficient lightning current capability. The assessment also showed that single failure of the integral bonding wire of the self-bonded couplings or excessive axial clearance at the reducer ferrules of certain self-bonded couplings could affect electrical bonding between fuel tubes. Insufficient electrical bonding between fuel tubes or insufficient current capability of fuel tube couplings, if not corrected, could result in arcing and potential ignition source inside the fuel tank during lightning strikes and consequent fuel tank explosion. To correct the unsafe condition, this directive mandates the replacement of certain fuel tube couplings with redesigned couplings. For certain couplings, the replacement includes a detailed inspection for wear of the sleeve and coupling and applicable corrective actions (including installing new O-rings and sleeves). You may obtain further information by examining the MCAI in the AD docket. Comments We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public. Conclusion We reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are highlighted in a NOTE within the AD. Costs of Compliance We estimate that this AD will affect about 692 products of U.S. registry. We also estimate that it will take about 21 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $80 per work-hour. Required parts will cost about $2,417 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $2,835,124, or $4,097 per product. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify this AD: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov;* or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone

(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2008-04-08 Bombardier, Inc. (Formerly Canadair):** Amendment 39-15380. Docket No. FAA-2007-0335; Directorate Identifier 2007-NM-292-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective March 28, 2008. Affected ADs

(b)None. Applicability

(c)This AD applies to Bombardier Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes, certificated in any category, serial numbers 7003 through 7067, and 7069 through 7981. Subject

(d)Air Transport Association

(ATA)of America Code 28: Fuel. Reason

(e)The mandatory continuing airworthiness information

(MCAI)states: Bombardier Aerospace has completed a system safety review of the CL-600-2B19 aircraft fuel system against new fuel tank safety standards, introduced in Chapter 525 of the Airworthiness Manual through Notice of Proposed Amendment

(f)Within 5000 flight hours after the effective date of this AD, unless already done, replace fuel tube couplings inside the wing and center fuel tanks with redesigned couplings, in accordance with the Accomplishment Instructions of Bombardier Service Bulletin 601R-28-054, Revision A, dated August 7, 2006. Do all applicable inspections and corrective actions before further flight. FAA AD Differences Note: This AD differs from the MCAI and/or service information as follows: No differences. Other FAA AD Provisions

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

(1)*Alternative Methods of Compliance (AMOCs):* The Manager, New York Aircraft Certification Office, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Rocco Viselli, Aerospace Engineer, Airframe and Propulsion Branch, ANE-171, FAA, New York Aircraft Certification Office, 1600 Stewart Avenue, Suite 410, Westbury, New York 11590; telephone

(516)228-7331; fax

(516)794-5531. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

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

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

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

(h)Refer to MCAI Canadian Airworthiness Directive CF-2007-23, dated October 18, 2007, and Bombardier Service Bulletin 601R-28-054, Revision A, dated August 7, 2006, for related information. Material Incorporated by Reference

(i)You must use Bombardier Service Bulletin 601R-28-054, Revision A, dated August 7, 2006, to do the actions required by this AD, unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact Bombardier, Inc., Canadair, Aerospace Group, P.O. Box 6087, Station Centre-ville, Montreal, Quebec H3C 3G9, Canada.

(3)You may review copies at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call

(202)741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html* . Issued in Renton, Washington, on February 13, 2008. Stephen P. Boyd, Assistant Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E8-3070 Filed 2-21-08; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-0334; Directorate Identifier 2007-NM-206-AD; Amendment 39-15385; AD 2008-04-13] RIN 2120-AA64 Airworthiness Directives; ATR Model ATR42 and ATR72 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

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

(MCAI)originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as: [T]he FAA has published a set of new rules related to the fuel tank safety, including the Special Federal Aviation Regulation 88 (SFAR 88). The JAA (Joint Aviation Authority) has issued an Interim Policy JAA INT/POL 25/12, to recommend the application of a similar requirement to the National Aviation Authorities

(NAA)[of Europe]. * * * ATR carried out a safety review on the fuel tank systems and zones adjacent to the fuel tanks on all ATR models * * *. The unsafe condition is the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. We are issuing this AD to require actions to correct the unsafe condition on these products. DATES: This AD becomes effective March 28, 2008. The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of March 28, 2008. ADDRESSES: You may examine the AD docket on the Internet at *http://www.regulations.gov* or in person at the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC. FOR FURTHER INFORMATION CONTACT: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1137; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: Discussion We issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the **Federal Register** on December 17, 2007 (72 FR 71286). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states: [T]he FAA has published a set of new rules related to the fuel tank safety, including the Special Federal Aviation Regulation 88 (SFAR 88). The JAA (Joint Aviation Authority) has issued an Interim Policy JAA INT/POL 25/12, to recommend the application of a similar requirement to the National Aviation Authorities

(NAA)[of Europe]. This recommendation was followed by French DGAC, which rendered the compliance to JAA INT/POL 25/12 mandatory for all ATR Aircraft. Under this regulation, all holders of type certificates are required to conduct a design review of their fuel tank systems against explosion risk. It also requires the development and implementation of maintenance and inspection instructions to maintain the safety of the fuel tank system. To answer JAA INT/POL 25/12, and in accordance with SFAR 88 requirements and guideline, ATR carried out a safety review on the fuel tank systems and zones adjacent to the fuel tanks on all ATR models using relevant safety assessment methods of JAR 25.1309. As a result of this safety review, ATR developed for ATR 42 the modification 05355 (SB (service bulletin) ATR 42-28-0039), and for ATR 72 the modification 05356 (SB ATR 72-28-1019). Those modifications consist in the installation of fuses adapters on wiring entering the fuel tanks and current limitation devices. For ATR 72 aircraft, the modification also requires replacement of the high level sensors with new sensors having shorter harness. The modification also includes related investigative and corrective actions, which include inspecting the electrical harness for correct installation and adjusting the harness as necessary, and, for Model ATR 42 airplanes, inspecting the bonding strap for correct installation and adjusting the bonding strap. The unsafe condition is the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. You may obtain further information by examining the MCAI in the AD docket. Comments We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public. Conclusion We reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are highlighted in a NOTE within the AD. Costs of Compliance We estimate that this AD will affect about 55 products of U.S. registry. We also estimate that it will take about 150 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $80 per work-hour. Required parts will cost about $23,000 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $1,925,000, or $35,000 per product. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify this AD: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov* ; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone

(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2008-04-13 ATR—GIE Avions de Transport Regional (formerly Aerospatiale):** Amendment 39-15385. Docket No. FAA-2007-0334; Directorate Identifier 2007-NM-206-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective March 28, 2008. Affected ADs

(b)None. Applicability

(c)This AD applies to the airplanes specified in paragraphs (c)(1) and (c)(2) of this AD.

(1)ATR Model ATR42-200, -300, -320, and -500 airplanes, certificated in any category, serial numbers 1 through 642.

(2)ATR Model ATR72-101, -201, -102, -202, -211, -212, and -212A airplanes, certificated in any category, serial numbers 1 through 724. Subject

(d)Air Transport Association

(ATA)of America Code 28: Fuel. Reason

(e)The mandatory continuing airworthiness information

(MCAI)states: [T]he FAA has published a set of new rules related to the fuel tank safety, including the Special Federal Aviation Regulation 88 (SFAR 88). The JAA (Joint Aviation Authority) has issued an Interim Policy JAA INT/POL 25/12, to recommend the application of a similar requirement to the National Aviation Authorities

(f)Within 41 months after the effective date of this AD, unless already done, modify the fuel system and do all applicable related investigative and corrective actions according to the instructions given by the applicable service bulletin listed in Table 1 of this AD. Do all applicable related investigative and corrective actions before further flight. Actions accomplished before the effective date of this AD in accordance with Avions de Transport Regional Service Bulletin ATR 42-28-0039, Revision 03, dated November 15, 2006, are considered acceptable for compliance with the corresponding action specified in this AD. Table 1.—Service Information Avions de Transport Regional service bulletin Revision level Date ATR42-28-0039 (for Model ATR42 Airplanes) 04 June 12, 2007. ATR72-28-1019 (for Model ATR72 Airplanes) 05 June 12, 2007. FAA AD Differences Note: This AD differs from the MCAI and/or service information as follows: The additional actions specified in the MCAI for operators that have done actions in accordance with previous issues of the service bulletins are not complete. Therefore, this AD only refers to Avions de Transport Regional Service Bulletins ATR 42-28-0039, Revision 03, dated November 15, 2006; Revision 04, dated June 12, 2007; and ATR 72-28-1019, Revision 05, dated June 12, 2007; as appropriate sources of service information for accomplishing the required actions. Operators that have done actions in accordance with previous issues of the service bulletins may request an approval for an alternative method of compliance

(AMOC)according to paragraph

(g)of this AD, provided that the AMOC provides an acceptable level of safety. Other FAA AD Provisions

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

(1)*Alternative Methods of Compliance (AMOCs):* The Manager, ANM-116, International Branch, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1137; fax

(425)227-1149. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

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

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

(h)Refer to MCAI EASA Airworthiness Directive 2007-0226, dated August 24, 2007, and the service information listed in Table 2 of this AD, for related information. Table 2.—Related Service Information Avions de Transport Regional service bulletin Revision level Date ATR42-28-0039 04 June 12, 2007. ATR72-28-1019 05 June 12, 2007. Material Incorporated by Reference

(i)You must use Avions de Transport Regional Service Bulletin ATR42-28-0039, Revision 04, dated June 12, 2007; or Avions de Transport Regional Service Bulletin ATR72-28-1019, Revision 05, dated June 12, 2007; as applicable; to do the actions required by this AD, unless the AD specifies otherwise. Avions de Transport Regional Service Bulletin ATR42-28-0039, Revision 04, dated June 12, 2007, contains the following effective pages: Page Nos. Revision level shown on page Date shown on page 1-6, 8-10, 16-18, 45-48, 92, 93 04 June 12, 2007. 7, 11, 51 1 February 28, 2006. 12-15, 19-26, 31, 32, 39, 40, 67, 68, 79, 80, 91 03 November 15, 2006. 27-30, 33-38, 41-44, 49, 50, 53-66, 69-78, 81-90 Original August 1, 2005. 52 02 August 10, 2006. Avions de Transport Regional Service Bulletin ATR72-28-1019, Revision 05, dated June 12, 2007, contains the following effective pages: Page No. Revision level shown on page Date shown on page 1-8, 13-15, 18, 37, 38, 66 05 June 12, 2007. 9, 51, 52 1 February 28, 2006. 10-12, 17, 21-36, 39-48, 53, 54, 57, 58, 61-64 Original August 1, 2005. 16, 65 02 August 10, 2006. 19, 20, 49, 50, 55, 56, 59, 60 03 September 29, 2006.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact ATR, 316 Route de Bayonne, 31060 Toulouse, Cedex 03, France.

(202)741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html* . Issued in Renton, Washington, on February 13, 2008. Stephen P. Boyd, Assistant Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E8-3188 Filed 2-21-08; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-28381; Directorate Identifier 2006-NM-164-AD; Amendment 39-15383; AD 2008-04-11] RIN 2120-AA64 Airworthiness Directives; Boeing Model 707 Airplanes, and Model 720 and 720B Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: The FAA is adopting a new airworthiness directive

(AD)for all Boeing Model 707 airplanes, and Model 720 and 720B series airplanes. This AD requires revising the FAA-approved maintenance program by incorporating new airworthiness limitations

(AWLs)for fuel tank systems to satisfy Special Federal Aviation Regulation No. 88 requirements. This AD also requires the initial performance of certain repetitive AWL inspections to phase in those inspections, and repair if necessary. This AD results from a design review of the fuel tank systems. We are issuing this AD to prevent the potential for ignition sources inside fuel tanks caused by latent failures, alterations, repairs, or maintenance actions, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. DATES: This AD becomes effective March 28, 2008. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in the AD as of March 28, 2008. ADDRESSES: For service information identified in this AD, contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov* ; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The address for the Docket Office (telephone 800-647-5527) is the Document Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Kathrine Rask, Aerospace Engineer, Propulsion Branch, ANM-140S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)917-6505; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Discussion The FAA issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to all Boeing Model 707 airplanes, and Model 720 and 720B series airplanes. That NPRM was published in the **Federal Register** on July 3, 2007 (72 FR 36370). That NPRM proposed to require revising the FAA-approved maintenance program by incorporating new airworthiness limitations

(AWLs)for fuel tank systems to satisfy Special Federal Aviation Regulation No. 88 requirements. That NPRM also proposed to require the initial performance of certain repetitive AWL inspections to phase in those inspections, and repair if necessary. Comments We provided the public the opportunity to participate in the development of this AD. We have considered the comment received. Changes Made to This AD For standardization purposes, we have revised this AD in the following ways: • We have added a new paragraph

(i)to this AD to specify that no alternative inspections, inspection intervals, or critical design configuration control limitations (CDCCLs) may be used unless they are part of a later approved revision of Boeing 707/720 Airworthiness Limitations

(AWLs)Document D6-7552-AWL, dated March 2006, or unless they are approved as an alternative method of compliance (AMOC). Inclusion of this paragraph in the AD is intended to ensure that the AD-mandated airworthiness limitations changes are treated the same as the airworthiness limitations issued with the original type certificate. • We have simplified the language in Note 1 of this AD to clarify that an operator must request approval for an AMOC if an operator cannot accomplish the required inspections because an airplane has been previously modified, altered, or repaired in the areas addressed by the required inspections. Request To Change Wording in Note 1 of the NPRM Boeing requests that we change the wording in Note 1 of the NPRM as follows: • Change “new inspections and maintenance actions” to include the words “according to paragraph (g)” after “actions.” • Change “the operator must request approval for revision to the airworthiness limitations” to “the operator must request approval for deviation from the airworthiness limitations.” • Remove “as applicable” from the last sentence of the note and change the paragraph reference from “paragraph

(g)or (i)” to “paragraph (i).” Boeing explains that the current wording is difficult to follow. As stated previously, we have simplified the language in Note 1 of this AD for standardization with other similar ADs. The language the commenter requests we change does not appear in the revised note; therefore, no additional change to this AD is necessary in this regard. Credit for Prior Accomplishment of AWL 28-AWL-01 We have added a statement to paragraph

(h)of this AD specifying that accomplishment of AWL 28-AWL-01 as part of an FAA-approved maintenance program prior to the later of the times specified in paragraphs (h)(1) and (h)(2) of this AD constitutes compliance with the requirements of paragraph (h). Conclusion We have carefully reviewed the available data, including the comment received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We have determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD. Costs of Compliance There are about 213 airplanes of the affected design in the worldwide fleet. This AD affects about 76 airplanes of U.S. registry. The required actions take about 8 work hours per airplane, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of the AD for U.S. operators is $48,640, or $640 per airplane. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

(1)Is not a “significant regulatory action” under Executive Order 12866;

(2)Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **2008-04-11 Boeing:** Amendment 39-15383. Docket No. FAA-2007-28381; Directorate Identifier 2006-NM-164-AD. Effective Date

(a)This AD becomes effective March 28, 2008. Affected ADs

(b)None. Applicability

(c)This AD applies to all Boeing Model 707-100 long body, -200, -100B long body, and -100B short body series airplanes; Model 707-300, -300B, -300C, and -400 series airplanes; and Model 720 and 720B series airplanes; certificated in any category. Note 1: This AD requires revisions to certain operator maintenance documents to include new inspections. Compliance with these inspections is required by 14 CFR 91.403(c). For airplanes that have been previously modified, altered, or repaired in the areas addressed by these limitations, the operator may not be able to accomplish the actions described in the revisions. In this situation, to comply with 14 CFR 91.403(c), the operator must request approval for an alternative method of compliance according to paragraph

(i)of this AD. The request should include a description of changes to the required inspections that will ensure the continued operational safety of the airplane. Unsafe Condition

(d)This AD results from a design review of the fuel tank systems. We are issuing this AD to prevent the potential for ignition sources inside fuel tanks caused by latent failures, alterations, repairs, or maintenance actions, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Service Information

(f)The term “D6-7552-AWL March 2006,” as used in this AD, means Boeing 707/720 Airworthiness Limitations

(AWLs)Document D6-7552-AWL, dated March 2006. Revision of AWLs Section

(g)Before December 16, 2008, revise the FAA-approved maintenance program by incorporating the information in the sections specified in paragraphs (g)(1) through (g)(3) of this AD, except that the initial inspection specified in paragraph

(h)of this AD must be done at the time specified in paragraph (h). Accomplishing the revision in accordance with a later revision of D6-7552-AWL March 2006 is an acceptable method of compliance if the revision is approved by the Manager, Seattle Aircraft Certification Office (ACO), FAA.

(1)Section B., “FUEL SYSTEMS AIRWORTHINESS LIMITATIONS,” of D6-7552-AWL March 2006.

(2)Section C., “SYSTEM AWL PAGE FORMAT,” of D6-7552-AWL March 2006.

(3)Section D., “AIRWORTHINESS LIMITATIONS—FUEL SYSTEMS,” of D6-7552-AWL March 2006. Initial Inspection and Repair if Necessary

(h)At the later of the times specified in paragraphs (h)(1) and (h)(2) of this AD: Do a detailed inspection of external wires over the center fuel tank for damaged or loose clamps, wire chafing, and wire bundles in contact with the surface of the center fuel tank, in accordance with Section D, “AIRWORTHINESS LIMITATIONS—FUEL SYSTEMS,” AWL 28-AWL-01, of D6-7552-AWL March 2006. If any discrepancy is found during this inspection, repair the discrepancy before further flight in accordance with D6-7552-AWL March 2006. Accomplishing the actions required by this paragraph in accordance with a later revision of D6-7552-AWL March 2006 is an acceptable method of compliance if the revision is approved by the Manager, Seattle ACO. Accomplishing AWL 28-AWL-01 as part of an FAA-approved maintenance program prior to the later of the times specified in paragraphs (h)(1) and (h)(2) of this AD constitutes compliance with the requirements of this paragraph.

(1)Before the accumulation of 36,000 total flight cycles, or within 120 months since the date of issuance of the original standard airworthiness certificate or the date of issuance of the original export certificate of airworthiness, whichever occurs first.

(2)Within 72 months after the effective date of this AD. Note 2: For the purposes of this AD, a detailed inspection is: “An intensive examination of a specific item, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at an intensity deemed appropriate. Inspection aids such as mirror, magnifying lenses, etc., may be necessary. Surface cleaning and elaborate procedures may be required.” No Alternative Inspections, Inspection Intervals, or CDCCLs

(i)After accomplishing the actions specified in paragraphs

(g)and

(h)of this AD, no alternative inspections, inspection intervals, or CDCCLs may be used unless the inspections, intervals, or CDCCLs are part of a later revision of D6-7552-AWL March 2006, that is approved by the Manager, Seattle ACO; or unless the inspections, intervals, or CDCCLs are approved as an alternative method of compliance

(AMOC)in accordance with the procedures specified in paragraph

(j)of this AD. Alternative Methods of Compliance (AMOCs) (j)(1) The Manager, Seattle ACO, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(2)To request a different method of compliance or a different compliance time for this AD, follow the procedures in 14 CFR 39.19. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO. Material Incorporated by Reference

(k)You must use Boeing 707/720 Airworthiness Limitations

(AWLs)Document D6-7552-AWL, including attachment, dated March 2006, to perform the actions that are required by this AD, unless the AD specifies otherwise. (Only the first page of the attachment contains the document date; no other page of the attachment contains this information.) The Director of the Federal Register approved the incorporation by reference of this document in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, for a copy of this service information. You may review copies at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html.* Issued in Renton, Washington, on February 13, 2008. Stephen P. Boyd, Assistant Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E8-3189 Filed 2-21-08; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-28382; Directorate Identifier 2006-NM-179-AD; Amendment 39-15382; AD 2008-04-10] RIN 2120-AA64 Airworthiness Directives; Boeing Model 727 Airplanes AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

(AD)for all Boeing Model 727 airplanes. This AD requires revising the FAA-approved maintenance program by incorporating new airworthiness limitations

(AWLs)for fuel tank systems to satisfy Special Federal Aviation Regulation No. 88 requirements. This AD also requires the initial inspection of a certain repetitive AWL inspection to phase in that inspection, and repair if necessary. This AD results from a design review of the fuel tank systems. We are issuing this AD to prevent the potential for ignition sources inside fuel tanks caused by latent failures, alterations, repairs, or maintenance actions, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane. DATES: This AD is effective March 28, 2008. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of March 28, 2008. ADDRESSES: For service information identified in this AD, contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov* ; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The address for the Docket Office (telephone 800-647-5527) is the Document Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Kathrine Rask, Aerospace Engineer, Propulsion Branch, ANM-140S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)917-6505; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Discussion We issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an airworthiness directive

(AD)that would apply to all Boeing Model 727 airplanes. That NPRM was published in the **Federal Register** on July 6, 2007 (72 FR 36901). That NPRM proposed to require revising the FAA-approved maintenance program by incorporating new airworthiness limitations

(AWLs)for fuel tank systems to satisfy Special Federal Aviation Regulation No. 88 requirements. That NPRM also proposed to require the initial inspection of a certain repetitive AWL inspection to phase in that inspection, and repair if necessary. Comments We gave the public the opportunity to participate in developing this AD. We considered the comments received from the one commenter. Changes Made to This AD For standardization purposes, we have revised this AD in the following ways: • We have added a new paragraph

(i)to specify that no alternative inspections, inspection intervals, or critical design configuration control limitation (CDCCLs) may be used unless they are part of a later approved revision of the Boeing 727-100/200 Airworthiness Limitations (AWLs), D6-8766-AWL, dated March 2006 (hereafter referred to as “Document D6-8766-AWL”), or unless they are approved as an alternative method of compliance (AMOC). Inclusion of this paragraph in an AD is intended to ensure that the AD-mandated airworthiness limitations changes are treated the same as the airworthiness limitations issued with the original type certificate. • We have simplified the language in Note 1 of this AD to clarify that an operator must request approval for an AMOC if an operator cannot accomplish the required inspections because an airplane has been previously modified, altered, or repaired in the areas addressed by the required inspections. Change to the Compliance Time We have revised paragraph (h)(1) of this AD to change the compliance time from units of flight hours to flight cycles, as specified in Document D6-8766-AWL. Credit for Prior Accomplishment of AWL No. 28-AWL-01 We have added a statement to paragraph

(h)of this AD specifying that accomplishment of AWL No. 28-AWL-01 as part of an FAA-approved maintenance program prior to the applicable compliance time specified in paragraph (h)(1) or (h)(2) of this AD constitutes compliance with the requirements of paragraph (h). Request To Revise Note 1 Boeing requests that we revise Note 1 of the NPRM to clarify the need for an AMOC. Boeing states that the current wording is difficult to follow, and that the note is meant to inform operators that an AMOC to the AWLs document may be required if an operator has previously modified, altered, or repaired in the areas addressed by limitations. Boeing requests that we revise Note 1 as follows: • Add the words “according to paragraph (g)” at the end of the first sentence. • Replace the words “revision to” with “deviation from” in the last sentence. • Delete the words “(g) or” and “as applicable” from the last sentence. As stated previously, we have simplified the language in Note 1 of this AD for standardization with other similar ADs. The language the commenter requests we change does not appear in the revised note; therefore, no additional change to this AD is necessary in this regard. Request To Add an Additional Reference to Appendix 1 Boeing requests that we revise Appendix 1 of the NPRM to add an additional Air Transport Association

(ATA)section for AWL No. 28-AWL-02. Boeing states that page block 401 of chapter 53-20-11 of the Boeing 727 Airplane Maintenance Manual, Passenger Cabin Floor Panel Removal/Installation, should be included. We disagree with adding the additional reference, since we have deleted Appendix 1 from this AD. The purpose of Appendix 1 was to assist operators in identifying the maintenance manual tasks that could affect compliance with a CDCCL. However, we have also received several similar comments regarding the appendixes in other NPRMs that address the same unsafe condition on other Boeing airplanes. Those comments indicate that including non-required information in those NPRMs has caused confusion. Further, Document D6-8766-AWL contains most of the information that is listed in Appendix 1 of the NPRM. Therefore, we have removed Appendix 1 from this AD. Conclusion We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We also determined that these changes will not increase the economic burden on any operator or increase the scope of the AD. Costs of Compliance There are about 530 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs, at an average labor rate of $80 per hour, for U.S. operators to comply with this AD. Estimated Costs Action Work hours Parts Cost per airplane Number of U.S.-registered airplanes Fleet cost Maintenance program revision 8 None $640 272 $174,080 Inspection 8 None 640 272 174,080 Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

(1)Is not a “significant regulatory action” under Executive Order 12866,

(2)Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979), and

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. You can find our regulatory evaluation and the estimated costs of compliance in the AD Docket. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2008-04-10 Boeing:** Amendment 39-15382. Docket No. FAA-2007-28382; Directorate Identifier 2006-NM-179-AD. Effective Date

(a)This airworthiness directive

(AD)is effective March 28, 2008. Affected ADs

(b)None. Applicability

(c)This AD applies to all Boeing Model 727, 727C, 727-100, 727-100C, 727-200, and 727-200F series airplanes, certificated in any category. Note 1: This AD requires revisions to certain operator maintenance documents to include new inspections. Compliance with these inspections is required by 14 CFR 91.403(c). For airplanes that have been previously modified, altered, or repaired in the areas addressed by these inspections, the operator may not be able to accomplish the inspections described in the revisions. In this situation, to comply with 14 CFR 91.403(c), the operator must request approval for an alternative method of compliance

(AMOC)according to paragraph

(j)of this AD. The request should include a description of changes to the required inspections that will ensure the continued operational safety of the airplane. Unsafe Condition

(d)This AD results from a design review of the fuel tank systems. We are issuing this AD to prevent the potential for ignition sources inside fuel tanks caused by latent failures, alterations, repairs, or maintenance actions, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Service Information Reference

(f)The term “Document D6-8766-AWL,” as used in this AD, means Boeing 727-100/200 Airworthiness Limitations (AWLs), D6-8766-AWL, dated March 2006. Maintenance Program Revision

(g)Before December 16, 2008, revise the FAA-approved maintenance program to incorporate the information in the sections specified in paragraphs (g)(1), (g)(2), (g)(3), and (g)(4) of this AD; except that the initial inspection required by paragraph

(h)of this AD must be done at the applicable compliance time specified in that paragraph. Accomplishing the revision in accordance with a later revision of Document D6-8766-AWL is an acceptable method of compliance if the revision is approved by the Manager, Seattle Aircraft Certification Office (ACO), FAA.

(1)Section A, “SCOPE” of Document D6-8766-AWL.

(2)Section B, “FUEL SYSTEMS AIRWORTHINESS LIMITATIONS,” of Document D6-8766-AWL.

(3)Section C, “SYSTEM AWL PAGE FORMAT,” of Document D6-8766-AWL.

(4)Section D, “AIRWORTHINESS LIMITATIONS—FUEL SYSTEMS,” of Document D6-8766-AWL. Initial Inspection and Repair if Necessary

(h)At the later of the compliance times specified in paragraphs (h)(1) and (h)(2) of this AD, do a detailed inspection of the wire bundles routed over the center fuel tank for damaged clamps, wire chafing, and wire bundles in contact with the surface of the center fuel tank, in accordance with AWL No. 28-AWL-01 of Section D of Document D6-8766-AWL. If any discrepancy is found during the inspection, repair the discrepancy before further flight in accordance with AWL No. 28-AWL-01 of Section D of Document D6-8766-AWL. Accomplishing the actions required by this paragraph in accordance with a later revision of Document D6-8766-AWL is an acceptable method of compliance if the revision is approved by the Manager, Seattle ACO. Accomplishing AWL No. 28-AWL-01 as part of an FAA-approved maintenance program prior to the applicable compliance time specified in paragraph (h)(1) or (h)(2) of this AD constitutes compliance with the requirements of this paragraph. Note 2: For the purposes of this AD, a detailed inspection is: “An intensive examination of a specific item, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at an intensity deemed appropriate. Inspection aids such as mirror, magnifying lenses, etc., may be necessary. Surface cleaning and elaborate procedures may be required.”

(1)Prior to the accumulation of 36,000 total flight cycles, or within 120 months since the date of issuance of the original standard airworthiness certificate or the date of issuance of the original export certificate of airworthiness, whichever occurs first.

(2)Within 72 months after the effective date of this AD. No Alternative Inspections, Inspection Intervals, or CDCCLs

(i)After accomplishing the applicable actions specified in paragraphs

(g)and

(h)of this AD, no alternative inspections, inspection intervals, or CDCCLs may be used unless the inspections, intervals, or CDCCLs are part of a later revision of Document D6-8766-AWL that is approved by the Manager, Seattle Aircraft Certification Office (ACO), FAA; or unless the inspections, intervals, or CDCCLs are approved as an AMOC in accordance with the procedures specified in paragraph

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO. Material Incorporated by Reference

(k)You must use Boeing 727-100/200 Airworthiness Limitations (AWLs), D6-8766-AWL, dated March 2006, to do the actions required by this AD, unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207.

(AD)for all Boeing Model 707 airplanes and Model 720 and 720B series airplanes. This AD requires repetitive inspections for any cracking of or damage to the left side and right side flight deck No. 2, No. 4, and No. 5 windows, as necessary, and corrective actions if necessary. This AD results from reports of in-flight departure and separation of the flight deck windows. We are issuing this AD to detect and correct cracking in the vinyl interlayer or damage to the structural inner glass panes of the flight deck No. 2, No. 4, and No. 5 windows, which could result in loss of a window and rapid loss of cabin pressure. Loss of cabin pressure could cause crew communication difficulties or crew incapacitation. DATES: This AD is effective March 28, 2008. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of March 28, 2008. ADDRESSES: Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov* ; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The address for the Docket Office (telephone 800-647-5527) is the Document Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Berhane Alazar, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)917-6577; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Discussion We issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an airworthiness directive

(AD)that would apply to all Boeing Model 707 airplanes and Model 720 and 720B series airplanes. That NPRM was published in the **Federal Register** on December 3, 2007 (72 FR 67866). That NPRM proposed to require repetitive inspections for any cracking of or damage to the left side and right side flight deck No. 2, No. 4, and No. 5 windows, as necessary, and corrective actions if necessary. Comments We gave the public the opportunity to participate in developing this AD. We considered the single comment received. Boeing supports the NPRM. Conclusion We reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting the AD as proposed. Costs of Compliance There are about 238 airplanes of the affected design in the worldwide fleet. This AD affects about 83 airplanes of U.S. registry. The required actions take about 2 work hours per airplane, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of the AD for U.S. operators is $13,280, or $160 per airplane, per inspection cycle. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

(1)Is not a “significant regulatory action” under Executive Order 12866,

(2)Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979), and

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. You can find our regulatory evaluation and the estimated costs of compliance in the AD Docket. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2008-04-06 Boeing:** Amendment 39-15378. Docket No. FAA-2007-0264; Directorate Identifier 2007-NM-212-AD. Effective Date

(a)This airworthiness directive

(AD)is effective March 28, 2008. Affected ADs

(b)None. Applicability

(d)This AD results from reports of in-flight departure and separation of the flight deck windows. We are issuing this AD to detect and correct cracking in the vinyl interlayer or damage to the structural inner glass panes of the flight deck No. 2, No. 4, and No. 5 windows, which could result in loss of a window and rapid loss of cabin pressure. Loss of cabin pressure could cause crew communication difficulties or crew incapacitation. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Repetitive Inspections and Replacement

(f)At the applicable times specified in Tables 1, 2, and 3 of paragraph 1.E. of Boeing 707 Alert Service Bulletin A3526, dated June 4, 2007, except as provided by paragraph

(g)of this AD: Do the internal and external detailed inspections for any cracking of or damage to the left side and right side flight deck No. 2, No. 4, and No. 5 windows, as applicable, and do the applicable corrective actions before further flight, by accomplishing all of the applicable actions specified in the Accomplishment Instructions of Boeing 707 Alert Service Bulletin A3526, dated June 4, 2007. Repeat the inspections thereafter at the applicable interval specified in paragraph 1.E. of Boeing 707 Alert Service Bulletin A3526, dated June 4, 2007. Exception to Compliance Times

(g)Where Tables 1, 2, and 3 of paragraph 1.E. of Boeing 707 Alert Service Bulletin A3526, dated June 4, 2007, specify counting the compliance time from “* * * the date on this service bulletin,” this AD requires counting the compliance time from the effective date of this AD. Alternative Methods of Compliance (AMOCs) (h)(1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

(3)An AMOC that provides an acceptable level of safety may be used for any repair required by this AD, if it is approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization who has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane, and the approval must specifically refer to this AD. Material Incorporated by Reference

(i)You must use Boeing 707 Alert Service Bulletin A3526, dated June 4, 2007, to do the actions required by this AD, unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207.

(3)You may review copies of the service information incorporated by reference at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html* . Issued in Renton, Washington, on February 11, 2008. Stephen P. Boyd, Assistant Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E8-2994 Filed 2-21-08; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 301 [TD 9378] RIN 1545-BE35 Release of Lien or Discharge of Property; Correction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Correcting amendments. SUMMARY: This document contains corrections to final regulations (TD 9378) that were published in the **Federal Register** on Thursday, January 31, 2008 (73 FR 5741) relating to release of lien and discharge of property under sections 6325, 6503 and 7423 of the Internal Revenue Code. These regulations update existing regulations and contain procedures for processing a request made by a property owner for discharge of a Federal tax lien from his property under section 6325(b)(4). The regulations also clarify the impact of these procedures on sections 6503(f)(2) and 7426(a)(4) and (b)(5). DATES: The correction is effective February 22, 2008. FOR FURTHER INFORMATION CONTACT: Debra A. Kohn,

(202)622-7985 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background The final regulations (TD 9378) that are the subject of the correction are under sections 6325, 6503 and 7426 of the Internal Revenue Code. Need for Correction As published, final regulations (TD 9378) contain errors that may prove to be misleading and are in need of clarification. List of Subjects in 26 CFR Part 301 Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements. Correction of Publication Accordingly, 26 CFR part 301 is corrected by making the following amendments: PART 301—PROCEDURE AND ADMINISTRATION **Paragraph 1.** The authority citation for part 301 continues to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** Section 301.6325-1 is amended by revising the second sentence of paragraph (b)(2)(i) and first sentence of paragraph (b)(4)(ii) to read as follows: § 301.6025-1 Release of lien or discharge of property.

(b)* * *

(2)* * *

(i)* * * In determining the amount to be paid, the appropriate official will take into consideration all the facts and circumstances of the case, including the expenses to which the government has been put in the matter. * * *

(4)* * *

(ii)* * * The appropriate official may, in his discretion, determine that either the entire unsatisfied tax liability listed on the notice of Federal tax lien can be satisfied from a source other than the property sought to be discharged, or the value of the interest of the United States is less than the prior determination of such value. * * * LaNita Van Dyke, Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. E8-3103 Filed 2-21-08; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 410 [CMS-6024-F] RIN 0938-AN10 Medicare Program; Prior Determination for Certain Items and Services AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: This final rule establishes a process for Medicare contractors to provide eligible participating physicians and beneficiaries with a determination of coverage relating to medical necessity for certain physicians' services before the services are furnished. This rule is intended to afford the physician and beneficiary the opportunity to know the financial liability for a service before expenses are incurred. This final rule establishes reasonable limits on physicians' services for which a prior determination of coverage may be requested and discusses generally our plans for establishing the procedures by which those determinations may be obtained. This rule also responds to public comments on the August 30, 2005 proposed rule. DATES: *Effective Date:* March 24, 2008. FOR FURTHER INFORMATION CONTACT: Debbie Skinner,

(410)786-7480. SUPPLEMENTARY INFORMATION: I. Background A. Background of Rulemaking On August 30, 2005, we published a rule (70 FR 51321) proposing to implement section 938 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003

(MMA)(Pub. L. 108-173, enacted on December 8, 2003), establishing the reasonable limits on physicians' services for which a prior determination of coverage may be requested and we discussed our plans for establishing the procedures by which those determinations may be obtained. The notice and comment period closed on October 29, 2005. We received seven timely public comments, which were useful in identifying issues and concerns. We have made changes to this final rule to address the public comments. B. Overview of Existing Statutes and Policies Section 1862(a)(1)(A) of the Social Security Act (the Act) prohibits Medicare payments for items and services that are not reasonable and necessary for the diagnosis and treatment of an illness or injury. However, section 1879 of the Act provides that under certain circumstances Medicare will pay for services that are not considered reasonable and necessary if both the beneficiary and physician did not know and could not have reasonably been expected to know that Medicare payment would not be made. A physician may be held financially liable for noncovered services he or she furnishes if, for example, the Medicare contractor or CMS publishes specific requirements for those services or the physician has received a denial or reduction of payment for the same or similar service under similar circumstances. In cases where the physician believes that the service may not be covered as reasonable and necessary, an acceptable advance notice of Medicare's possible denial of payment must be given to the patient if the physician does not want to accept financial responsibility for the service. These notices are referred to as Advance Beneficiary Notices (ABNs). ABNs must be given in writing, in advance of providing the service. They must include: the description of the service; an explanation of why the service may not be covered; a good faith cost estimate for the service; and the beneficiary's signature indicating the beneficiary has received and understood the notice. ABNs enable beneficiaries to make an informed decision about whether or not to receive an item or service that could potentially be denied as not reasonable and necessary. Currently, there is no process for the beneficiary or his or her physician to find out with greater certainty if that item or service would be considered reasonable and necessary for that beneficiary before incurring financial liability. Consequently, beneficiaries may still be discouraged from obtaining services because they are uncertain whether or not Medicare contractors will deem those services reasonable and necessary in their particular case. To address this issue, section 938 of the MMA requires the Secretary to establish a process whereby eligible requesters may submit to the contractor a request for a determination, before the furnishing of the physician's service, as to whether the physician's service is covered and consistent with the applicable requirements of section 1862(a)(1)(A) of the Act (relating to medical necessity). This MMA section also provides that the following are eligible requesters: a participating physician, but only with respect to physicians' services to be furnished to an individual who is entitled to benefits and who has consented to the physician making the request for those services; and an individual entitled to benefits, but only with respect to a physician's service for which the individual receives an ABN under section 1879(a) of the Act. Requesting a prior determination under this process is at the discretion of the eligible beneficiary or physician. Full knowledge regarding financial liability for the service would be available to physicians and beneficiaries before expenses are incurred, but prior determination of coverage is not required for submission of a claim. If the physician wants a prior determination, there must first be consent from the beneficiary. In cases where a prior determination has been requested, an ABN should only be provided if the beneficiary wants the procedure and

(1)the prior determination confirms noncoverage; or

(2)a decision could not be made because requested materials were not received; or

(3)the decision on the prior determination has not yet been received. We note that if the decision is favorable, then an ABN is unnecessary. This final rule establishes reasonable limits on the physicians' services for which a prior determination of coverage may be requested and discusses generally our plans for establishing the process by which prior determinations may be obtained. The procedures that Medicare contractors would use to make the determinations will be established in our manuals. II. Provisions of the Proposed Rule In 42 CFR 410.20(d)(1), we proposed to define a prior determination of medical necessity as a decision by a Medicare contractor, before a physician's service is furnished, as to whether or not the physician's service is covered consistent with the requirements of section 1862(a)(1)(A) of the Act relating to medical necessity. In § 410.20(d)(2), we proposed that each Medicare contractor must, through the procedure established in CMS instructions, allow requests for prior determinations from eligible requesters under the contractor's respective jurisdiction for those services identified by CMS and posted on that specific Medicare contractor's Web site. We proposed that each contractor's list would consist of the following: At least the 50 most expensive physicians' services listed in the Medicare Physician Fee Schedule

(MPFS)Database performed at least 50 times annually minus those services excluded by § 410.20(d)(3)(with adequate national or local coverage determinations); and plastic and dental surgeries that may be covered by Medicare and that have an average allowed charge of at least $1,000. In § 410.20(d)(3), we proposed that those services for which there is a national coverage determination

(NCD)in effect or a local coverage determination/local medical review policy (LCD/LMRP) in effect through the local contractor at the time of the request for prior determination would not be eligible for prior determination. This exclusion only applies when the NCD or LCD/LMRP, in CMS' judgment, provides the sufficiently specific reasonable and necessary criteria for the specific procedure for which the prior determination is requested. In § 410.20(d)(4), we proposed that CMS may increase the number of services in the initial pool that are eligible for prior determination (over the minimum of 50) through manual instructions. Our reason for this provision was to ensure that CMS can provide for prior determinations for additional services when we detect a need. Sections 1869(h)(3) through (h)(6) of the Act are specific with respect to various aspects of the prior determination process. Therefore, in § 410.20(d)(5), we specified those mandatory provisions. The detailed procedures to be followed by our contractors would be published in our manual instructions. Section 410.20(d)(5)(i) generally explained the prior determination process and accompanying documentation that may be required. Section 410.20(d)(5)(ii) described how contractors will respond to prior determination requests. The statute requires that contractors must mail the requester the decision no later than 45 days after the request is received. Section 410.20(d)(5)(iii) explained the binding nature of a positive determination. Section 410.20(d)(5)(iv) explained the limitation on further review. III. Analysis of and Response to Public Comments We received seven public comments on the proposed rule. Summaries of the comments received and our responses to those comments are set forth below. General *Comment:* One commenter asked CMS to ensure that physicians give their patients ABNs only when they have analyzed a particular procedure and have formed a reasonable belief that it may not be covered. *Response:* Regulations governing ABNs and other notices of noncoverage, meeting the requirements of section 1879 of the Act, are found at 42 CFR 411.408. Instructions specific to the ABN are found in the on-line Medicare Claims Processing Manual, Publication 100-04, Chapter 30. This comment will be considered by the agency, but is beyond the scope of this regulation. List of Eligible Services *Comment:* We received several comments recommending that the list of services eligible for prior determination be expanded. Several of these commenters suggested the list of 50 eligible services should be expanded, while another commenter suggested that CMS should include all services above a certain dollar amount. *Response:* We are revising § 410.20(d)(2) of this final rule to include a provision that will allow us to expand or contract the number of services eligible for prior determination in the future through manual instructions. We are also allowing prior determinations for plastic and dental surgeries over $1,000. We did not include all services above a certain dollar amount because administrative constraints necessitate that we control the number of eligible services. Using a monetary cut-off would lead to uncertainty regarding how many services would be eligible in subsequent years due to inflation cost of the services. *Comment:* Several commenters agreed with our approach that allows plastic and dental surgeries to be eligible for prior determination since many providers and beneficiaries currently have no way of knowing whether these services will be considered reasonable and necessary. *Response:* We agree that this approach will be beneficial to both providers and beneficiaries. *Comment:* One commenter suggested that CMS take the denial rate into account when determining which services are eligible for prior determination. *Response:* For administrative consistency and other reasons, we chose to focus on cost. Denial rates are contractor specific and therefore are not applicable to a list formulated for the entire nation. Additionally, although a service may have a relatively high denial rate, that number may be insignificant depending on the number of services performed annually. Exclusion of Services for Which There Is a Local Coverage Determination

(LCD)or National Coverage Determination

(NCD)*Comment:* We received several comments stating that CMS should not exclude from the list of eligible services those services for which there is an LCD or an NCD in place. One commenter stated that beneficiaries will not have access to LCDs. Several stated that a beneficiary requester would not necessarily understand the LCD or NCD, and it would not provide them with enough information to make an informed decision. Several commenters indicated concern that the LCD or NCD would not be clear enough to provide the requester with information to make an informed decision. *Response:* We have clarified § 410.20(d)(3) to state that services for which there is an NCD or LCD in place will remain on the “list of eligible services.” In cases where the NCD or LCD provides sufficiently specific reasonable and necessary criteria addressing the particular clinical indication for the physician's service for which the prior determination is requested, the NCD or LCD will serve as the prior determination. Requesters will be sent a copy of the NCD or LCD with an explanation that this NCD/LCD will serve as the prior determination because it provides the necessary information for the beneficiary or provider to know whether or not the service will be considered reasonable and necessary. These explanations should also contain summary information clear enough for providers and beneficiaries alike to understand what is covered and what is not covered. In cases where the NCD or LCD does not provide sufficiently specific reasonable and necessary criteria addressing the particular clinical indication for the physician's service at issue, requesters will be sent a prior determination that is not based upon the NCD/LCD. *Comment:* One commenter wanted to know how CMS would make the determination as to whether the LCD/NCD in question provides sufficiently specific reasonable and necessary criteria for the procedure for which the prior determination is requested. *Response:* The contractors will make that decision by reviewing the LCD or NCD to determine whether or not the specific reasonable and necessary criteria addressing the particular clinical indication for the procedure is addressed by the LCD. *Comment:* Several commenters suggested that since section 938 of the MMA requires CMS to include a copy of any relevant LCD or NCD with the prior determination decision, those services should not be initially excluded. *Response:* We have clarified that services for which there is an NCD or LCD in place will not be excluded and will remain on the “list of eligible services,” if they meet the other criteria for being placed on the list. In cases where the relevant LCD or NCD provides sufficiently specific reasonable and necessary criteria addressing the particular clinical indication for the physician's service at issue, the contractor will include a copy of the NCD or LCD with the decision of noncoverage, in accordance with section 938 of the MMA. *Comment:* One commenter asked how CMS plans to handle instances where the specific clinical situation determines whether or not a service is medically necessary per an LCD or an NCD or how borderline cases will be handled (that is, physicians might disagree as to whether clinical criteria in the LCD are met). *Response:* It will be up to the contractor to determine whether the clinical criteria in the NCD or LCD are met. *Comment:* One commenter asked whether contractors would develop LCDs solely in response to a high volume of prior determination requests. *Response:* Contractors will continue to develop LCDs in accordance with instructions in CMS manuals. Processing Timeframe *Comment:* We received several comments stating that the 45-day processing time is too long to be helpful to the beneficiary or provider. *Response:* Section 410.20(d)(5)(ii) requires that “* * * notice will be provided within 45 days (the same time period as the time period applicable to the contractor providing notice of initial determinations on a claim for benefits under section 1869 (a)(2)(A) of the Act).” Contractors will be instructed to process requests and send out responses as quickly as possible, taking into consideration the beneficiary's physical condition, the urgency of treatment, and the availability of the necessary documentation. Miscellaneous Comments *Comment:* Several commenters suggested that CMS needs to clarify how information on this process (including the list of eligible services) will be disseminated to providers and beneficiaries. *Response:* In addition to using the contractors' Web sites, we are looking into a number of ways to disseminate the information to both providers and beneficiaries. We will issue manual instructions regarding the list of eligible services. *Comment:* One commenter stated that CMS should investigate the possibility of allowing for submission of prior determination requests electronically. *Response:* We do not intend to accept these requests electronically. We do not consider this a “prior authorization,” for which there is an electronic form, but rather a coverage determination request. (See the statutory excerpt in § 410.20(d)(5)(ii)(A)(3), specifically calling this decision a coverage determination.) This is an optional process, and it does not preclude either the beneficiary or the provider from obtaining or performing the service and submitting the claim for payment. *Comment:* Several commenters stated that the regulation should include how frequently the list will be updated. Another commenter stated that contractors should be required to provide written notice of any changes to the list to providers and beneficiaries. *Response:* We agree with the commenters that the regulation should include how frequently the list will be updated. In § 410.20(d)(2), we have added a phrase to state that the list will be updated annually in conjunction with the release of the MPFS. Written notice will be provided, at a minimum, on the contractors' Web sites. *Comment:* One commenter stated that the process the contractors use should be subject to notice and comment. *Response:* The statute provides the basic process contractors are to follow when processing requests (that is, who can make a request, what is to be included in a request, what is to be included in a response, processing timeframe, requester rights following a negative determination, and, requester rights not to request a prior determination). The statutory process to be used by contractors was included in the proposed rule and was subject to comment. The detailed administrative matters will be in the manuals, which will allow us the flexibility to modify the administrative issues quickly if we find the procedures could be performed in a more effective manner. Contractors must adhere to policy as stipulated in CMS manuals. *Comment:* One commenter stated the list of 50 services should be subject to notice and comment. One commenter also suggested that any additional services added under § 410.20(d)(4) should be subject to comment. *Response:* The criteria we will use to select the list of services were provided in the August 2005 proposed rule (70 FR 51321) and were subject to public comment. This list will be updated annually based on the MPFS, which is also available to the public. Because the list will be determined annually based on a ministerial execution of the already-published criteria, rather than the adoption of new substantive rules, we do not believe that any further opportunity for public comment is either required by law or useful. Additionally, we do not believe it is prudent to solicit comments on the specific services since the list is not static and will change based on the fee schedule. *Comment:* One commenter stated that the list of eligible services should be available to providers and beneficiaries somewhere other than the contractor's Web site. *Response:* We agree that this would be helpful. We are looking into a number of other ways to disseminate the information to both providers and beneficiaries. We will issue manual instructions regarding the list of eligible services. The list will be available by calling 1-800-Medicare and on the *www.Medicare.gov* Web site. *Comment:* One commenter stated that the regulation should specify that the requestor be given written notice. *Response:* We agree with the commenter and have clarified in § 410.20(d)(5)(ii)(A) that the requester must receive written notice, as required by statute. *Comment:* One commenter stated that the notice of non-coverage should also be required to explain that someone who receives such a notice may still obtain the service, submit a claim to Medicare, and then appeal the claim if it is denied. *Response:* We agree with the commenter. Section 410.20(d)(5)(iv)(B) of the regulation provides that a negative determination does not impact the right of the requester to obtain services and appeal any denial under the existing claims appeals system. Through our manuals, we will require contractors to include that information in the prior determination notice, where there is a negative determination. *Comment:* One commenter stated that the regulation should include recourse to the beneficiary, and a consequence to the provider, if a provider fails to submit the necessary accompanying documentation. *Response:* With regard to instances where the provider fails to submit the necessary documentation, § 410.20(d)(5)(ii)(B)(2) provides that if a contractor makes a determination that it lacks sufficient information to make a coverage determination with respect to a physician's service, the contractor will include in the notice a description of the additional information that was required to make a coverage determination, as required by the statute. We believe this provides the type of recourse to beneficiaries to cure flaws in their original requests that the Congress intended. *Comment:* One commenter requested that we clarify what we mean by “plastic and dental surgeries that have an average allowed charge of at least $1,000.” *Response:* We have clarified in § 410.20(d)(2)(ii) that we mean at least $1,000 based on the MPFS amount, (not including the adjustment for location by the geographic practice cost index (GPCI)). *Comment:* One contractor requested that CMS provide contractors with the necessary resources to implement this process, and suggested that contractors be part of the development of the process. *Response:* With contractor input, we will determine the resources and instructions the contractors will need to implement this process. Contractors will be involved in the necessary clearance processes. *Comment:* One commenter requested that CMS clarify how contractors should handle requests submitted for services not on the list of eligible services. *Response:* The detailed procedures specified in our manual instructions will include a provision that the contractor will send back the request with an explanation that it is not an eligible service. *Comment:* One commenter asked us to clarify in the regulation text whether or not services receiving an affirmative prior determination decision are still subject to eligibility and reimbursement criteria. *Response:* Yes, services receiving affirmative prior determinations are still subject to eligibility and reimbursement criteria when adjudicated on a claim. IV. Provisions of the Final Rule Section 1869(h)(1) of the Act, as added by section 938 of the MMA, requires the Secretary to establish a prior determination process for certain physicians' services. Sections 1869(h)(3) through (h)(6) of the Act are specific with respect to various aspects of the prior determination process, and we intend to follow these provisions in establishing the prior determination process. We will issue the detailed procedures through our instructions to contractors in our manuals. Section 1869(h)(2) of the Act, as added by section 938 of the MMA, requires the Secretary to establish by regulation reasonable limits on the physicians' services for which a prior determination may be requested. This section provides that in establishing the reasonable limits, the Secretary may consider the dollar amount involved with respect to the physician's service, administrative costs and burdens, and other relevant factors. We evaluated national data on physicians' services including payment amounts, utilization, and denial rates. We considered using denial rates as one of the determining factors. However, denial rates vary according to contractor, and although a service may have a relatively high denial rate, that number may be insignificant depending on the number of services performed annually. This information did not readily lend itself to establishing a national list. Accordingly, we have decided to use other factors instead. Based on our analysis, we are establishing an initial pool of eligible physicians' services with the highest average allowed charges that are performed at least 50 times annually. The definition of physicians' services in the MMA provision (section 938) is the one in section 1848(j)(3) of the Act. The definition includes the physician administration of a drug (but not the cost of the drug itself) and certain services not traditionally performed by a physician, such as physical therapy and occupational therapy, which are paid using the MPFS. We are also establishing a list of plastic and dental surgeries that may be covered by Medicare and that have an amount of at least $1,000 in the MPFS (not including the adjustment for location by the GPCI). We will identify the specific services that are eligible for prior determinations through manual instructions based on the criteria outlined in the regulation. We have decided not to identify a specific number of eligible services in the regulation text in order to provide the agency with flexibility in identifying an adequate/sufficient list of services eligible for prior determinations. Specifically, in § 410.20(d)(1)(i), we define a “prior determination of medical necessity” as an individual decision by a Medicare contractor, before a physician's service is furnished, as to whether or not the physician's service is covered consistent with the requirements of section 1862(a)(1)(A) of the Act relating to medical necessity. We have also incorporated the statutory definition of an “eligible requester,” which had been included in the preamble to the proposed rule, into the regulatory text. Therefore, in § 410.20(d)(1)(ii), we define an “eligible requester” to include a participating physician or a physician who accepts assignment, but only with respect to physicians' services to be furnished to an individual who is entitled to receive benefits and who has consented to the physician making the request for those physician's services; and an individual entitled to benefits, but only with respect to a physician's service for which the individual receives, from a physician, an advance beneficiary notice under section 1879(a) of the Act. We clarified that physicians who accept assignment for services eligible for a prior determination are eligible requesters because this is consistent with the statute and will maximize the benefit of the prior determination process for beneficiaries. In § 410.20(d)(2), we state that each Medicare contractor will, through the procedure established in our manual instructions, allow requests for prior determinations of medical necessity from eligible requesters under the contractor's respective jurisdiction for those services that we identify (updated in conjunction with the update to the MPFS) and posted on that specific Medicare contractor's Web site. Only those services listed on the contractor's Web site on the date the request for a prior determination is made would be subject to prior determination. The list of services will be posted by the Healthcare Common Procedure Coding System procedure code and code description on each carrier's Web site and will include the following: The most expensive physicians' services included in the MPFS which are performed at least 50 times annually; and plastic and dental surgeries that may be covered by Medicare and that have an amount of at least $1,000 (not including adjustment for location by the GPCI). We have three reasons for establishing the limit on physicians' services based on the dollar amount of the service and including certain plastic and dental surgeries. First, beneficiaries are more likely to be discouraged from obtaining the most expensive physicians' services because they are uncertain whether or not they would have to incur financial liability if Medicare does not pay for the service. The plastic and dental surgeries included are also relatively expensive, and there may be significant individual considerations in determining what is covered and what is excluded. Second, the majority of these services tend to be non-emergency surgical procedures generally performed in an inpatient setting. Since these services are not typically emergency services, beneficiaries would have adequate time to request a prior determination. Third, limiting prior determinations to these services is reasonable given the administrative resources required to process each prior determination request. In § 410.20(d)(3), we state that in instances where an NCD or an LCD exists that has sufficiently specific reasonable and necessary criteria addressing the particular clinical indication for the physician's service for which the prior determination is requested, the contractor will send a copy of the LCD or NCD with an explanation that this NCD/LCD will serve as the prior determination. Our reason for this provision is that many NCDs and LCDs already provide the information necessary to make an informed decision about whether or not a service will be covered. In § 410.20(d)(4), we state that we will identify through manual instructions the number of services that are eligible for a prior determination consistent with the criteria established in the regulation. Our reason for this provision is to ensure that we can adjust the number of eligible services when we detect a need. Sections 1869(h)(3) through (h)(6) of the Act are specific with respect to various aspects of the prior determination process. Therefore, in § 410.20(d)(5), we specify those mandatory provisions. The detailed procedures to be followed by our contractors will be published in our manual instructions. Section 410.20(d)(5)(i) generally explains the prior determination process and accompanying documentation that may be required. Section 410.20(d)(5)(ii) describes how contractors will respond to prior determination requests. Section 938 of the MMA provides that notice will be provided “within the same time period as the time period applicable to the contractor providing notice of initial determinations on a claim for benefits under section 1869(a)(2)(A) of the Act.” Therefore, the statute requires that contractors must mail the requester the decision no later than 45 days after the request is received. Contractors will be instructed to process the requests as quickly as possible (but no longer than 45 days), taking into consideration the beneficiary's physical condition, the urgency of treatment, and the availability of the necessary documentation. Section 410.20(d)(5)(iii) explains the binding nature of a positive determination. Section 410.20(d)(5)(iv) explains the limitation on further review. V. Collection of Information Requirements Under the Paperwork Reduction Act

(PRA)of 1995, we are required to provide 30-day notice in the **Federal Register** and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget

(OMB)for review and approval. In order to fairly evaluate whether or not an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA of 1995 requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. We are soliciting public comment on each of these issues for the following sections of this document that contain information collection requirements (ICRs): Section 410.20 Physicians' Services Prior Determination of Medical Necessity for Physicians' Services Section 410.20(d)(5) states that before a physician's service is furnished, an eligible requester, such as a physician or beneficiary, may request an individualized decision, a “Prior Determination of Medical Necessity,” by a Medicare contractor as to whether or not the physician's service is covered consistent with the requirements of section 1862(a)(1)(A) of the Act relating to medical necessity. CMS may require that the request be accompanied by a description of the physician's service, supporting documentation relating to the medical necessity of the physician's service, and other appropriate documentation. In the case of a request submitted by an eligible requestor who is described in section 1869(h)(1)(B)(ii) of the Act, the Secretary may also require that the request be accompanied by a copy of the advance beneficiary notice involved. The burden associated with this requirement would be the time spent by a requester to provide the appropriate level of documentation, as outlined in this section, to a Medicare contractor so that the contractor can provide a “Prior Determination of Medical Necessity.” We estimate 5,000 requests will be made on an annual basis, and it will require 15 minutes per request, for an annual burden of 1,250 hours. We received one comment in response to the proposed rule stating that this estimate appeared to be too low. We stand by our original estimate that 5,000 requests will be made on an annual basis and it will require 15 minutes per request, for an annual burden of 1,250 hours. If you comment on these information collection and record keeping requirements, please mail copies directly to the following: Centers for Medicare & Medicaid Services, Office of Strategic Operations and Regulatory Affairs, Division of Regulations Development, Attn.: Melissa Musotto, CMS-6024-F, Room C5-14-03, 7500 Security Boulevard, Baltimore, MD 21244-1850. Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503, Attn: Carolyn Lovett, CMS Desk Officer, CMS-6024-F, *carolyn_lovett@omb.eop.gov* . Fax

(202)395-6974. VI. Regulatory Impact Statement We have examined the impact of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act

(RFA)(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis

(RIA)must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This rule does not reach the economic threshold and thus is not considered a major rule. Furthermore, this rule will not result in an increase in benefit spending. The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, non-profit organizations, and government jurisdictions. While most hospitals and most other providers and suppliers are small entities, either by non-profit status or by having revenues of $6.5 million to $31.5 million in any 1 year, individual physicians and beneficiaries are not included in the definition of a small entity. Accordingly, we are not preparing an analysis for the RFA because we have determined that this rule will not have a significant economic impact on a substantial number of small entities. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined that this rule will not have a significant impact on the operations of a substantial number of small rural hospitals. Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $120 million. This rule will have no consequential effect on the governments mentioned or on the private sector. Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this regulation will not impose any costs on State or local governments, the requirements of E.O. 13132 are not applicable. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget. List of Subjects in 42 CFR Part 410 Health facilities, Health professions, Kidney diseases, Laboratories, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as set forth below: PART 410—SUPPLEMENTARY MEDICAL INSURANCE

(SMI)BENEFITS Subpart B—Medical and Other Health Services 1. The authority citation for part 410 continues to read as follows: Authority: Sections 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). 2. Section 410.20 is amended by adding new paragraph

(d)to read as follows: § 410.20 Physicians' services.

(d)*Prior determination of medical necessity for physicians' services* —(1) *Definitions.*

(i)A “Prior Determination of Medical Necessity” means an individual decision by a Medicare contractor, before a physician's service is furnished, as to whether or not the physician's service is covered consistent with the requirements of section 1862(a)(1)(A) of the Act relating to medical necessity.

(ii)An “eligible requester” includes the following:

(A)A participating physician (or a physician that accepts assignment), but only with respect to physicians' services to be furnished to an individual who is entitled to receive benefits under this part and who has consented to the physician making the request under this section for those physicians' services.

(B)An individual entitled to benefits under this part, but only with respect to physicians' services for which the individual receives, from a physician, an advance beneficiary notice under section 1879(a) of the Act.

(2)*General rule.* Each Medicare contractor will, through the procedures established in CMS manual instructions, allow requests for prior determinations of medical necessity from eligible requesters under its respective jurisdiction for those services identified by CMS (updated annually in conjunction with the update to the MPFS and posted on that specific Medicare contractor's Web site by the Healthcare Common Procedure Coding System procedure code and code description). Only those services listed on that Medicare contractor's Web site on the date the request for a prior determination is made are subject to prior determination. Each contractor's list will consist of the following:

(i)The national list, provided by CMS, of the most expensive physicians' services (as defined in section 1848(j)(3) of the Act) included in the MPFS which are performed at least 50 times annually.

(ii)The national list, provided by CMS, of plastic and dental surgeries that may be covered by Medicare and that have an amount of at least $1,000 on the MPFS (not including the adjustment for location by the GPCI).

(3)*Services with local coverage determinations

(LCDs)or national coverage determinations (NCDs).* In instances where an LCD or an NCD exists that has sufficiently specific reasonable and necessary criteria addressing the particular clinical indication for the procedure for which the prior determination is requested, the contractor will send a copy of the LCD or NCD to the requestor along with an explanation that the LCD or NCD serves as the prior determination and that no further determination will be made.

(4)*Identification of eligible services.* CMS will identify the number of services that are eligible for a prior determination through manual instructions consistent with the criteria established in the regulation.

(5)*Statutory procedures.* Under sections 1869(h)(3) through (h)(6) of the Act, the following procedures apply:

(i)*Request for prior determination* —(A) *In general.* An eligible requester may submit to the contractor a request for a determination, before the furnishing of a physician's service, as to whether the physician's service is covered under this title consistent with the applicable requirements of section 1862(a)(1)(A) of the Act (relating to medical necessity).

(B)*Accompanying documentation.* CMS may require that the request be accompanied by a description of the physician's service, supporting documentation relating to the medical necessity of the physician's service, and other appropriate documentation. In the case of a request submitted by an eligible requester who is described in section 1869(h)(1)(B)(ii) of the Act, the Secretary may require that the request also be accompanied by a copy of the advance beneficiary notice involved.

(ii)*Response to request* —(A) *General rule.* The contractor will provide the eligible requester with written notice of a determination as to whether— ( *1* ) The physician's service is covered (the physician's service is covered consistent with the requirements of section 1862(a)(1)(A) of the Act relating to medical necessity); or ( *2* ) The physician's service is not covered (the physician's service is not covered consistent with the requirements of section 1862(a)(1)(A) of the Act relating to medical necessity); or ( *3* ) The contractor lacks sufficient information to make a coverage determination with respect to the physician's service.

(B)*Contents of notice for certain determinations* —( *1* ) *Coverage.* If the contractor makes the determination described in paragraph (d)(5)(ii)(A)(1) of this section, the contractor will indicate in the prior determination notice that the physician service is covered consistent with the requirements of section 1862(a)(1)(A) of the Act relating to medical necessity. ( *2* ) *Noncoverage.* If the contractor makes the determination described in paragraph (d)(5)(ii)(A)( *2* ) of this section, the contractor will include in the notice a brief explanation of the basis for the determination, including on what national or local coverage or noncoverage determination (if any) the determination is based, and a description of any applicable rights under section 1869(a) of the Act. ( *3* ) *Insufficient information.* If the contractor makes the determination described in paragraph (d)(5)(ii)(A)( *3* ) of this section, the contractor will include in the notice a description of the additional information required to make the coverage determination.

(C)*Deadline to respond.* The notice described in paragraphs (d)(5)(ii)(A)(1) through (d)(5)(ii)(A)(3) of this section will be provided by the contractor within 45 days of the date the request for a prior determination is received by the contractor.

(D)*Informing beneficiary in case of physician request.* In the case of a request by a participating physician or a physician accepting assignment, the process will provide that the individual to whom the physician's service is to be furnished will be informed of any determination described in paragraph (d)(5)(ii)(A)( *2* ) of this section (relating to a determination of non-coverage). The beneficiary will also be notified that, notwithstanding the determination of non-coverage, the beneficiary has the right to obtain the physician's service in question and have a claim submitted for the physician's service.

(iii)*Binding nature of positive determination.* If the contractor makes the determination described in paragraph (d)(5)(ii)(A)( *1* ) of this section, that determination will be binding on the contractor in the absence of fraud or evidence of misrepresentation of facts presented to the contractor.

(iv)*Limitation on further review* —(A) *General rule.* Contractor determinations described in paragraph (d)(5)(ii)(A)( *2* ) of this section or paragraph (d)(5)(ii)(A)( *3* ) of this section (relating to pre-service claims) are not subject to administrative appeal or judicial review.

(B)*Decision not to seek prior determination or negative determination does not impact the right to obtain services, seek reimbursement, or appeal rights.* Nothing in this paragraph will be construed as affecting the right of an individual who— ( *1* ) Decides not to seek a prior determination under this paragraph with respect to physicians' services; or ( *2* ) Seeks such a determination and has received a determination described in paragraph (d)(5)(ii)(A)( *2* ) of this section, from receiving (and submitting a claim for) those physicians' services and from obtaining administrative or judicial review respecting that claim under the other applicable provisions of this part 405 subpart I of this chapter. Failure to seek a prior determination under this paragraph with respect to physicians' services will not be taken into account in that administrative or judicial review.

(C)*No prior determination after receipt of services.* Once an individual is provided physicians' services, there will be no prior determination under this paragraph with respect to those physicians' services. Editorial Note: This document was received at the Office of the Federal Register on February 11, 2008. (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program) Dated: May 31, 2007. Leslie V. Norwalk, Acting Administrator, Centers for Medicare & Medicaid Services. Approved: October 30, 2007. Michael O. Leavitt, Secretary. [FR Doc. E8-2811 Filed 2-21-08; 8:45 am] BILLING CODE 4120-01-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 411 and 489 [CMS-6272-F] RIN 0938-AN27 Medicare Program; Medicare Secondary Payer

(MSP)Amendments AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: On February 24, 2006, we published an interim final rule with comment period in the **Federal Register** that implemented amendments to the Medicare Secondary Payer

(MSP)provisions under Title III of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). The MMA clarified the MSP provisions regarding the obligations of primary plans and primary payers, the nature of the insurance arrangements subject to the MSP rules, the circumstances under which Medicare may make conditional payments, and the obligations of primary payers to reimburse Medicare. In this final rule, we are finalizing several clarifications made to the MSP provisions. In addition, we are responding to public comments on the February 24, 2006 interim final rule with comment period that pertain to these MSP provisions. DATES: *Effective Date:* These regulations are effective on March 24, 2008. FOR FURTHER INFORMATION CONTACT: Suzanne Lewis,

(410)786-0970. SUPPLEMENTARY INFORMATION: I. Background A. Statutory Background Beginning in 1980, the Congress enacted a series of amendments to section 1862(b) of the Social Security Act (the Act) (hereafter referred to as the Medicare Secondary Payer

(MSP)provisions) to protect the financial integrity of the Medicare program by making Medicare a secondary payer, rather than a primary payer of health care services, when certain types of other health care coverage are available. (Workers' compensation had already been primary to Medicare since the implementation of the original Medicare statute.) In enacting the MSP provisions, the Congress intended that the MSP provisions be construed to make Medicare a secondary payer to the maximum extent possible. These statutory provisions are set forth in regulations at 42 CFR part 411, Exclusions From Medicare and Limitations on Medicare Payment. On December 8, 2003, the Congress enacted the Medicare Prescription Drug, Improvement, and Modernization Act

(MMA)of 2003 (Pub. L. 108-173). The Congress passed section 301 under Title III of the MMA to address several interpretations of the MSP provisions being pressed by various parties that would, if ultimately accepted, severely limit the applicability of the MSP provisions at considerable expense to the Medicare program. As discussed in the February 24, 2006 interim final rule with comment period (71 FR 9466) many of these interpretations were presented in the context of Federal court litigation over the meaning of various MSP provisions. The Congress rejected these attempts to incorrectly limit the application and scope of the MSP statute. In the MMA, the Congress clarified its original intent regarding the MSP provisions under section 1862(b) of the Act, thereby indicating that these interpretations were incorrect and that the Secretary's interpretations were accurate. These clarifications were effective as if enacted on the date of the original legislation. Section 301(a) of the MMA amended section 1862(b)(2)(A)(ii) of the Act to remove the term “promptly.” This amendment establishes that various parties were incorrect in their interpretation that section 1862(b)(2)(A)(ii) of the Act applied only if the workers' compensation law or plan, liability insurance, or no-fault insurance has paid or could reasonably be expected to pay for services “promptly.” This amendment also added language to section 1862(b)(2)(B) of the Act to clarify that the Secretary may make payment subject to reimbursement if the workers' compensation law or plan, liability insurance, or no-fault insurance has not paid or could not reasonably be expected to pay for services “promptly.” Section 301(b)(1) of the MMA amended section 1862(b)(2)(A) of the Act to clarify the application of the term “self-insured plan.” It establishes that “an entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.” Section 301(b)(2)(A) of the MMA amended section 1862(b)(2)(B) of the Act to specify that a primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment that the Secretary makes with respect to an item or service if it is demonstrated that the primary plan has or had a responsibility to make payment with respect to the item or service. It added language establishing that a primary plan's responsibility for this payment “may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means.” Section 301(b)(3) of the MMA amended section 1862(b)(2) of the Act to further delineate those entities (that is, “primary payers”) from which the United States may seek reimbursement. It amended language specifying that the United States may bring an action against “all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan.” This amendment specified that the United States may recover double damages against these entities. Also, it amended language clarifying that the United States may recover payment from “any entity that has received payment from a primary plan or from the proceeds of a primary plan's payment to any entity.” Under section 301(d) of the MMA, these provisions are effective as if enacted on the date of the original legislation to reflect the original MSP provisions and Congressional intent at issue. This final rule amends 42 CFR part 411 and § 489.20(i)(2)(ii) of our regulations to implement these MSP provisions. B. Requirements for Issuance of Regulations Section 902 of the MMA amended section 1871(a) of the Act and requires the Secretary, in consultation with the Director of the Office of Management and Budget, to establish and publish timelines for the publication of Medicare final regulations based on the previous publication of a Medicare proposed or interim final regulation. Section 902 of the MMA also states that the timelines for these regulations may vary but shall not exceed 3 years after publication of the preceding proposed or interim final regulation except under exceptional circumstances. This final rule finalizes provisions set forth in the February 2006 interim final regulations. In addition, this final rule has been published within the 3-year time limit imposed by section 902 of the MMA. Therefore, we believe that the final rule is in accordance with the Congress' intent to ensure timely publication of final regulations. II. Provisions of the Interim Final Regulations As is the case with group health plan and large group health plan insurance, Medicare may not make payment if payment with respect to the same item or service has been made or can reasonably be expected to be made under workers' compensation, no-fault, or liability insurance. However, Medicare may make a payment conditioned on reimbursement when the workers' compensation, no-fault, or liability insurance plan (including a self-insured plan) has not made or cannot reasonably be expected to make payment with respect to this item or service promptly. As discussed in the February 2006 interim final rule, in accordance with section 301(a) of the MMA, we removed the word “promptly” from § 411.20(a)(2), § 411.40(b)(1)(i), and § 411.50(c)(1) and (c)(2) to clarify that these Medicare payments are conditional and must be reimbursed whenever a primary payer's responsibility to make payment is demonstrated. In § 411.21, we removed the definitions for “third party payer” and “third party payment” and replaced them with definitions for “primary payer” and “primary payment.” We also provided a definition for “primary plan.” We made these changes to conform to the statutory language under the MMA. Consistent with these changes, we made nomenclature changes to replace the terms “third party payer,” “third party payment,” and “third party plan” with “primary payer,” “primary payment,” or “primary plan,” respectively, under part 411 throughout subparts B through H. In § 411.33(f)(4), we replaced the term “third party” with “primary payer.” We also amended § 489.20(i)(2)(ii) to replace “third party payment” with “primary payment.” In the February 2006 interim final rule with comment period, we also added language to the definition of “self-insured” plan in § 411.50(b) in accordance with section 301(b)(1) of the MMA. We clarified that an entity that engages in a business, trade, or profession is deemed to have a “self-insured” plan for liability insurance if it carries its own risk, in whole or in part. Any such entity's self-insured status may be demonstrated, among other ways, by the failure to obtain insurance. In accordance with section 301(b)(2)(A) of the MMA, we added a new § 411.22 to clarify that a primary payer, and an entity that receives payment from a primary payer, become obligated to reimburse CMS if and when it is demonstrated that the primary payer has or had primary payment responsibility. This responsibility may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items and services included in a claim against the primary payer, or by other means, including but not limited to a settlement, award, or contractual obligation. This means that a primary payer may not extinguish its obligations under the MSP provisions by paying the wrong party—for example, by paying the Medicare beneficiary or the provider when it should have reimbursed the Medicare program. Primary payers are expected to reimburse CMS when it is demonstrated that they have or had payment responsibility. In accordance with section 301(b)(3) of the MMA, in § 411.21, § 411.22, and § 411.24(e) also clarified that the Medicare program may seek reimbursement from a primary payer, or any or all the entities responsible or required to make payment as a primary payer. With respect to debts where a group health plan or large group health plan is the primary plan, the amendments make clear that all employers that sponsor or contribute to the group health plan or large group health plan are primary payers required to reimburse Medicare regardless of whether the group health plan or large group health plan was an insured plan (that is, the employer or other plan sponsor purchased insurance) or was self-insured by the employer or other plan sponsor. Medicare may also seek reimbursement from any entity that has received payment from a primary payer. Entities that receive payment include, but are not limited to, beneficiaries, attorneys, and providers or suppliers (including physicians). Furthermore, in the February 2006 interim final rule with comment period, we revised § 411.24(e) by adding language pertaining to Medicare's authority to recover conditional payments. Specifically, in accordance with section 301(b)(3) of the MMA, we specified at § 411.24(e) that CMS has a direct right of action to recover from any primary payer. We made a technical revision at § 411.24(f)(2) to replace the words “is primary” with “is a primary plan.” Consistent with section 301(b)(2)(A) of the MMA, the February 2006 interim rule with comment period clarified at § 411.24(i)(1) that, like liability insurance and disputed claims under group health plans and no-fault insurance, workers' compensation insurance and plans must also reimburse Medicare, although it paid some other entity, if it knew or should have known that the claimant was a Medicare beneficiary. Where Medicare has already recovered payment from the entity, reimbursement to Medicare by the workers' compensation insurance or plan is not required. However, nothing in the February 2006 interim final rule with comment period will be construed to require us to first pursue the entity which receives payment before it can pursue the primary payer. Also consistent with section 301(b)(2)(A) of the MMA, we added language to § 411.45, § 411.52, and § 411.53 to specify that any conditional payment that Medicare makes is based upon the recovery rules under subpart B of part 411. In addition, at § 411.52, we clarified the basis for which Medicare makes payment in liability cases. We revised § 411.53 by removing the phrase “, or the provider or supplier,” in the existing paragraph

(a)to clarify that it is the beneficiary's responsibility to file a claim for no-fault benefits. III. Analysis of and Responses to Public Comments We received five comments from the public on the February 2006 interim final rule with comment period. The comments received and our responses to those comments are discussed below. *A. General Comments* *Comment:* A commenter stated that the February 2006 interim final rule with comment period would “refrain” CMS from making conditional payments where there is no anticipation of reimbursement “promptly” while broadening CMS' recovery scope for reimbursement of conditional payments. The commenter also stated concern that the consequences of this would be enormous for injured employees in the State of Indiana. *Response:* We recognize the commenter's concerns and note that we will continue to be permitted to make conditional payments when liability insurance, no-fault insurance, or workers compensation do not pay promptly. In addition, we will continue to recover any conditional payments made. Furthermore, we will continue to not make conditional payments when the “injured employee” also has group health plan coverage that is primary to Medicare. The group health plan is expected to fulfill its responsibilities under the statute. *Comment:* A commenter believes that CMS' waiver of proposed rulemaking is not justified. The commenter stated that conforming regulatory language to statutory amendments does not justify waiving proposed rulemaking nor does it render a “notice-and-comment procedure” “impracticable, unnecessary, or contrary to the public interest.” The commenter suggested that CMS recharacterize and republish the February 2006 interim final rule with comment period as a proposed rule with appropriate time for public comments. *Response:* We recognize the commenter's concerns. However, it is unnecessary to undertake notice and comment rulemaking because we are merely conforming existing regulations to the statutory changes affected by section 301 of the MMA. *Comment:* The commenter also believes that CMS' adoption of a comment due date as the effective date for the regulation is inappropriate and renders any comments moot. The commenter suggested that CMS adopt an effective date for the revised regulations that is on or after the date of **Federal Register** publication of a final rule, not before its promulgation. *Response:* In the February 2006 interim final rule (71 FR 9466), “MMA Amendments to the Medicare Secondary payer

(MSP)Provisions,” we explained that the clarifications regarding the Congress's original intent in implementing the MSP provisions under section 1862(b) of the Social Security Act made by section 301 of the MMA were effective as if enacted on the date of the original legislation. In the February 2006 interim final rule (71 FR 9468), we explained that because the interim final rule merely conformed part 411 and § 489.20(i)(2)(ii) of the regulations to statutory changes affected by section 301 of the MMA, we found good cause to waive the notice of proposed rulemaking and issue the rule on an interim basis. We published the February 2006 interim final rule with a 60-day public comment period, providing the public adequate time to comment on the rule. In addition, there was a 60-day delay in the effective date of that rule. Although the effective date and the date of the close of the public comment period coincided, we believe the public comments are not moot because we are required to publish a subsequent final rule in which we consider and address all timely public comments on the preceding interim final rule. We have addressed the timely public comments in section III of this final rule, “Analysis of and Responses to Public Comments.” Based on our consideration of the public comments, § 411.22 and § 411.25 have been amended to further clarify the reimbursement obligations and notice requirements of primary payers. Section 411.45 has been amended to replace the word “capacity” with “incapacity” so that there is consistency between the language used in § 411.45 and § 411.53 This final rule will be effective 30 days after date of publication. *Comment:* A commenter expressed the view that only beneficiaries and not beneficiaries, providers, and other entities should be responsible and have the burden of updating the Coordination of Benefits

(COB)files. *Response:* This comment is outside of the scope of the February 2006 interim final rule. Please note that beneficiaries, providers, physicians, other suppliers, and other entities all have appropriate obligations to ensure our COB records are updated. *Comment:* A commenter believes that the February 2006 interim final rule with comment period should require that “when a payer other than Medicare is determined to be the primary payer, the payer should be required to pay at least the Medicare payment amount for the service.” The commenter also believes that CMS should address “the undue administrative burden” created when a payer is determined to be primary and makes payment to a physician at a rate that is different than the Medicare amount that has already been paid to the physician. *Response:* This comment is outside of the scope of the February 2006 interim final rule. However, we note that the MSP statute prohibits a group health plan from “taking Medicare entitlement into account” when Medicare is the secondary payer. The group health plan must make the same primary payment it makes for non-Medicare entitled individuals. We recognize the commenter's concerns. Providers, physicians, and other suppliers are required by the MSP statute at 42 U.S.C. 1395 y(6)(b) to identify payers primary to Medicare and to bill them before billing Medicare. Regulations at § 411.24(h) require entities that receive duplicate primary payment to reimburse Medicare within 60 days. It is reasonable to expect providers, physicians, and other suppliers to reconcile payments received for services to Medicare beneficiaries and to comply with these requirements. B. Definitions In the February 2006 interim final rule, to conform to the statutory language under the MMA, we removed the definitions for “third party payer” and “third party payment” and replaced them with “primary payer” and “primary payment.” We also added a new definition for “primary plan.” *Comment:* A commenter believes that the definition of “third party payer” and “third party payment” in the previous version of the regulation excluded the application of the MSP provisions to individuals if they are Medicare beneficiaries; are engaged in a business, trade, or profession; and are self-insured for purposes of liability insurance. *Response:* The MMA clarifies that all entities (including sole proprietorships and partnerships) that engage in a business, trade, or profession are deemed to be self-insured to the extent that they do not purchase liability insurance. This does not constitute a change in the way we have administered the MSP provisions. In the February 2006 interim final rule, to implement the statutory amendment to section 1862(b)(2)(A) of the Act, we added language to the current definition of “self-insured plan” to read as follows: “Self-insured plan means a plan under which an individual, or a private or governmental entity, carries its own risk instead of taking out insurance with a carrier. This term includes a plan of an individual or other entity engaged in a business, trade, or profession, a plan of a non-profit organization such as a social, fraternal, labor, educational, religious, or professional organization, and the plan established by the Federal government to pay liability claims under the Federal Tort Claims Act. An entity that engages in a business, trade, or profession is deemed to have a self-insured plan for purposes of liability insurance if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.” *Comment:* A commenter questioned whether any individual engaged in a business trade or profession may be personally liable to the extent a claim is asserted against the individual and the claim is satisfied through a settlement, judgment, or award from the personal assets of the individual or otherwise. *Response:* The commenter is correct that an individual who is engaged in a business, trade, or profession is deemed to be self-insured for purposes of the MSP liability provisions to the extent that he or she does not purchase liability insurance. An individual not engaged in a business, trade, or profession is not deemed to be self-insured. *Comment:* A commenter expressed concern that the definition of self-insured plan would not only include a legally separate business entity owned by a Medicare beneficiary, but it would encompass business entities such as a sole proprietorship and partnership, through which the beneficiary retains personal legal liability and where the beneficiary is either uninsured or under-insured. The commenter also stated that the Medicare beneficiary's business could be construed as having a self-insured plan obligated to repay benefits, but the beneficiary would still be personally liable, in effect. *Response:* The commenter is correct that an individual engaged in a business, trade, or profession is personally liable in a liability insurance situation to the extent that he or she does not purchase liability insurance. B. Reimbursement Obligations of Primary Payers and Entities That Received Payment From Primary Payers In the February 2006 interim final rule, to implement one of the statutory amendments to section 1862(b)(2)(B) of the Act, we added a new § 411.22 to state that a primary payer, and an entity that receives payment from a primary payer, must reimburse us for any payment if it is demonstrated that the primary payer has or had responsibility to make payment. A primary plan's responsibility for payment may be demonstrated by a judgment; a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer's insured; or by other means, including but not limited to a settlement, award, or contractual obligation. *Comment:* A commenter stated that § 411.22 should clarify that “if a judgment or other legal proceeding determines that a payer (other than Medicare) is the primary payer, and the payer mistakenly reimburses the physician rather than Medicare (which has already provided reimbursement to the physician for the service), then it is the payer and/or Medicare's responsibility to notify the physician.” The same commenter is concerned that the “double damage” language of § 411.24(c)(2) can be interpreted to apply to physicians. *Response:* We disagree. It is reasonable to expect providers, physicians, and other suppliers to realize that they have received duplicate primary payments and to reimburse Medicare as required by § 411.24(h). Section 411.24(c)(2) specifically says we may “* * * recover from the primary payer * * *” As defined in § 411.21, a “primary payer” is “* * * any entity that is or was required or responsible to make payment with respect to an item or service (or any portion thereof) under a primary plan. These entities include, but are not limited to, insurers or self-insurers, third party administrators, and all employers that sponsor or contribute to group health plans or large group plans.” “Physicians” in their capacity as “physicians” clearly do not fall within the definition of “primary payer.” However, a physician as an employer which sponsors or contributes to a group health plan, including a self-insured group health plan, may be a “primary payer.” *Comment:* A commenter believes that § 411.22 could be interpreted to allow Medicare to seek reimbursement from the provider first, before going to the primary payer. The commenter suggested that CMS further clarify § 411.22 by including language stating that Medicare will pursue reimbursement from the primary payer *first* ; and that Medicare will not seek payment from providers that have not been paid by the primary payer for the claim in question. *Response:* Section 1862(b)(2)(B)(iii) of the Act gives Medicare the authority to recover from the party responsible for making primary payment; any entity that has received a primary payment from Medicare and a primary plan; and from providers, physicians, and other suppliers who fail to file a proper claim. Accordingly, it would be inappropriate to limit Medicare's recovery options. *Comment:* A commenter stated that § 411.22 suggests that CMS anticipates that primary payers will reimburse Medicare immediately and directly upon a “demonstration” that a given payer has or had primary payment responsibility, thereby relieving CMS and its contractors of the requirement to issue a demand letter. The commenter asked for direction as to whom and in what form the reimbursement is to be made and, as well, the nature of the supporting information to be provided. The commenter also requested clarification as to whether entities that receive “payment from a primary payer” are required to notify Medicare of mistaken or conditional payments. Specifically, the commenter asked whether the notice requirements in § 411.25 (which states that if a primary payer learns that CMS has made a Medicare primary payment for services for which the primary payer has made or should have made primary payment, it must give notice to that effect to the Medicare intermediary or carrier that paid the claim) extend to both primary payers and entities that receive “payment from a primary payer.” *Response:* We have modified § 411.22 and § 411.25 to address this comment in part. In addition, we will provide notice as to where and in what format the repayment should be made. Section 411.25 applies only to primary payers. *Comment:* A commenter is questioned how a “contractual obligation” can of itself “demonstrate” an obligation to make a primary payment for a particular claim because a contractual obligation is a generic statement of responsibility applicable to all claims. The commenter believes the contract itself cannot “demonstrate” that a particular claim meets its criteria for responsibility to make payment. The commenter stated that some other step must be taken to apply the contract terms to the facts and circumstances of a particular case, for example, analysis and conclusions evidenced by judgments, formal written settlements, awards, etc. The commenter noted that in the group health plan context, issues of primary responsibility to pay are usually not resolved by judgments, settlements, or awards, etc. The commenter requested clarification regarding how “responsibility for payment” would be demonstrated in these circumstances. *Response:* A contract can establish that a primary plan is obligated to make primary payment for designated covered items and services under the plan. A primary payer has the obligation upon learning that Medicare has paid for certain items and services provided to an individual for which it has primary payment responsibility to determine if it is the proper primary payer for those items and services. This determination constitutes a demonstration of primary payment responsibility for those items and services and the consequential obligation to repay Medicare. *Comment:* A commenter stated that, in the context of § 411.25, CMS has consistently taken the position that “learns” means “is, or should be, aware.” The commenter would like CMS to clarify whether the obligation to reimburse CMS arises only when responsibility to pay is “demonstrated” in accordance with the terms of § 411.22 or whether it also arises when the primary payer “learns” of the existence of a conditional payment under § 411.25. The commenter requested that CMS clarify whether the notice requirements of § 411.25 and the reimbursement requirements of § 411.22 must be satisfied at the same time or whether they are separate obligations that must be satisfied separately. *Response:* Section 1862(b)(2)(B)(ii) of the Act specifically states that the obligation to repay Medicare arises when primary payment responsibility is demonstrated. Thus, the primary payer is obligated to repay Medicare whenever it learns in any manner or form that it has primary payment responsibility. We have modified § 411.22 and § 411.25 to address this comment. C. Conditional Payments and Mental Incapacity In the February 2006 interim final rule with comment period, we added language to § 411.45, § 411.52, and § 411.53 to specify that any conditional payment that Medicare makes is based upon the recovery rules under subpart B of part 411. *Comment:* A commenter expressed concern with the inconsistency in the language used when we state that conditional payment may be made where a beneficiary “because of physical or mental *capacity* failed to file a proper claim” (§ 411.45) or “because of physical or mental incapacity failed to meet a claim-filing requirement (§ 411.53). The commenter suggested that CMS use either the term “capacity” or “incapacity” for consistency of application and evidentiary requirements. The commenter also suggested that CMS define what a beneficiary must do to establish “capacity” or “incapacity.” *Response:* We agree and will use the term “incapacity.” However, we do not believe it is necessary to define what a beneficiary must do to establish “incapacity.” “Incapacity” is determined on a case-specific basis. A provider, physician, or other supplier is responsible for demonstrating on a claim-specific basis that the beneficiary was physically or mentally incapable of providing the information necessary for the provider, physician, or other supplier to submit a proper claim. IV. Provisions of the Final Regulations For the most part, this final rule incorporates the provisions of the February 2006 interim final rule with comment period. Those provisions of this final rule that differ from the February 2006 interim final rule are as follows: • Section 411.22 and § 411.25 have been amended to further clarify the reimbursement obligations and notice requirements of primary payers. • Section 411.45 has been amended to replace the word “capacity” with “incapacity” so that there is consistency between the language used in § 411.45 and § 411.53. V. Collection of Information Requirements Under the Paperwork Reduction Act of 1995, we are required to provide 30-day notice in the **Federal Register** and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget

(OMB)for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. Therefore, we are soliciting public comment on each of these issues for the following sections of this document that contain information collection requirements. Section 411.25 primary payer's notice of primary payment responsibility. Section 411.25(a) requires a primary payer to provide information about primary payment responsibility and the information about Medicare Secondary Payer situation to the entity or entities designated by CMS to receive the information. Primary payers must provide this information upon demonstration that CMS made a Medicare primary payment for services for which the primary payer has made or should have made primary payment. As stated earlier in the preamble of this document, a demonstration of the primary payers responsibility includes a judgment, a payment conditioned upon the recipients compromise, waiver, or release (whether or not there is a determination of admission or liability of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means). Section 411.25(c) states that the primary payer must provide additional information to the designated entity or entities as needed. The information may be required for the entity or entities to update CMS' system of records. The burden associated with the requirements in § 411.25 is the time and effort associated with a primary payer gathering and providing of information about primary payer responsibilities, Medicare secondary payer situations, and additional information used to update the CMS' system of records. While these requirements are subject to the PRA, the associated burden is approved under OMB control number 0938-0214, with an expiration date of May 31, 2009. As required by section 3504(h) of the Paperwork Reduction Act of 1995, we have submitted a copy of this document to the Office of Management and Budget

(OMB)for its review of these information collection requirements. VI. Regulatory Impact Statement We have examined the impacts of this final rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act

(RIA)must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). We have determined that the effect of this final rule on the economy and the Medicare program is not economically significant, since it merely clarifies certain MSP provisions to reflect original congressional intent and ratifies the manner in which we have implemented/administered the MSP provisions. If the technical and clarifying amendments had not been enacted, “savings” reflected in the table below would have been lost and Medicare expenditures would have increased. The table reflects the potential impact of a Fifth Circuit Court decision that held that the MSP liability provision did not apply when there was no liability insurance purchased or no formal plan of self-insurance recognized under the Internal Revenue Code. This placed a small portion of future MSP liability savings at risk. It was assumed that over time, some U.S. Circuit Courts could have reached a similar conclusion so that the potential losses of future MSP liability savings would increase slowly over time in addition to the projected growth of Medicare benefits. It was further assumed that some individuals who repaid Medicare before 2003 would sue for refunds and that favorable decisions would be rendered in some, but not all, cases. It was also assumed that the refunds of past MSP liability savings would peak about 2007. Lastly, it was assumed that MSP liability collections represent approximately 70 percent Part A claims payments and 30 percent Part B claims payments (which are based on historic MSP liability savings). Medicare Savings Retained [Rounded to the nearest $10 million] Part A Part B Total Year 2003 $0 $0 $0 2004 10 0 10 2005 10 0 10 2006 10 0 10 2007 20 0 20 2008 10 0 10 2009 20 0 20 2010 20 10 30 2011 20 10 30 2012 20 10 30 2013 20 10 30 2014 20 10 30 2015 20 10 30 Therefore, this final rule is not a major rule as defined in Title 5, United States Code, section 804(2) and is not an economically significant rule under Executive Order 12866. The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year. Individuals and States are not included in the definition of a small entity. We have determined and we certify that this final rule will not have a significant economic impact on a substantial number of small entities because there is and will be no change in the administration of the MSP provisions. Therefore, we are not preparing an analysis for the RFA. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule or notice having the effect of a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Core-Based Statistical Area and has fewer than 100 beds. We have determined that this final rule will not have a significant effect on the operations of a substantial number of small rural hospitals because there is and will be no change in the administration of the MSP provisions. Therefore, we are not preparing an analysis for section 1102(b) of the Act. Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule or notice having the effect of a rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold level is currently approximately $120 million. This final rule has no consequential effect on State, local, or tribal governments or on the private sector because there is and will be no change in the administration of the MSP provisions. Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this final rule does not impose any costs on State or local governments, the requirements of E.O. 13132 are not applicable. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget. List of Subjects 42 CFR Part 411 Kidney diseases, Medicare, Reporting and recordkeeping requirements. 42 CFR Part 489 Health facilities, Medicare, Reporting and recordkeeping requirements. Accordingly, the interim final rule amending 42 CFR Chapter IV, which was published on February 2006 (71 FR 9466), is adopted as a final rule with the following changes: PART 411—EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE PAYMENT 1. The authority citation for part 411 continues to read as follows: Authority: Sections 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). 2. Section 411.22 is amended by adding a paragraph

(c)as follows: § 411.22 Reimbursement obligations of primary payers and entities that received payment from primary payers.

(c)The primary payer must make payment to either of the following:

(1)To the entity designated to receive repayments if the demonstration of primary payer responsibilities is other than receipt of a recovery demand letter from CMS or designated contractor.

(2)As directed in a recovery demand letter. 3. Section 411.25 is amended by— A. Revising the section heading. B. Revising paragraphs

(a)and (c). The revisions read as follows: § 411.25 Primary payer's notice of primary payment responsibility.

(a)If it is demonstrated to a primary payer that CMS has made a Medicare primary payment for services for which the primary payer has made or should have made primary payment, it must provide notice about primary payment responsibility and information about the underlying MSP situation to the entity or entities designated by CMS to receive and process that information.

(c)The primary payer must provide additional information to the designated entity or entities as the designated entity or entities may require this information to update CMS' system of records. § 411.45 [Amended] 4. Section 411.45(a)(2) is amended by removing the word “capacity” and adding the word “incapacity” in its place. (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program) Dated: September 4, 2007. Herb B. Kuhn, Acting Administrator, Centers for Medicare & Medicaid Services. Approved: October 19, 2007. Michael O. Leavitt, Secretary. Editorial Note: This document was received at the Office of the Federal Register on February 12, 2008. [FR Doc. E8-2938 Filed 2-21-08; 8:45 am] BILLING CODE 4120-01-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 433 [CMS 2275-F] RIN 0938-AO80 Medicaid Program; Health Care-Related Taxes AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: This final rule revises the collection threshold under the regulatory indirect guarantee hold harmless arrangement test to reflect the provisions of the Tax Relief and Health Care Act of 2006. When determining whether there is an indirect guarantee under the 2-prong test for portions of fiscal years beginning on or after January 1, 2008 and before October 1, 2011, the allowable amount that can be collected from a health care-related tax is reduced from 6 to 5.5 percent of net patient revenues received by the taxpayers. This final rule also clarifies the standard for determining the existence of a hold harmless arrangement under the positive correlation test, Medicaid payment test, and the guarantee test (with conforming changes to parallel provisions concerning hold harmless arrangements with respect to provider-related donations); codifies changes to permissible class of health care items or services related to managed care organizations as enacted by the Deficit Reduction Act of 2005; and, removes obsolete transition period regulatory language. DATES: *Effective date:* This rule is effective April 22, 2008. *Compliance date:* CMS will not consider a State to be out of compliance with the revision to the definition of permissible classes until October 1, 2009. FOR FURTHER INFORMATION CONTACT: Charles Hines,

(410)786-0252 or Stuart Goldstein,

(410)786-0694. SUPPLEMENTARY INFORMATION: I. Background A. General Title XIX of the Social Security Act (the Act) authorizes Federal grants to the States for Medicaid programs to provide medical assistance to persons with limited income and resources. While Medicaid programs are administered by the States, they are jointly financed by the Federal and State governments. The Federal government pays its share of medical assistance expenditures to the State on a quarterly basis according to a formula described in sections 1903 and 1905(b) of the Act. The amount of the Federal share of medical assistance expenditures is called Federal financial participation (FFP). The State pays its share of medical expenditures in accordance with section 1902(a)(2) of the Act. The Medicaid Voluntary Contribution and Provider Specific Tax Amendments of 1991 (Pub. L. 102-234), enacted December 12, 1991, amended section 1903 of the Act to specify limitations on the amount of FFP available for medical assistance expenditures in a fiscal year when States receive certain funds donated from providers and revenues generated by certain health care-related taxes. We issued regulations to implement the statutory provisions concerning provider donations and health care-related taxes in an interim final rule (with comment period) published on November 24, 1992 (57 FR 55118). A final rule was issued on August 13, 1993 (58 FR 43156). The Federal statute and implementing regulations were designed to protect Medicaid providers from being unduly burdened by health care related tax programs. Health care related tax programs that are compliant with the requirements set forth by the Congress create a significant tax burden for health care providers that do not participate in the Medicaid program or that provide limited services to Medicaid individuals. B. Health Care-Related Taxes Section 1903(w) of the Act requires that State health care-related taxes must be imposed on a permissible class of health care services; be broad based or apply to all providers within a class; be uniform, such that all providers within a class must be taxed at the same rate; and avoid hold harmless arrangements in which collected taxes are returned directly or indirectly to taxpayers. Section 1903(w)(3)(E) of the Act specifies that the Secretary shall approve broad based (and uniformity) waiver applications if the net impact of the health care-related tax is generally redistributive and the amount of the tax is not directly correlated to Medicaid payments. The broad based and uniformity requirements are waivable through a statistical test that measures the degree to which the Medicaid program incurs a greater tax burden than if these requirements were met. The permissible class of health care services and hold harmless requirements cannot be waived. The statute and Federal regulation identify 19 permissible classes of health care items or services that States can tax without triggering a penalty against Medicaid expenditures. The regulatory language at 42 CFR 433.68(f) sets forth tests for determining the presence of a hold harmless arrangement that were directly based on the language contained in section 1903(w)(4) of the Act. The preamble to the 1993 regulation provided guidance and some illustrative examples of the types of health care-related tax programs that we believed would violate the hold harmless prohibitions. In a June 29, 2005 decision, however, the HHS Departmental Appeals Board (DAB), DAB No. 1981, found that these regulations did not clearly preclude certain types of arrangements that we believe to be within the scope of the statutory hold harmless prohibition and implementing regulations. The DAB consequently reversed disallowances issued by CMS to five States. In each of these reversed disallowances, the States had created programs that imposed a tax on nursing homes and simultaneously created programs that awarded grants or tax credits to private pay residents of those nursing homes. These grants and/or tax credits were designed by the States to compensate private pay residents of nursing homes for the costs of the tax passed on to them by their nursing homes through increased charges. The DAB, however found that CMS regulations did not clearly identify that such grants and tax payments amounted to hold harmless arrangements that would preclude FFP. One of the hold harmless tests, set forth in current rules at § 433.68(f)(3)(i), defines arrangements that are considered to be prohibited indirect guarantees. Taxes imposed on health care-related providers may not exceed 6 percent of the revenue received by the taxpayer unless the State makes a showing that, in the aggregate, 75 percent of taxpayers do not receive 75 percent or more of their total tax costs back in enhanced Medicaid payments or other State payments. Prior to the enactment of the Tax Relief and Health Care Act of 2006, States could tax individual classes of health care services and providers, including inpatient hospital services, outpatient hospital services, and nursing facility services up to 6 percent of the net patient revenue attributable to the assessed permissible class of health care items or services without violating prohibitions on the indirect hold harmless arrangements. The 6 percent limit was established to maintain consistency with the average level of taxes applied to other goods and services in the State, as discussed in the November 24, 1992 preamble to the interim final rule implementing the statute. On December 20, 2006 the Tax Relief and Health Care Act of 2006 was signed into law as Public Law 109-432. Section 403 of that law incorporated the existing regulatory test for an indirect guarantee into the Medicaid statute but provided for a temporary reduction in the allowable tax rate under the first prong of the test. Specifically, the indirect hold harmless threshold has been reduced from 6 percent to 5.5 percent effective January 1, 2008 and before October 1, 2011. We want to remind States that the collection threshold test is an annual test and while the effective date of this change does not coincide with the beginning of any State's fiscal year the test must still be performed on an annual basis. Therefore, if a State chooses to impose a health care related tax at a rate in excess of 5.5 percent prior to January 1, 2008, it will have to appropriately adjust the tax rate after January 1, 2008 so that health care related tax collections will not exceed 5.5 percent on a per class basis going forward. Compliance in State fiscal year 2008 will be evaluated from January 1, 2008 through the last day of State fiscal year 2008. Beginning with State fiscal year 2009 the 5.5 percent tax collection will be measured on an annual State fiscal year basis. II. Provisions of the Proposed Rule In the March 23, 2007 proposed regulation we proposed to: • Codify section 6051 of the Deficit Reduction Act of 2005 (Pub. L. 109-171) which amended section 1903(w)(7)(viii) of the Act to expand the previous Medicaid managed care organization

(MCO)class of health care items and services to include all MCOs. • Clarify the provisions of the hold harmless tests found at § 433.68(f). • Modify and clarify the positive correlation test set forth at § 433.68(f)(1), to specify that a State or other unit of government will violate this test if they impose a health care-related tax and also provide for a direct or indirect non-Medicaid payment and the payment amount is positively correlated to the tax amount or to the difference between the Medicaid payment and tax amount. We proposed to interpret the phrase “direct and indirect non-Medicaid payment” broadly. These payments may take many forms, such as grants or tax credits, although there will undoubtedly be other types of payments that we have not yet anticipated. • Clarify the definition of tax amounts and payment amounts for purposes of hold harmless analyses. We proposed to unify these definitions so that they would have identical meanings in all three hold harmless tests under § 433.68(f). • Clarify within § 433.68(f)(2) that a Medicaid payment would be considered to vary based on the tax amount when the payment is conditional on the tax payment. • Clarify the guarantee test at § 433.68(f)(3) to specify that a State can provide a direct guarantee through a direct or indirect payment. A direct guarantee would be found when a State payment is made available to a taxpayer or a party related to the taxpayer (for example, as a nursing home resident is related to a nursing home), in the reasonable expectation that the payment would result in the taxpayer being held harmless for any part of the tax. An indirect payment to the taxpayer would also constitute a direct guarantee. One such example of this indirect payment providing a direct guarantee would be found where a State imposing a tax on nursing facilities provided grants or tax credits to private pay residents of those facilities that could be used to compensate those residents for any portion of the tax amount that the State has allowed to be passed down to them by their nursing homes. This represents a direct guarantee of an indirect payment to taxpayers. • Modify under § 433.68(f)(3)(i), the indirect hold harmless threshold percentage to be consistent with the Tax Relief and Health Care Act of 2006, which lowered the collection threshold under the indirect hold harmless provision from 6 percent of net patient service revenue to 5.5 percent effective for portions of fiscal years beginning on or after January 1, 2008 through September 30, 2011, prior to a State being required to demonstrate the second prong of the indirect hold harmless provision. • Clarify at § 433.56(a)(4) the permissible class for purposes of health care-related taxes to only those services of ICF/MRs by removing narrow exception for similar services of community-based residences for the mentally retarded if certain criteria are met. • Modify parallel hold harmless provisions with respect to provider-related donations at § 433.54(c). • Remove transition periods related to provider-related Donations and health care related taxes provided under section 1903(w)(1)(C)(ii) of the Act since the last transition period expired in 1993. III. Analysis of and Responses to Public Comments We received 21 items of timely public comments which contained approximately 190 public comments that raised 47 individual issues, in response to the March 23, 2007 proposed regulation (72 FR 13726 through 13734). The comments came from a variety of correspondents, including health care provider associations, national and State organizations and State Medicaid agencies. The majority of commenters urged us to reconsider proposed changes to the hold harmless provisions. The following is a summary of the comments received and our response to those comments. A. General Comments *Comment:* One commenter expressed support for the codification of the 6 percent maximum tax amount allowed and agreed with CMS' implementation of section 403 of the Tax Relief and Health Care Act of 2006. The commenter indicated that while health care provider taxes are not an optimal approach to sustainable appropriate and equitable Medicaid funding, but stated that cutting the maximum tax rate allowed substantially below 6 percent would have resulted in Medicaid payment reductions and thus harmed low income populations needing care. The commenter also suggested that such taxes create a significant tax burden for health care providers that provide limited services to or no services to Medicaid beneficiaries. *Response:* We appreciate the support for our implementation of section 403 of the Tax Relief and Health Care Act 2006. We understand the concern about the burden of health care related taxes on providers that have little or no Medicaid revenues. Medicaid limits on health care related taxes protect those providers at the same time as ensuring that such health care related taxes do not effectively shift a disproportionate burden of the Medicaid program to the federal government. We also recognize that States use revenues received from permissible health care related taxes to support Medicaid payment rates, but States have other sources of revenue that can support Medicaid payments and ensure that low income populations receive needed care. This rule balances all these concerns in clarifying the definitions of permissible classes and hold harmless arrangements. *Comment:* A couple of commenters asserted that the proposed rule violated the Administrative Procedure Act provision codified at 5 U.S.C. 553(b). The commenters took issue with the preamble clarifications regarding interpretations of regulatory provisions that were included in the proposed rule. The commenters argued that CMS should have included precise regulatory language to implement such changes and that CMS cannot implement the proposed rule until it publishes sufficient notice in the form of substantive regulatory language. Other commenters stated that CMS provided no rational support for the proposed rule. *Response:* We disagree with the suggestion of any procedural deficiency. Through publication of the proposed regulation, CMS adhered to all requirements of the Administrative Procedure Act. Proper notice was given of proposed changes and a public comment period was provided. Those comments were considered, and are discussed in this final rule. The final rule includes all necessary changes to the regulatory framework and gives States clear guidance on how that regulatory framework will be applied to health care related tax programs. *Comment:* Numerous commenters argued that the proposed regulatory changes directly contradict provisions of the Social Security Act and that CMS exceeded its statutory authority. These commenters cited section 5(c) of the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments of 1991 (Pub.L. 102-234) which mandated that the Secretary consult with States before issuing any regulations under this public law. The commenters asserted that significant changes were made through this proposed regulation and that consultation with States was required prior to the issuance of the regulatory changes. For these reasons, the commenters indicated that CMS should not implement the new rule and begin consultations with States. *Response:* We believe the conditions of section 5(c) of the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments of 1191, Public Law 102-234 were fully satisfied by the process the Secretary undertook when the regulations implementing that Act were issued in 1992 and 1993. Even if these conditions were read to extend in perpetuity, however, they have been met with respect to this final rule. The notice and public comment procedures used to issue this final rule have provided a full and fair opportunity for consultation with States. This opportunity is in addition to the ongoing dialogue between CMS and the States over proposed State financing in the review process for Medicaid State plan amendments. *Comment:* Several commenters believe that CMS' approach will harm State Medicaid programs by decreasing the resources necessary to support the growing and changing nature of Medicaid services. Another commenter raised concern about the financial and administrative burden for States of the proposed rule. One commenter argued that the changes proposed in the regulation will compel States to dismantle already approved financing. One commenter asserted that the negative effect of the proposed rule could exceed approaches rejected by Congress. One commenter was concerned that CMS did not fully consider the significant financial issues confronting States and the continual pressure to contain Medicaid spending in the face of State budgets. Another commenter stated that the proposed regulation will cause a shift in burden of health care financing from the federal government to the States. *Response:* This final regulation implements section 403 of the Tax Relief and Health Care Act of 2006 and clarifies existing Federal law related to permissible classes of health care services and the hold harmless provisions. We do not agree that the statutorily-mandated reduction in the indirect guarantee threshold will result in excessive financial and administrative burdens or reductions in program benefits. In any case, CMS is bound by the law to make this change. Moreover, the clarifications provided in this regulation were not designed to target particular existing health care related tax programs for which States have received waiver approval from CMS of the broad based and/or uniformity requirements. These clarifications were instead to ensure a consistent and uniform understanding of the application of the hold harmless provisions. We refer to them as clarifications because they reflect CMS's understanding of how the hold harmless provisions should be applied. These clarifications are based on the need to ensure that the regulations effectively identify hold harmless arrangements in which health care related taxes operate to effectively shift a disproportionate burden of the Medicaid program to the federal government. Although the clarifications are not targeted toward any particular financing arrangements, CMS reserves the right to perform financial management reviews of any tax structures to ensure compliance with Federal statute, expressly approved by CMS or otherwise. *Comment:* Several commenters requested that CMS affirm that the proposed rule would not jeopardize already approved State plan amendments

(SPAs)and provider tax programs. The commenters also requested that CMS confirm that it will continue to approve SPAs and provider tax submissions with similar features as those already approved. In the absence of such confirmations, the commenters requested that CMS identify with written explanations which specific approved SPAs and provider tax submissions would be problematic under the proposed regulation. Another commenter suggested that if these provisions are adopted in final, they should only apply to payments contained in SPAs adopted after the effective date of the final rule. *Response:* With respect to the change in the indirect guarantee test, Congress did not make any provision to exempt or grandfather existing approved tax provider programs. Under the direction of the Congress, the final regulation is effective January 1, 2008. With respect to the other changes contained in this final rule, we considered and rejected a possible exception for already approved provider tax programs. Such an exception would not be uniform and would not achieve the objective of ensuring that provider taxes did not shift the effectively shift a disproportionate burden to the federal government. As part of the routine CMS review of Medicaid State plan amendments

(SPA)that affect Medicaid payment to providers, CMS examines the sources of the non-Federal share of Medicaid payments, including the revenues received by States from health care-related taxes. Such SPAs are reviewed and decided upon on a case-by-case basis under the consistent application of Federal statute and regulations. Because these clarifications reflect current CMS practices regarding ongoing reviews, CMS is not aware of any approved tax programs that are not in compliance with the final rule. However, CMS always reserves the right to ensure any State Medicaid financing source and associated reimbursement methodologies comply with Federal requirements. *Comment:* A few commenters were concerned that the proposed rule would ultimately decrease funding for the Medicaid program and threaten access to important long-term care services. Another commenter was concerned that the proposed rule will adversely affect safety net providers by lowering Medicaid payments and as a result patients' access to essential health care services would be disrupted. *Response:* This final regulation along with the Federal Medicaid statute governing health care related taxes was designed in part to protect health care providers. Specifically, the reduction to the allowable collection threshold serves to minimize the burden imposed on health care providers by States through taxation in order to support the State's Medicaid program. The effect of this reduction is that health care providers can realize a greater net revenue base when they are no longer obligated to fund a portion of their Medicaid payments through a State imposed tax. Further, those health care providers that do not participate in the Medicaid program would experience an overall reduction in their tax rate. In addition, States have the option to replace any tax revenue lost as a result of the reduction to the allowable collection threshold with other sources of non-Federal share payment, including additional State and local general fund dollars. If such general fund dollars are used health care providers may experience no reduction in the level of their Medicaid funding. States still have many available resources to ensure that necessary services are available to the most vulnerable populations. The purpose of this regulation was not to reduce access to any health care services but to strengthen the fiscal integrity of the Medicaid program. *Comment:* One commenter stated that addressing perceived problems with Medicaid financing would be better addressed through legislation. Another commenter specified that CMS should work with the Congress to clarify existing statutory language. *Response:* The final regulation implements section 403 of the Tax Relief and Health Care Act of 2006 and clarifies existing Federal law related to permissible classes of health care services and the hold harmless provisions. The clarifications are to ensure that the regulatory framework effectively implements existing statutory provisions setting permissible classes and prohibiting hold harmless arrangements that shift a disproportionate share of the cost of the Medicaid program to the federal government. *Comment:* One commenter noted that, given the most recently issued proposed regulations restricting IGTs and CPEs, CMS should not further limit States' ability to fund the non-federal share of Medicaid payments. *Response:* This final regulation implements and clarifies statutory provisions that permit States to fund the non-federal share of Medicaid payments with permissible health care related taxes. The statutory provisions, and these regulations, are a response to States that imposed health care related taxes that had the effect of shifting financial burdens from the States to the federal government. This shift resulted from hold harmless arrangements under which providers were effectively repaid some or all of the tax burden, and the federal government was left with a disproportionate share of the tax burden. The changes made in this final regulation should assist States in determining the permissibility of tax programs. While the temporary reduction in the indirect guarantee threshold test may reduce the amount of permissible tax revenues, States have the option to replace any tax revenue lost as a result of the reduction to the allowable collection threshold with other sources of non-Federal share payment, including additional State and local general fund dollars. *Comment:* One commenter expressed concern that the proposed rule unnecessarily grants CMS authority to delve into relationships between States and local governments and does not provide sufficient clarity on the criteria for evaluation of these relationships. The commenter believes that open ended interpretations of tax and reimbursement programs could result in case by case inconsistencies and confusion while States attempt to structure a permissible provider tax program. *Response:* This final regulation implements section 403 of the Tax Relief and Health Care Act of 2006 and clarifies existing Federal law related to permissible classes of health care services and the hold harmless provisions. This rule does not specifically require review of relationships between States and local governments. Under existing statutory law, however, CMS must ensure that State claims for federal funding are supported by non-federal expenditures and comply with all provisions of the law. This includes review of health care related taxes and associated payment or grant arrangements, whether on a State or local level. In other words, our review is limited to tracing the flow of funds to verify the non-federal share of Medicaid expenditures. This final rule makes changes to the regulatory framework to ensure that this review is consistent, uniform, and effectively implements the statutory requirements. *Comment:* A couple of commenters specified that CMS did not have the statutory authority to go beyond the explicit direction provided in the Tax Relief and Health Care Act of 2006 to only temporarily reduce the maximum allowable tax rate. *Response:* CMS' responsibility is to ensure that the Federal statutory requirements governing health care related taxes are met. In addition to codifying in regulation section 403 of the Tax Relief and Health Care Act of 2006, the new regulation clarifies some issues that have arisen since the issuance of the 1993 rule. Therefore, we believe it is necessary and appropriate for the Secretary to issue new regulatory provisions to address these issues so that States will have clear guidance on which health care related tax programs will be entitled to FFP. Furthermore, this final rule fully complies with the requirements of the Administrative Procedure Act. *Comment:* One commenter noted that changes to tax programs will further exacerbate health care challenges in areas impacted by major natural disasters. *Response:* We do not agree that either the statutorily mandated reduction in the indirect guarantee test, or the clarification of permissible classes or hold harmless tests, will exacerbate health care challenges in areas impacted by major natural disaster. The reduction to the allowable collection limit serves in part to minimize the burden imposed on health care providers through health care related taxation. This result should help to minimize the cost structure of providers in areas impacted by major natural disasters. *Comment:* One commenter stated that the proposed regulations reflect a fundamental suspicion of States' Medicaid financing practices. The commenter encouraged CMS to address any inappropriate financing arrangements through enforcement of current regulatory standards on a case by case basis rather than regulatory changes. *Response:* Our responsibility is to ensure that the Federal statutory requirements governing health care related taxes are met in a consistent and uniform manner. Revision to the regulatory framework ensures consistent and effective implementation of the statute. B. Implementation *Comment:* Several commenters recommended that CMS delay the implementation of the new rule until State legislatures can adequately assess its implications and take the necessary action to ensure proper funding of their Medicaid programs. A few commenters recommended that the proposed rule be delayed until CMS works closely with States to establish some optional funding solutions for Medicaid services. Another commenter suggested that, at a minimum, States should be provided an adequate transition period to implement the new rule. Another commenter recommended that the effective date of the rule be delayed by at least 6 to 12 months. *Response:* As required by section 403 of the Tax Relief and Health Care Act of 2006, the final regulation with respect to the reduction in the indirect guarantee threshold percentage is effective January 1, 2008. We have provided for a transition period until October 1, 2009 for States to come into compliance with the statutory revision to the permissible class of health care services identified as “services of a managed care organizations.” Since the other provisions of the regulation are clarifications that reflect CMS's existing understanding of the law, further transition is not warranted. C. Permissible Classes of Health Care Items and Services—ICF/MR (§ 433.56(a)(4)) *Comment:* Several commenters, including a commenter from a State that the commenter believes was the intended beneficiary of the provision, expressed concern that CMS did not explain why community based residences included in the ICF/MR class in 1993 would be excluded from the class. One commenter stated that CMS violated the APA by not providing a reasoned analysis for the proposed change. Another commenter stated that this proposed change would adversely affect the provision of home and community based services. *Response:* We proposed to delete this exception because we believed it was no longer applicable to any State. In response to these comments, we have determined that there is one State to which the exception applies. Therefore, we are no longer deleting the exception. In the 1993 interim final rule implementing Medicaid Voluntary Contribution and Provider Specific Tax Amendments of 1991, the statutory class of health care items and services at section 1903(w)(7)(iv) of the Act for services of intermediate care facilities for the mentally retarded (ICF/MR) was defined to include similar services furnished by community-based residences for the mentally retarded, under a waiver under section 1915(c) of the Act, in a State in which, as of December 24, 1992, at least 85 percent of such facilities were classified as ICF/MRs prior to the grant of the waiver. This exception was very narrow and was only intended to capture those States that were granted section 1915(c) waivers that converted most of their ICF/MRs to community-based residences prior to the effective date of the interim final rule. Over the past several years, a few States have requested CMS approval to expand their ICF/MR services tax programs to include certain home and community-based services. None of those States were able to demonstrate compliance with the parameters of this permissible class of health care items or services. Therefore, when CMS proposed deleting the exception, CMS did not believe there were any States that did or could meet these specific requirements. In response to public comments, CMS was able to identify one State that meets the requirements for this class of health care services. Rhode Island has a long-standing tax program that meets these requirements and as a result, the final regulation retains the original regulatory language. *Comment:* Several commenters asked for CMS to expand the inclusion of home and community-based service providers in the ICF/MR class for all States, arguing that it is not equitable to accord different treatment to States that converted ICF/MRs into waiver facilities before 1992 than to other States. These commenters noted that this policy would generally benefit home and community-based service providers. These commenters argued that, in order for the class to be truly broad-based, all types of home and community-based residences for persons with mental retardation and developmental disabilities should be included. One commenter specifically asserted that this policy would allow States to impose health care-related taxes to help fund home and community-based services, and would increase access and availability of such services. Many commenters cited the benefits of home and community-based waiver services, and mentioned Federal policies supporting the expansion of such services. *Response:* The statutory provision at section 1903(w)(7)(iv) of the Act refers only to ICF/MR facilities as the permissible class. As discussed above, in 1993, we provided for a limited exception to address the unique situation of States with existing waivers that converted most of their ICF/MRs to community-based residences prior to the effective date of the interim final rule. We do not believe a broader exception would be consistent with the statutory language. Moreover, we were not persuaded by the arguments that higher taxes on home and community-based services would actually encourage and stimulate the provision of such services. It appears counterintuitive that taxes that make such services more costly would stimulate broader use and availability. *Comment:* One commenter requested that CMS more precisely define intermediate care facilities for the mentally retarded (ICF/MR) to include all facilities licensed as ICFs/MR, no matter the size of the facility. *Response:* The regulation was not intended to redefine ICF/MRs or any other provider type. Instead, in part, the rule proposed to clarify a permissible class of health care services for purposes of health care-related tax requirements. For purposes of health care-related taxes, if a State were to impose a tax on ICF/MR services, in order to be considered broad-based, all licensed ICF/MR providers within the State would need to be subject to the tax. *Comment:* One commenter suggested that CMS exercise its statutory authority to update the historical listing of permissible classes by adopting additional provider classes through regulation. The commenter noted that CMS has reminded States of this opportunity. The commenter specified that inviting proposals to add classes helps update the Medicaid program by recognizing change in providers, acknowledging State environments are different, supporting Congressional intent and recognizing that individual States and providers should be free to collaborate and choose the best means suited to address financing relationships to meet their State's needs. *Response:* The preamble to the 1993 final rule stated that the Secretary would consider adding additional classes if States can demonstrate the need for additional designation and that any proposed class meet the following criteria:

(1)The revenue of the class is not predominantly from Medicaid and Medicare (not more than 50 percent from Medicaid and not more than 80 percent from Medicaid, Medicare, and other Federal programs combined;

(2)the class is clearly identifiable, for example, by designation through State licensing programs, recognition for Federal statutory purposes, or inclusion as a provider in State plans; and

(3)the class is nationally recognized rather than unique to a State. At this time, we do not see a reason to alter this policy or to add new permissible classes of health care items or services. D. Permissible Classes of Health Care Items and Services—Managed Care (§ 433.56(a)(8)) *Comment:* One commenter recommended that CMS consider a definition for the term “preferred provider organizations” so that States will know what entities must be included in a tax program on this class of providers for it to comply with the broad-based requirement of the statute and associated regulations. *Response:* Inclusion of the term preferred provider organization

(PPO)as a type of managed care organization that would be in the permissible class of services for health care-related taxation purposes mirrored the statutory language enacted under section 6051 of the Deficit Reduction Act which amended section 1903(w)(7)(A)(viii) of the Social Security Act. The statutory language was designed to more broadly encompass services provide by all managed care organizations without regard to their status as Medicaid or commercial health plan or the form of such plans. The statutory language included examples to clearly establish that all types of managed care businesses must be included in order for a health care-related tax to be truly broad based. For Medicare accreditation purposes it is established that MCOs are licensed as both HMOs or PPOs. The intent is to fully encompass the types of managed care products available to individuals in commercial markets for coordinated care plans. This is a generally accepted term and type of entity in the managed health care market and we do not feel that a definition is necessary for Medicaid regulation purposes. E. Hold Harmless § 433.68(f)—General *Comment:* Some commenters expressed concern that the new rule appears to replace a purely objective test for hold harmless arrangements with one that is subjective. They argued that the Secretary had rejected the introduction of a subjective analysis when he published the original hold harmless prohibitions in 1993 and that the new rule should continue along this same course. *Response:* We believe that the new regulation continues to apply a largely objective analysis in determining whether state tax programs contain hold harmless arrangements. This regulation is intended to carry out the purposes originally outlined in the Medicaid Voluntary Contribution and Provider Specific Tax Amendments of 1991 (Pub. L. 102-234) and the implementing regulations, by prohibiting FFP for health care-related taxes where the state has implemented a hold harmless provision. One lesson we have learned in the years since we first endeavored to implement Congress's prohibitions on taxes with hold harmless arrangements is that it is simply impossible to anticipate every hold harmless arrangement that may be implemented by States. As a result, it would not be true to Congressional intent to implement a mathematical model to be applied in detecting hold harmless arrangements that violate the statutory prohibitions. We do not believe the Medicaid statute contemplates such a formula, but anticipates that the Secretary will carefully analyze all circumstances relevant to the creation and operation of a state health care-related tax and attendant tax relief programs in carrying out his mandate to prohibit FFP where hold harmless arrangements exist. The analysis of state provider taxes remains an overwhelmingly objective process, but the unique and individual nature of State tax programs means that the analysis is always on a case-by-case basis. The individualized analysis outlined in this rule is not the type of subjective analysis that the Secretary expressly rejected in the 1993 final rule. In that rule, the Secretary rejected a suggestion that CMS should assess the egregiousness of a hold harmless violation in determining whether to take a disallowance. *Comment:* One commenter opined that Congress did not authorize the Secretary to expand the tests for determining when an impermissible hold harmless arrangement exists, arguing that the regulations should mimic the statutory language. Other commenters suggested that the existing rules were appropriate and the new rules could place existing tax programs at risk. *Response:* It is not our intent to expand the test for determining when an impermissible hold harmless arrangement exists beyond the original purposes authorized by Congress and underlying the 1993 rules. As noted above, we are not aware of any state tax programs that would have been permissible under the Secretary's prior interpretation of the rules, but are no longer permissible under the new rules. The new rule endeavors to address issues that have arisen since the issuance of the 1993 rule, which effectively repeated the statutory language but did little to elucidate that language. That rule proved largely successful in stopping impermissible hold harmless arrangements, with the overwhelming majority of States ending such programs. A recent decision issued by the HHS Departmental Appeals Board, however, has indicated confusion concerning the degree of flexibility in the application of the Secretary's longstanding interpretation of that rule in addressing new issues that have arisen. (DAB No. 1981, June 29, 2005.) Therefore, we believe it is necessary and appropriate for the Secretary to issue new regulations so that States will have clear guidance on which health care-related tax programs will be entitled to FFP. *Comment:* Several commenters requested that they be able to retain the ability to use rates that are based on receipt of provider taxes rather than overall provider costs. *Response:* The Social Security Act clearly allows States to collect permissible health care-related taxes to be used as a source of non-federal share funding for Medicaid payments to health care providers. Further, States can consider Medicaid's portion of a permissible health care-related tax as an allowable cost for purposes of developing Medicaid reimbursement rates. However, basing Medicaid payment rates solely on the receipt of health care-related taxes is a clear hold harmless violation. *Comment:* Several commenters noted that broadening the definition of hold harmless will penalize States that have other non-Medicaid funding initiatives for health care organizations. Under the proposed rule, payments made to health care providers as part of regular business could become entangled in the enforcement of the new rule. *Response:* The hold harmless clarifications in this regulation are necessary to ensure compliance with the statutory limitations on hold harmless arrangements. In reviewing a health care related tax program, CMS needs to review the tax and associated financial arrangements as a whole, including any non-Medicaid payments. Taxes or fees that are imposed in the ordinary course of business and are not health care related would not trigger such a review, nor would non-Medicaid governmental payments that occur in the regular course of business, for example through procurements. *Comment:* One commenter stated that the changes to the hold harmless provisions could make their current provider tax program non-approvable because the fees for the most part are used to pay back the cost to the fee payer. *Response:* We are not aware of any State tax programs that would have been permissible under the Secretary's prior interpretation of the rules, but are no longer permissible under the new rules. If, however a State increases Medicaid reimbursement rates based solely on the receipt of a health care related tax, rather than on the costs incurred for providing Medicaid services, such an arrangement would be considered a hold harmless violation. We believe this result is consistent with the requirements of the statute and existing regulation and is unchanged by this final rule. *Comment:* One commenter requested that CMS include in the rule itself the language in the preamble to the proposed rule indicating that States using cost-based payment systems may include provider tax costs as one of many provider costs that are considered in setting individualized provider rates. The commenter argued that including this language in the rule would prevent any changes in CMS interpretation. *Response:* We are not including this language in the rule itself because the rule is limited to the basic framework and cannot address every specific circumstance and nuance. And this is an example of a very complex issue. The clarification to the Medicaid payment hold harmless test states that a Medicaid payment will be considered to vary based on the tax amount when the payment is conditional on the tax payment. This provision does not prevent States that use cost-based reimbursement methodologies from including Medicaid's share of health care related tax costs as one of many health care provider costs that are considered in setting individualized Medicaid reimbursement rates. However, where a Medicaid payment is conditional on receipt of health care related taxes, we would view the Medicaid payment to be, in part or in full, the repayment of the health care related tax to repay the taxes in a hold harmless arrangement rather than as a protected reimbursement for cost of Medicaid services. *Comment:* A few commenters addressed the DAB decision that CMS acknowledged it was attempting to respond to with this regulation, suggesting that a more appropriate response to that decision would have been to simply clarify that the hold harmless standard applies to situations where the benefits accrue to private pay patients rather than to the taxpaying facilities directly. *Response:* We do not believe that the commenter's suggestion would address all of the confusion created by the Board's decision. We agree that clarifying the rules to explain that the hold harmless standard applies to situations where the state payments are made to third parties would help to clarify the questions raised by the Board's decision and we have attempted to do that in this rule. However, we do not believe such a clarification alone would be sufficient. F. Hold Harmless—§ 433.68(f)(1)—Positive Correlation *Comment:* Several commenters stated that by including any positive correlation over any amount of time, the proposed rule destroys any standard by which a State may assess whether or not a tax based Medicaid funding arrangement will be determined by CMS to be a hold harmless violation. Other commenters disagreed with CMS' statement that the current regulations related to positive correlation led to confusion. The commenters believe that the subjective analysis proposed will only lead to additional confusion. *Response:* Our experience is that States and providers are typically very aware of the overall character of a tax based Medicaid funding arrangement. Moreover, it is clear that to achieve the statutory purpose of ending hold harmless arrangements that result in shifting a disproportionate burden to the federal government, the test must be applied flexibly. Otherwise, financing arrangements will be structured to meet the letter but not the underlying purpose of the statutory limitations. This regulation is intended to further clarify the existing hold harmless provisions and not to lead to additional confusion. *Comment:* Several commenters asserted that the test for a “positive correlation” under § 433.68(f)(1) is too subjective, and should instead remain a statistical test. They expressed concern that under the proposed test, CMS could find a positive correlation in almost any situation. *Response:* The 1993 rule does confine the statutory term “positive correlation” to a test requiring mathematical certainty. The insertion of the statistical concept suggests that a positive correlation contemplates a positive relationship between two variables. Such a correlation would exist, for example, where a state passes a tax on nursing home beds that a facility is permitted to pass on to its residents in the form of rate increases. If at or about the same time, the state passes a grant program that pays private pay residents of the nursing home an amount similar to the bed tax, the grant money would be available for use to compensate the nursing facility for the tax and a positive correlation would be found to exist between the tax and the grant. The correlation would not be destroyed by altering one variable over time and would not necessarily need to be measured in a statistical sense. This has always been CMS's position with respect to the 1993 regulations, but unfortunately the description of positive correlation as a statistical concept in the 1993 rule created some confusion. In retrospect, we now believe that characterizing positive correlation as having “the same meaning as the statistical term” in the 1993 rule was imprecise. The use of this language caused some readers to view the test as requiring a mathematical certainty with specifically measurable statistical significance over the life of the grant and tax programs, or measured with respect to specific amounts collected and paid out under the specific programs. Where we did impose a mathematical test in evaluating a tax program it was clearly spelled out in the 1993 rule, as it was with respect to the “indirect guarantee test” described at page 43182 of the 1993 rule. The rule was, however, never meant to bring mathematical certainty into the positive correlation examination. We do not consider the current rule to signal a significant change in our analysis; rather, it clarifies our interpretation of the statutory term “positive correlation.” We will continue to evaluate health care related tax programs to determine whether there is a positive correlation with a state payment program. G. Hold Harmless § 433.68(f)(2)—Medicaid Payment Test *Comment:* Many commenters argued that, by prohibiting States from conditioning Medicaid payment on receipt of the tax, the proposed rule would prevent the State from using the tax to reimburse providers. These commenters stated that Congress clearly intended provider taxes to be used for purposes of Medicaid reimbursement purposes. The commenters noted that section 1903(w)(4) of the Social Security Act specifies that the hold harmless provisions “shall not prevent use of the tax to reimburse health care providers in a class for expenditures under this title nor preclude States from relying on such reimbursement to justify or explain the tax in the legislative process.” *Response:* We agree States can use permissible health care related tax revenues to increase Medicaid reimbursement rates. However, section 1903(w)(4) of the Act specifies three conditions under which a State or local government is determined to hold taxpayers harmless for their tax costs. If any of these conditions are met the tax program would be determined to have a hold harmless provision and the tax would be impermissible. The final rule does not change the conditions of the hold harmless provisions under Federal law. Consistent with these provisions, where a Medicaid payment is conditional on receipt of health care related taxes, we would view the Medicaid payment to be, in part or in full, the repayment of the health care related tax to repay the taxes in a hold harmless arrangement rather than as a protected reimbursement for cost of Medicaid services. *Comment:* Several commenters stated that by expressly 37 conditioning Medicaid payments on the tax amount, States are explicitly explaining how the tax is being used for Medicaid reimbursement as part of the legislative process. The commenters believe that it is reasonable to condition payment on the approval and receipt of the tax and to not do so would be fiscally irresponsible. The State would be obligated to make payments without having a funding source to finance them and without conditioning States would not be able to adopt tax programs. Other commenters noted that health care providers are reluctant to support taxes unless there is an explicit assurance that the revenues from the taxes will be dedicated to increasing Medicaid payments and that State legislatures are reluctant to increase Medicaid liabilities with the ability to make them contingent on the funding source. *Response:* There is a distinction between using health care related tax revenues to support Medicaid payments and specifically guaranteeing repayment of some or all of the tax amount or otherwise ensuring a direct correlation between payments to taxpayers and the amount of their taxes. States have and continue to maintain the ability to justify the imposition of a health care related tax by indicating through the State legislative process that proceeds from the health care related tax will be used to increase Medicaid reimbursement and that such funding must be approved by CMS. However, the statute is very clear that health care related taxes cannot contain hold harmless arrangements and any failure to comply with any of the three hold harmless “tests” would render a health care related tax impermissible. There is a distinct difference between explaining a health care related tax and its purposes through the legislative process and extending conditional guarantees to provider taxpayers. States must ensure that no payment is conditioned upon receipt of a health care related tax payment. *Comment:* A few commenters requested that CMS clarify preamble language related to State use of tax proceeds and federal match to increase Medicaid rates in the form of Medicaid supplemental payments. The commenters believe that this should not prohibit States from using tax proceeds and federal match to increase Medicaid rates in the form of Medicaid per diem add-ons or rate supplements. *Response:* Section 1903(w)(4) expressly provides that States may use permissible tax revenues to fund provider payments for covered services furnished to eligible individuals. This provision does not authorize States to use tax revenues for a hold harmless arrangement that effectively repays provider taxpayers. In other words, the payment methodology related to such increases to Medicaid reimbursement rates must be designed in a manner that recognizes the volume or nature of the covered services provided to Medicaid individuals, and cannot be related simply to the amount of tax proceeds. *Comment:* Several commenters disagreed with any suggestion that a Medicaid payment increase funded by tax revenue is necessarily uneconomical, because the funding source of the payment is irrelevant to rate development. The commenters stated that Congress rejected the position that, because provider taxes reduced actual expenditures made by the State, the amount of the provider tax should be deducted from total State spending so that only “real” or “net” State expenditures would be matched. One commenter stated that the proposed rule would interfere with permissible taxation by presupposing that rates explicitly supported by tax revenue are too high and therefore not economical. *Response:* These commenters appear to have misread the preamble of the proposed rule. We agree that States may collect permissible health care related taxes, and may use those tax revenues as a source of non-federal share funding for Medicaid payments to health care providers. Our specific concern is when the Medicaid payments are conditional on payment of the taxes. In that instance, the Medicaid payment is not linked to any rate-setting determination based on the cost or volume of services. Instead, the Medicaid payment is in the nature of a hold harmless arrangement to return all or part of the tax liability to the taxpayer. We are clarifying the Medicaid payment test to provide that a Medicaid payment will be considered to vary based on the tax amount when the payment is conditional on the tax payment. This clarification would only affect States that seek to use rates that are based on the receipt of provider taxes rather than on overall provider cost. In other words, the final regulation rule would limit the ability of States to expressly condition payment rates on tax receipts rather than on a process that determines rates that are consistent with efficiency, economy and quality of care in compliance with section 1902(a)(30)(A) of the Act. *Comment:* A few commenters disagreed with the definition of enhanced Medicaid payment as a payment for which any branch of government has indicated that the payment can be reduced or eliminated if the provider tax is discontinued. The commenters were concerned that CMS is asserting that this would represent a structural repayment of the tax and violates hold harmless provisions. The commenters disagreed with this position. *Response:* The phrase “enhanced Medicaid payments” relates to the second prong of the indirect hold harmless test (“75/75 test”). This test stipulates that if a health care related tax exceeds the regulatory percentage threshold, CMS would consider a hold harmless to exist if 75 percent or more of the taxpayers in the class receive 75 percent or more of their total tax back in enhanced Medicaid payments or other State payments. We clarified that if a State ever had to provide a demonstration for purposes of the “75/75 test” we may consider any amount that any branch of the State, including legislative and executive branch, has indicated could be subject to reduction in the absence of provider tax revenues as an enhanced Medicaid payment. This comparison is between Medicaid payments and tax costs and we were not asserting in this instance that this would be a structural repayment. We were clarifying that, for purposes of the “75/75 test”, payments which would no longer be provided if the tax funding source were eliminated, would be considered enhanced Medicaid payments, even if the State did not characterize them as such. *Comment:* Several commenters stated that eliminating conditional Medicaid payments would undermine provider support for health care related taxes. The commenters asserted that assurances that provider tax revenue will be used for a specific category of Medicaid expenditures is not equivalent to holding taxpayers harmless for the cost of the tax. *Response:* States have and continue to maintain the ability to justify the imposition of a health care related tax by indicating through the State legislative process that proceeds from the health care related tax will be used to increase Medicaid reimbursement and that such funding must be approved by CMS. However, the statute is very clear that health care related taxes cannot contain hold harmless arrangements and any failure to comply with any of the three hold harmless “tests” would render a health care related tax impermissible. There is a distinct difference between explaining a health care related tax and its purposes through the legislative process and extending conditional guarantees to repay provider taxpayers. We recognize that high volume Medicaid providers could benefit from a health care related tax that funds a Medicaid rate increase, however, States must ensure that no payment is conditioned upon receipt of a health care related tax payment. *Comment:* Several commenters stated that the definitions of “tax amount” and “payment amount” in the proposed rule are too broad. One commenter argued that the shift in terminology in § 433.68(f)(2) from “amount of the total tax payment” to “tax amount” represents a significant departure from the statutory and prior regulatory language. *Response:* As explained in the preamble to the proposed rule, the change in terminology is not a substantive change from what was intended in the original 1993 rule. We are using the terms “tax amount” and “payment amount” throughout the new rule in an effort to be consistent. We have found that the use of differing terms in the various sections of the 1993 rule has led to some confusion. Accordingly, we consolidated the terms “total tax cost,” “total tax payment,” “amount of the payment,” “amount of such tax” into the terms “tax amount” and “payment amount” to be used in each section of the hold harmless rule. We explained our reasoning at more length in the proposed rule and believe that reasoning remains valid (72 FR 13729, 13730). This does not represent a significant departure from prior statutory or regulatory language. It clarifies that we are not looking at the total amount of the tax payment received by the state, but we will be looking at the tax program as a whole, including whether taxpayers are being held harmless for increments of the tax. With respect to subsection (f)(2) this means that we will look at whether any portion of the Medicaid payments made by the state to providers, varies based upon the health care related tax levied upon the providers. The “tax amount” is the amount of the tax levied upon the provider (either directly, or indirectly). *Comment:* Several commenters stated that the phrase “including where Medicaid payment is conditional on receipt of the tax amount” is problematic. Some commenters noted that the proposed language would appear to have the effect of prohibiting States from enforcing tax obligations on delinquent providers through intercept of Medicaid payments. Another commenter expressed concern that this would prohibit States from requiring overdue taxes as a condition for payments due to a taxpayer. Other commenters stated that it may result in situations where health provider taxes that are statutorily established in a manner that complies with the broad based and uniformity requirements of the statue cannot be enforced. *Response:* This regulation does not prevent State enforcement of the collection of health care related taxes. It is the State's obligation to ensure that any health care related tax program is collected in a manner consistent with legislation enacting the health care related tax program and any approved waiver of the broad-based and/or uniformity requirements. To suggest that the phrase “including where Medicaid payment is conditional on receipt of the tax amount” would prohibit States from enforcing tax obligations on delinquent health care providers is erroneous. If States do not enforce the proper collection of the health care related tax, the State is at risk of violating statutory broad-based and/or uniformity requirements which could render the entire tax program and its collections impermissible. *Comment:* A few commenters specified that the word “total” is critical within the Medicaid payment test because a Medicaid payment that varies based on the Medicaid portion of the tax is permissible. The commenters stipulated that only a Medicaid payment that varies based on the total provider tax amounts constitutes a hold harmless. Other commenters stated that the portion of a provider's health care-related tax payment attributable to Medicaid services is an allowable cost, and Medicaid reimbursement may be furnished for it. The commenters recommended that the word “total” be restored. *Response:* The regulation specifies that a hold harmless arrangement exists if all or any portion of the Medicaid payment varies based only on the amount of the tax payment. The removal of the word total does not represent a significant departure from prior statutory or regulatory language. As explained in the preamble to the proposed rule, the change in terminology is not a substantive change from what was intended in the original 1993 rule. We are using the terms “tax amount” and “payment amount” throughout the new rule in an effort to be consistent. We have found that the use of differing terms in the various sections of the 1993 rule has led to some confusion. Accordingly, we consolidated the terms “total tax cost,” “total tax payment,” “amount of the payment,” “amount of such tax” into the terms “tax amount” and “payment amount” to be used in each section of the hold harmless rule. We explained our reasoning at more length in the proposed rule and believe that reasoning remains valid (72 FR 13729, 13730). This was intended to clarify that we are not looking simply at the total amount of the tax payment received by the state, but will be looking at the tax program as a whole, including whether tax payers are being held harmless for increments of the tax. *Comment:* One commenter suggested that supplemental payments should be permitted to be paid to those providers who are providing Medicaid services based on receipt of provider taxes. *Response:* Generally, States can collect permissible taxes and use such tax receipts as the non-federal share to make supplemental payments for the provision of Medicaid services. However, a hold harmless arrangement exists when States seek to use reimbursement rates that are based solely on the receipt of health care related taxes and effectively repay the taxpayer (such as supplemental Medicaid payments conditioned on receipt of a health care related tax payment), rather than on overall health care provider costs. The clarifications in this rule are necessary to ensure that Medicaid payments are not made simply to repay providers for the cost of the health care related tax beyond Medicaid's allowable share, but also to ensure the integrity of the development of sound Medicaid payment rates in compliance with the requirements of section 1902(a)(30) of the Act. H. Hold Harmless 433.68(f)(3)—Guarantee Test *Comment:* Numerous commenters asked for clarification of the proposed interpretation of the phrase “direct and indirect” in the guarantee test, and should confirm that use of provider tax receipts to increase Medicaid rates for or to enhance the Medicaid rate methodology applicable to the taxed provider class is not prohibited. *Response:* The clarification of the guarantee test is meant to specify that a State can provide a direct or indirect guarantee through a direct or indirect payment. A direct guarantee will be found when a State payment is made available to a taxpayer or a party related to the taxpayer with the reasonable expectation that the payment would result in the taxpayer being held harmless for any part of the tax (through direct or indirect payments). A direct guarantee does not need to be an explicit promise or assurance of payment. Instead, the element necessary to constitute a direct guarantee is the provision for payment by State statute, regulation, or policy. An indirect guarantee is distinct from a direct guarantee in that such guarantee is initially measured by a percentage threshold that limits tax collections to 5.5 percent of net patient revenue attributable to the assessed service. States collecting a tax in excess of 5.5 percent of assessed patient service revenue must perform the second prong of the hold harmless test to demonstrate permissibility. *Comment:* A few commenters expressed concern that CMS has taken too broad a view in stating that monies “controlled or influenced by the state” will be considered in applying the guarantee test in § 433.68(f)(1). *Response:* The language of concern to these commenters appears in the preamble to the proposed rule. In the preamble we provided an illustration of how a health care related tax and grant program could be found to violate both the positive correlation test and the guarantee test. We believe that discussion accurately reflects existing statutory provisions governing health care related taxes. The specific language of concern to the commenters appears in a discussion of problematic indirect payments that States may make to taxpayers. The preamble notes that “money is fungible and, as long as the payment is from a source controlled or influenced by the State, it will be considered in determining whether it has been made available for the tax.” In evaluating whether the state has made monies available to hold providers harmless for any portion of a health care related tax, it makes little difference which part of the state treasury makes the funds available to the taxpayer, or if the state monies are funneled through some other third party, because all State monies are fungible. For example, it would be impermissible for the state to impose a nursing home bed tax to be paid to the state Medicaid agency and have the Governor's office control a separate grant payment designed to reimburse private pay residents for the amount of the tax passed on to them by the nursing homes. Even though the state may argue these are separate funding sources, CMS would consider all of the money state money and would consider the positive correlation between the two programs a violation of the hold harmless provisions. Similarly, States will not be permitted to recycle monies through third parties, by making payments to such third parties and requiring that the money be used to reimburse taxpayers for any portion of their health care related tax. This is the point the preamble was trying to address when it embraced payments “influenced by the state.” However, we agree with the commenters that “influenced by the state” is too broad a term. We believe “controlled or directed by the state” is a more accurate description of the types of payments that will be considered in evaluating whether an impermissible hold harmless arrangement exists. *Comment:* Several commenters stated that the term “reasonable expectation” under the guarantee test in § 433.68(f)(3) is too broad and/or subjective. *Response:* In the preamble to the proposed rule we stated that “A direct guarantee will be found when a state payment is made available to a taxpayer or a party related to a taxpayer (for example as a nursing home resident is related to a nursing home), in the reasonable expectation that the payment would result in the taxpayer being held harmless for any part of the tax” (72 FR 13730). We chose to use the term reasonable expectation because we recognized that state laws were rarely overt in requiring that state payments be used to hold taxpayers harmless. For example, state laws providing grants to nursing home residents who incur increased rates as a result of bed taxes on nursing homes, rarely required the residents receiving the grants to actually use the money to pay the increased nursing home fees. Accordingly, arguments have been made that such grants do not actually guarantee to hold the nursing homes harmless for the tax. We disagree. Because the residents must pay the increased rates passed on to them as a result of the tax and because the state has made money available to those residents to pay those increased rates, it is reasonable to expect that the payments going to the nursing home residents will promptly be sent to the nursing home as resident fee payments. This would result in a hold harmless for the nursing home. The only way to avoid this conclusion would be for the resident to leave the facility and/or not pay the rate increase. Therefore, we do not believe the use of the term reasonable expectation is overly broad or vague. *Comment:* Several commenters stated that collection of unpaid provider taxes by withholding amounts of Medicaid payments due under the new rule would constitute a hold harmless because it would cause the Medicaid payment to be contingent on the payment of the tax. *Response:* Withholding Medicaid payments to health care providers who have not paid their taxes would not constitute a hold harmless arrangement. This is a matter of State enforcement. States are, by themselves, obligated to ensure that any health care related tax is collected in a manner consistent with Federal law, authorizing State legislation and if applicable any CMS approved waiver of the broad-based and/or uniformity requirements. Typically, such enforcement provisions are authorized through the health care related tax's enacting legislation and are identified as enforcement collection provisions and/or penalties. *Comment:* A few commenters disagreed with CMS' assertion in the proposed rule that the direct and indirect tests differ on the kind of payment involved. The commenters stated that there is no basis for this distinction. *Response:* A direct guarantee will be found when a State payment is made available to a taxpayer or a party related to the taxpayer in the reasonable expectation that the payment would result in the taxpayer being held harmless for any part of the tax. An indirect guarantee is distinct from a direct guarantee in that such guarantee is initially measured by a percentage threshold that limits tax collection to 5.5 percent of patient revenue attributable to the assessed service. States collecting a tax in excess of 5.5 percent of assessed patient service revenue must perform the second prong of the hold harmless test to demonstrate permissibility. *Comment:* A few commenters indicated that they do not object to CMS' proposal to the direct guarantee test to clarify that payment to a taxpayer may be indirect. Nor do they disagree with CMS that, under the amended language, a grant or benefit to private pay patients or residents could be considered an indirect payment to the taxpayer for purposes of the “direct guarantee.” *Response:* We appreciate the support to ensure the fiscal integrity of the Medicaid program. Clarifying our current regulations helps us achieve this goal. I. Hold Harmless 433.68(f)(3)(i)—Indirect Guarantee *Comment:* One commenter stated that, in implementing the indirect percentage threshold changes as mandated by Congress, CMS went beyond the legislative directive by further amending the regulatory text to specify that the percentage threshold applied to net operating revenues. The commenter argued CMS' position that the safe harbor percentages are restricted to net revenue is not supported in the legislative history. The commenter believes that States should be permitted to interpret the phrase “revenue received by providers” as either gross or net revenue. *Response:* The phrase “revenues received by the taxpayer,” has been interpreted by CMS to be, the net patient service revenue, received by the health care provider. This would include all revenues received from all payers for providing the particular service that is assessed by the State and would not include revenues unrelated to the service being assessed. In addition, the safe harbor percentage originally created by the 1992 interim rule was never addressed in the statutory language and therefore would not be addressed in any legislative history. However, the legislative history clearly demonstrates that Congress requires CMS to evaluate the permissibility of a health care related tax on a per service basis, as the 1991 law separately identified permissible classes of health care items or services. Finally, we believe that the phrase “net operating revenue” used in the regulatory text may have caused confusion. We have altered the final regulation to refer to net patient service revenue. *Comment:* One commenter specified that under the proposed broad interpretation of the Medicaid payment hold harmless provision, CMS can find a violation in any situation where provider tax revenues are used to make Medicaid payments to taxed providers. The commenter argued that the impact of this results in the omission of the “indirect guarantee test”, whose importance was affirmed by Congress in the Tax Relief and Health Care Act of 2006. *Response:* As we have mentioned earlier, this regulation carries out the purposes originally outlined in the Medicaid Voluntary Contribution and Provider Specific Tax Amendments of 1991 (Pub. L. 102-234) and the implementing regulations, by prohibiting FFP for health care related taxes where the State has implemented a hold harmless provision. It has not been our intent to expand the test for determining when an impermissible hold harmless arrangement exists beyond the original purposes underlying the 1993 rules. We are not aware of any State health care related tax programs that would have been permissible under the Secretary's prior interpretation of the rules but are no longer permissible under this regulation. Therefore, we do not agree that we have nullified the indirect guarantee test that the commenter argues was reaffirmed by Congress. IV. Provisions of the Final Regulations As a result of our review of the comments we received during the public comment period, as discussed in section III of this preamble, we are making the following revisions to the proposed regulation published on January 18, 2007. Section 433.56 Classes of Health Care Services and Providers Defined We have modified the regulation at § 433.56(a)(4) to return to the original regulatory language. The regulation has been revised to re-incorporate that similar services furnished by community-based residences for the mentally retarded, under a waiver under section 1915(c) of the Act, in a State in which, as of December 24, 1992, at least 85 percent of such facilities were classified as ICF/MRs prior to the grant of the waiver can be included in the permissible class of health care items or services. CMS has modified the regulation to recognize that one State qualifies under this narrow exception. Section 433.68 Permissible Health Care-Related Taxes We have modified the phrase “net operating revenues” in § 433.68(f)(3)(i) to more accurately reflect that the base to which tax collections are applied for purposes of the indirect hold harmless threshold (i.e., net patient service revenue). Further, in response to comments we have clarified that revenues received by the taxpayer refers to the net patient revenue attributable to the assessed permissible class of health care items or services. To increase clarity and ensure implementation of the governing statutory provision, we are also removing § 433.68(f)(3)(ii) as a technical conforming action. This section is outdated and no longer has any applicability. 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 Analysis A. Overall Impact We have examined the impact of this regulation as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act

(RFA)(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on Federalism, and the Congressional Review Act (5 U.S.C. 804(2)). Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis

(RIA)must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This regulation will surpass the economic threshold and is considered a major rule. This rule is estimated to reduce Federal Medicaid outlays by $85 million in FY 2008 and by $115 million per year in FY 2009 through FY 2011. The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year. Individuals and States are not included in the definition of a small entity. We are not preparing an analysis for the RFA because the regulation will not have a direct impact on small entities. In this case the regulation directly affects payments the States receive from the Federal government and the impact on health care facilities is categorized as secondary impact. While the impact on health care facilities is secondary, we proceed to discuss the potential impact on small entities. First, the reduced health care related tax collection threshold under this regulation will help alleviate tax burdens on small health care facilities, to the extent they were subject to a health care-related tax. If States choose to maintain reimbursement rates, small health care facilities may receive higher net Medicaid reimbursement in light of the reduced tax burden. However, States may be unwilling to maintain reimbursement rates without the full revenue from the health care-related tax to contribute to the non-Federal share. If States choose to reduce Medicaid reimbursement rates to small health care facilities, this could result in lower net Medicaid reimbursement even after accounting for a reduction in the tax burden. Since we are uncertain how States will alter their Medicaid reimbursements in response to the reduced health care related tax collection threshold, we cannot provide an exact and quantifiable impact on such small entities. We did not receive any quantifiable information during the public comment process to determine any further detailed impact. Commenters did not raise issue with the collection threshold reduction. Nor did the commenters indicate how States will act in response to such reduction in available health care related tax revenue. It is important to note that not all health care related tax programs will be impacted. Only those health care related taxes that are currently being imposed at a rate in excess of 5.5 percent of net patient service revenue will be directly impacted. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a regulation may have a direct impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined that this regulation will 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 regulation whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold level is currently approximately $120 million. This regulation will not result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $120 million. Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final regulation that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. While this regulation would reduce the collection threshold for permissible health care related taxes from 6 percent of the net patient service revenue attributable to the assessed permissible class of health care items or services to 5.5 percent of the net patient service revenue, this change is required by section 403 of the Tax Relief and Health Care Act of 2006. This section of the statute was self-implementing on December 20, 2006; however, this rulemaking is necessary to include the reduction in the regulatory text, therefore ensuring consistency with applicable law and thus minimizing any confusion. Furthermore, we do not believe the discretionary requirements put in place by this rulemaking will impose substantial direct requirements or costs on State and local governments. B. Anticipated Effects Provider Tax Reform 1. Effects on State Medicaid Programs Estimates of the impact of lowering the maximum collection threshold for permissible health care related taxes, fees, and assessments were derived from Medicaid financial management reports on State receipts from these programs (form CMS-64.11). Since we do not believe that all States report completely their tax receipts from health care-related taxes on the form CMS-64.11, we bolstered our estimates by also analyzing information reported by some States as part of their request for waiver of the broad-based and/or uniformity requirements. These requests include estimated total tax collections and total net revenues received by taxpayers applicable to a permissible class of health care services. From this available information, we identified 15 States whose receipts as of the date of the reports are believed to equal the maximum threshold of 6 percent of net patient service revenue. In accordance with the new statutory language to reduce the maximum threshold from 6 to 5.5 percent, FFP corresponding to these receipts would be reduced by 8.33 percent [(1−5.5/6.0) × 100]. As described below, there are a number of avenues available for States to address these reductions. Accordingly, in estimating the potential Federal savings, we applied a behavioral offset of 50 percent to the savings calculated from reported data as described above. In accordance with the statute, savings were estimated only for portions of fiscal years beginning January 1, 2008 and ending September 30, 2011. States have a number of options open to them for addressing the reduction in FFP. In order to maintain existing reimbursement rates funded by a health care related tax in excess of the 5.5 percent threshold, they can restructure State spending and shift funds between programs. This could result in loss of State funding for other programs. States may also be able to raise funds through increases in other forms of generally applicable tax revenue increases. This could raise tax costs for other taxpaying entities within States. Finally, States, as a last resort, can reduce reimbursement to the taxpaying health care providers. We are uncertain which options States may employ to address this change. We did not receive any further quantifiable information through the public comment process that would indicate which option States are likely to choose in response to such reduction in available health care related tax revenue. 2. Effects on Other Providers The reduced tax limit in this rule will help alleviate health care related tax burdens on health care providers for obligations to the Medicaid program that are otherwise the responsibility of the States. However, if States choose to reduce reimbursement rates to health care providers, this could result in lower net Medicaid reimbursement for the health care provider even after accounting for reduction in the health care related tax burden. On the other hand, if States choose to maintain reimbursement rates by finding other non-Federal share sources to support the Medicaid reimbursement rates, health care providers may receive higher net Medicaid reimbursement in light of the reduced health care related tax burden. The new statutory language reducing the maximum threshold from 6 to 5.5 percent for the period of January 1, 2008 through September 30, 2011 is estimated to reduce Federal Medicaid outlays by $85 million in FY 2008 and by $115 million per year in FY 2009 through FY 2011. These savings will not be realized in 2012 because the threshold reverts back to 6 percent after September 30, 2011. Table A.—Estimated Reduction in Federal Medicaid Outlays Resulting From the Provider Tax Reform Proposal Being Implemented by CMS-2275-F Reduction in Federal Medicaid Outlays for fiscal years 2008-2012 (In $ million) 2008 2009 2010 2011 2012 Total Provider Tax Reform 85 115 115 115 0 430 3% discount rate 83 108 105 102 0 398 7% discount rate 79 100 94 88 0 361 C. Alternatives Considered In developing this regulation the following alternatives were considered. We considered reducing the regulatory collection threshold to 3 percent because we have noticed a recent trend in States' efforts to maximize non-Federal share funding opportunities under current Medicaid law through taxation of health care providers. The result has been that the Federal government is providing matching funds on Medicaid rate increases that are funded without additional State dollars but instead, with revenues collected from taxes on health care providers. This shift in fiscal responsibilities is typically accompanied by creative payment mechanisms that effectively place a disproportionate burden on the Medicaid program relative to other payers. In this way, some States are avoiding their payment responsibilities to the Medicaid program by shifting their share of the increased Medicaid payment rate obligations to the same health care providers serving Medicaid beneficiaries. The current trend in States' approach to taxing health care providers appears to start with a determination of the maximum amount of health care-related tax revenue that can be collected from health care providers. We have seen this particularly in State health care-related tax programs targeting high Medicaid utilized services solely as the basis for increasing Medicaid rates to those same providers. States appear to be exercising their ability under the law to request waivers of the broad based and/or uniformity requirements of the health care-related tax law in an effort to minimize the tax burden on facilities that furnish little to no services to Medicaid patients. Although we would only approve such a waiver request within the allowable regulatory standards, States requesting the waivers continue to propose taxes that collect the maximum 6 percent limit and vary the rate of tax to minimize the tax burden on non-Medicaid facilities within the slightest margin allowable under current regulations. Most waiver requests are initially submitted applicable to a tax structure that is inconsistent with the Federal statute and regulations. This requires CMS to provide ongoing feedback and assistance to States. States ultimately deviate from their initial tax structure until they are able to reach an optimal tax structure that enables them to gain approval while minimizing the non-Medicaid tax burden. Through our review of these practices, we have also noticed that many States are applying the current statutory and regulatory authority that permits the exclusion of Medicare revenue from a health care-related tax, which effectively raises the rate of tax on only the Medicaid revenues and commercial/private pay revenues above the aggregate 6 percent limit (measured on all payers' revenues). We have also seen an increase in the tax revenues collected through our examination of the revenues reported by States on the CMS 64.11A. Based on a review of quarterly expenditures, States reported the collection of over $2.2 billion in tax revenues from health care providers. However, since the Tax Relief and Health Care Act of 2006 reduced the regulatory threshold to 5.5 percent, none of the above mentioned alternatives were taken. With respect to the other changes contained in this final rule, we considered and rejected a possible exception for already approved health care-related tax programs. Such an exception would not be uniform and would not achieve the objective of ensuring that health care-related taxes did not effectively shift a disproportionate burden to the Federal government. Because these clarifications reflect the understanding of permissible classes and how the hold harmless provisions should apply that CMS has been applying in ongoing reviews, CMS is not aware of any approved tax programs that is not in compliance with the final rule. D. Accounting Statement and Table 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 regulation. This table provides our best estimate of the reduction in Federal Medicaid outlays for the years 2008 through 2012 as a result of the changes presented in this final regulation. This regulation only affects transfer payments between the Federal government and State governments. Table Number B.—Accounting Statement: Classification of Estimated Reduction in Medicaid Outlays From FY 2008 to FY 2012 [In millions] Category Transfers Annualized monetized transfers 3% Units discount rate $87.0 7% Units discount rate $88.0 From whom to whom? States to Federal Government E. Conclusion Due to the reduction in the statutory language lowering the maximum threshold from 6 to 5.5 percent this rule is estimated to reduce Federal Medicaid outlays by $85 million in FY 2008 and by $115 million per year in FY 2009 through FY 2011. For these reasons, we are not preparing analysis for either the RFA or section 1102(b) of the Act because we have determined that this regulation will not have a direct significant economic impact on a substantial number of small entities or a direct significant impact on the operations of a substantial number of small rural hospitals. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget. List of Subjects in 42 CFR Part 433 Administrative practice and procedure, Child support, Claims, Grant programs-health, Medicaid, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as follows: PART 433—STATE FISCAL ADMINISTRATION 1. The authority citation for part 433 continues to read as follows: Authority: Sections 1902(a)(2), 1903(a) and 1903(w) of the Social Security Act (42 U.S.C. 1302). Subpart B—General Administrative Requirements State Financial Participation 2. Section 433.54 is amended by revising paragraph

(c)to read as follows: § 433.54 Bona fide donations.

(c)A hold harmless practice exists if any of the following applies:

(1)The State (or other unit of government) provides for a direct or indirect non-Medicaid payment to those providers or others making, or responsible for, the donation, and the payment amount is positively correlated to the donation. A positive correlation includes any positive relationship between these variables, even if not consistent over time.

(2)All or any portion of the Medicaid payment to the donor, provider class, or related entity, varies based only on the amount of the donation, including where Medicaid payment is conditional on receipt of the donation.

(3)The State (or other unit of government) receiving the donation provides for any direct or indirect payment, offset, or waiver such that the provision of that payment, offset, or waiver directly or indirectly guarantees to return any portion of the donation to the provider (or other parties responsible for the donation). 3. Section 433.56 is amended by— A. Republishing the introductory text to paragraph (a). B. Revising paragraph (a)(4). C. Revising paragraph (a)(8). The revisions read as follow: § 433.56 Classes of health care services and providers defined.

(a)For purposes of this subpart, each of the following will be considered as a separate class of health care items or services:

(4)Intermediate care facility services for the mentally retarded, and similar services furnished by community-based residences for the mentally retarded, under a waiver under section 1915(c) of the Act, in a State in which, as of December 24, 1992, at least 85 percent of such facilities were classified as ICF/MRs prior to the grant of the waiver;

(8)Services of managed care organizations (including health maintenance organizations, preferred provider organizations); § 433.57 [Amended] 4. Section § 433.57 is amended by— A. Removing paragraph (a). B. Redesignating existing paragraphs

(b)and

(c)as paragraphs

(a)and (b), respectively. § 433.58 [Removed and reserved] 5. Section 433.58 is removed and reserved. § 433.60 [Removed and reserved] 6. Section 433.60 is removed and reserved. 7. Section 433.66 is amended by— A. Revising the section heading. B. Revising paragraph (a). The revisions read as follows: § 433.66 Permissible provider-related donations.

(a)*General rule.*

(1)Except as specified in paragraph (a)(2) of this section, a State may receive revenues from provider-related donations without a reduction in FFP, only in accordance with the requirements of this section.

(2)The provisions of this section relating to provider-related donations for outstationed eligibility workers are effective on October 1, 1992. 8. Section 433.67 is amended by revising paragraph (a)(2) to read as follows: § 433.67 Limitations on level of FFP for permissible provider-related donations.

(a)* * *

(2)*Limitations on donations for outstationed eligibility workers* . Effective October 1, 1992, the maximum amount of provider-related donations for outstationed eligibility workers, as described in § 433.66(b)(2), that a State may receive without a reduction in FFP may not exceed 10 percent of a State's medical assistance administrative costs (both the Federal and State share), excluding the costs of family planning activities. The 10 percent limit for provider-related donations for outstationed eligibility workers is not included in the limit in effect through September 30, 1995, for health care-related taxes as described in § 433.70. 9. Section 433.68 is amended by— A. Revising the section heading. B. Revising paragraph (a). C. Republishing paragraph

(f)introductory text. D. Revising paragraphs (f)(1), (f)(2), (f)(3) introductory text, and (f)(3)(i). E. Removing and reserving paragraph (f)(3)(ii). The revisions read as follows: § 433.68 Permissible health care-related taxes.

(a)*General rule.* A State may receive health care-related taxes, without a reduction in FFP, only in accordance with the requirements of this section.

(f)*Hold harmless* . A taxpayer will be considered to be held harmless under a tax program if any of the following conditions applies:

(1)The State (or other unit of government) imposing the tax provides for a direct or indirect non-Medicaid payment to those providers or others paying the tax and the payment amount is positively correlated to either the tax amount or to the difference between the Medicaid payment and the tax amount. A positive correlation includes any positive relationship between these variables, even if not consistent over time.

(2)All or any portion of the Medicaid payment to the taxpayer varies based only on the tax amount, including where Medicaid payment is conditional on receipt of the tax amount.

(3)The State (or other unit of government) imposing the tax provides for any direct or indirect payment, offset, or waiver such that the provision of that payment, offset, or waiver directly or indirectly guarantees to hold taxpayers harmless for all or any portion of the tax amount. (i)(A) An indirect guarantee will be determined to exist under a two prong “guarantee” test. If the health care-related tax or taxes on each health care class are applied at a rate that produces revenues less than or equal to 6 percent of the revenues received by the taxpayer, the tax or taxes are permissible under this test. The phrase “revenues received by the taxpayer” refers to the net patient revenue attributable to the assessed permissible class of health care items or services. However, for the period of January 1, 2008 through September 30, 2011, the applicable percentage of net patient service revenue is 5.5 percent. Compliance in State fiscal year 2008 will be evaluated from January 1, 2008 through the last day of State fiscal year 2008. Beginning with State fiscal year 2009 the 5.5 percent tax collection will be measured on an annual State fiscal year basis.

(B)When the tax or taxes produce revenues in excess of the applicable percentage of the revenue received by the taxpayer, CMS will consider an indirect hold harmless provision to exist if 75 percent or more of the taxpayers in the class receive 75 percent or more of their total tax costs back in enhanced Medicaid payments or other State payments. The second prong of the indirect hold harmless test is applied in the aggregate to all health care taxes applied to each class. If this standard is violated, the amount of tax revenue to be offset from medical assistance expenditures is the total amount of the taxpayers' revenues received by the State.

(ii)[Reserved] § 433.70 [Amended] 10. Section 433.70 is amended by— A. Revising the section heading. B. Removing paragraph (a)(1). C. Removing the paragraph designation for existing paragraph (a)(2). The revised heading reads as follows: § 433.70 Limitation on level of FFP for revenues from health care-related taxes. (Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program) Dated: October 23, 2007. Kerry Weems, Acting Administrator, Centers for Medicare & Medicaid Services. Approved: December 3, 2007. Michael O. Leavitt, Secretary. Editorial Note: This document was received at the Office of the Federal Register on February 15, 2008. [FR Doc. E8-3207 Filed 2-21-08; 8:45 am] BILLING CODE 4120-01-P DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency 44 CFR Part 67 Final Flood Elevation Determinations AGENCY: Federal Emergency Management Agency, DHS. ACTION: Final rule. SUMMARY: Base (1% annual chance) Flood Elevations

(BFEs)and modified BFEs are made final for the communities listed below. The BFEs and modified BFEs are the basis for the floodplain management measures that each community is required either to adopt or to show evidence of being already in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). DATES: The date of issuance of the Flood Insurance Rate Map

(FIRM)showing BFEs and modified BFEs for each community. This date may be obtained by contacting the office where the maps are available for inspection as indicated on the table below. ADDRESSES: The final BFEs for each community are available for inspection at the office of the Chief Executive Officer of each community. The respective addresses are listed in the table below. FOR FURTHER INFORMATION CONTACT: William R. Blanton, Jr., Engineering Management Branch, Mitigation Directorate, Federal Emergency Management Agency, 500 C Street, SW., Washington, DC 20472,

(202)646-3151. SUPPLEMENTARY INFORMATION: The Federal Emergency Management Agency

(FEMA)makes the final determinations listed below for the modified BFEs for each community listed. These modified elevations have been published in newspapers of local circulation and ninety

(90)days have elapsed since that publication. The Assistant Administrator of the Mitigation Directorate has resolved any appeals resulting from this notification. This final rule is issued in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR part 67. FEMA has developed criteria for floodplain management in floodprone areas in accordance with 44 CFR part 60. Interested lessees and owners of real property are encouraged to review the proof Flood Insurance Study and FIRM available at the address cited below for each community. The BFEs and modified BFEs are made final in the communities listed below. Elevations at selected locations in each community are shown. *National Environmental Policy Act* . This final rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared. *Regulatory Flexibility Act* . As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required. *Regulatory Classification* . This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735. *Executive Order 13132, Federalism* . This final rule involves no policies that have federalism implications under Executive Order 13132. *Executive Order 12988, Civil Justice Reform* . This final rule meets the applicable standards of Executive Order 12988. List of Subjects in 44 CFR Part 67 Administrative practice and procedure, Flood insurance, Reporting and recordkeeping requirements. Accordingly, 44 CFR part 67 is amended as follows: PART 67—[AMENDED] 1. The authority citation for part 67 continues to read as follows: Authority: 42 U.S.C. 4001 *et seq.* ; Reorganization Plan No. 3 of 1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR, 1979 Comp., p. 376. § 67.11 [Amended] 2. The tables published under the authority of § 67.11 are amended as follows: Flooding source(s) Location of referenced elevation * Elevation in feet

(NGVD)+ Elevation in feet

(NAVD)# Depth in feet above ground Modified Communities affected Williamson County, Illinois, and Incorporated Areas Docket No.: FEMA B-7733 & D-7816 Campground Creek Where Main Street crosses over Campground Creek +423 Unincorporated Areas of Williamson County. 490 feet upstream of Main Street +424 1090 feet upstream of Edgewood Park +428 1160 feet upstream of Edgewood Park +428 Crab Orchard Creek 200 feet upstream of Fosse Road +417 Unincorporated Areas of Williamson County. Just Downstream of State Highway 13 +430 East Fork Campground Creek Where Main Street crosses East Fork Campground Creek +423 Unincorporated Areas of Williamson County. 865 feet upstream of Belinda Road +426 Lake Creek Where Prosperity Road crosses Lake Creek +402 Unincorporated Areas of Williamson County. 650 feet upstream of Newton Avenue +410 West Fork Campground Creek Confluence with Campground Creek +424 Unincorporated Areas of Williamson County. 25 feet downstream of Honeysuckle Lane +424 West Fork Confluence with Westernaire Creek +423 Unincorporated Areas of Williamson County. Westernaire Creek 700 feet Downstream of Bainbridge Trail +426 Westernaire Creek Where Main Street crosses over Westernaire Creek +421 Unincorporated Areas of Williamson County. 750 feet upstream of DeYoung Street +432 * National Geodetic Vertical Datum. + North American Vertical Datum. # Depth in feet above ground. ADDRESSES Unincorporated Areas of Williamson County Maps are available for inspection at Supervisor of Assessments Office, 200 West Jefferson, Marion, IL 62959. Breckinridge County, Kentucky, and Incorporated Areas Docket No.: FEMA-B-7726 Ohio River Hancock County Boundary (Approximately 6,900 feet downstream of confluence with Clover Creek) +407 City of Cloverport, Breckinridge County (Unincorporated Areas). Meade County Boundary (Approximately 7,400 feet upstream of confluence with Ohio River Tributary 1) +418 * National Geodetic Vertical Datum. + North American Vertical Datum. # Depth in feet above ground. ADDRESSES City of Cloverport Maps are available for inspection at 212 West Main Street, Cloverport, KY 40111. Breckinridge County (Unincorporated Areas) Maps are available for inspection at 111 West Second Street, Hardinsburg, KY 40143. Rutherford County, North Carolina and Incorporated Areas Docket No.: FEMA-D-7714 Arrowood Branch At the confluence with McKinney Creek +708 Unincorporated Areas of Rutherford County. Approximately 0.7 mile upstream of the confluence with McKinney Creek +723 Beaverdam Creek (near State Road 1733) At the confluence with First Broad River +1,035 Unincorporated Areas of Rutherford County. Approximately 600 feet upstream of Old C C Road (State Road 1731) +1,449 Big Camp Creek At the confluence with Second Broad River +862 Unincorporated Areas of Rutherford County. Approximately 970 feet upstream of Frog Creek Road +984 Big Horse Creek At the confluence with Broad River +697 Unincorporated Areas of Rutherford County. Approximately 1.1 miles upstream of State Line Road (State Road 2105) +749 Big Spring Branch At the confluence with Second Broad River +815 Town of Forest City. Approximately 230 feet downstream of East Trade Street +974 Bills Creek At the confluence with Cove Creek +868 Unincorporated Areas of Rutherford County, Town of Lake Lure. Approximately 1,300 feet upstream of Shumont Estates Drive +1,206 Bills Creek Tributary 2 At the confluence with Bills Creek +991 Unincorporated Areas of Rutherford County. Approximately 800 feet upstream of Brookside Parkway +1,243 Bills Creek Tributary 3 At the confluence with Bills Creek +1,056 Unincorporated Areas of Rutherford County. Approximately 1.4 miles upstream of Bills Creek Road (State Road 1008) +1,239 Bowen Branch At the confluence with Sandy Run +865 Unincorporated Areas of Rutherford County. Approximately 1,300 feet upstream of Gene Walker Road (State Road 1763) +875 Box Creek At the confluence with Second Broad River +953 Unincorporated Areas of Rutherford County. Approximately 0.7 mile upstream of the confluence with Second Broad River +1,010 Bracketts Creek At the confluence with Floyds Creek +781 Town of Forest City, Unincorporated Areas of Rutherford County. Approximately 490 feet upstream of Withrow Road +973 Bracketts Creek Tributary 5 At the confluence with Bracketts Creek +902 Town of Forest City. Approximately 0.4 mile upstream of South Church Street +941 Bracketts Creek Tributary 8 At the confluence with Bracketts Creek +955 Town of Forest City. Approximately 0.4 mile upstream of Oak Street +980 Brier Creek At the confluence with First Broad River +962 Unincorporated Areas of Rutherford County. Approximately 1,700 feet upstream of the confluence of Pot Branch +1,120 Broad River At the Rutherford/Cleveland County boundary +680 Village of Chimney Rock, Town of Lake Lure, Unincorporated Areas of Rutherford County. At the Rutherford/Henderson County boundary +1,411 Broad River Tributary 6 At the confluence with Broad River +694 Unincorporated Areas of Rutherford County. Approximately 1,700 feet upstream of Island Ford Road +697 Buck Branch (into Second Broad River) At the confluence with Second Broad River +818 Unincorporated Areas of Rutherford County, Town of Forest City. Approximately 300 feet downstream of West Trade Street +949 Buck Branch (into West Fork Sandy Run) At the Rutherford/Cleveland County boundary +801 Unincorporated Areas of Rutherford County. Approximately 0.7 mile upstream of Rutherford/Cleveland County boundary +820 Buffalo Creek (into Lake Lure) At the confluence with Broad River +998 Unincorporated Areas of Rutherford County, Town of Lake Lure. Approximately 7.0 miles upstream of confluence with the Broad River +2,818 Buffalo Creek Tributary 1 At the confluence with Buffalo Creek (Lake Lure) +1,192 Unincorporated Areas of Rutherford County, Town of Lake Lure. Approximately 2.3 miles upstream of Buffalo Creek Road (State Road 1314) +2,795 Cane Creek At the confluence with Second Broad River +855 Unincorporated Areas of Rutherford County. At the Rutherford/McDowell County boundary +975 Cane Creek (into Broad River) At the confluence with Broad River +693 Unincorporated Areas of Rutherford County. Approximately 0.5 mile upstream of the confluence with Broad River +694 Cane Creek (into Lake Lure) At the confluence with Broad River +998 Unincorporated Areas of Rutherford County, Town of Lake Lure. Approximately 0.5 mile upstream of Girl Scout Camp Road (State Road 1186) +1,354 Catheys Creek At the confluence with Second Broad River +829 Unincorporated Areas of Rutherford County. Approximately 0.5 mile upstream of Thermal City Road (State Road 1321) +1,051 Catheys Creek Tributary 16 At the confluence with Catheys Creek +872 Unincorporated Areas of Rutherford County. Approximately 0.4 mile upstream of the confluence with Catheys Creek +878 Cedar Creek At the confluence with Cove Creek +877 Unincorporated Areas of Rutherford County. Approximately 1,200 feet upstream of the confluence of Taylor Creek +1,154 Cedar Creek Tributary 3 At the confluence with Cedar Creek +1,032 Unincorporated Areas of Rutherford County. Approximately 0.9 mile upstream of the confluence with Cedar Creek +1,151 Charles Creek At the confluence with Cleghorn Creek +755 Unincorporated Areas of Rutherford County. Approximately 0.5 mile upstream of the confluence with Cleghorn Creek +755 Cherry Creek At the confluence with Catheys Creek +913 Unincorporated Areas of Rutherford County. Approximately 500 feet upstream of Railroad +951 Cleghorn Creek At the confluence with Broad River +755 Unincorporated Areas of Rutherford County, Town of Rutherfordton. Approximately 0.5 mile upstream of Reece Street +953 Cleghorn Creek Tributary 10 At the confluence with Cleghorn Creek +865 Town of Rutherfordton. Approximately 50 feet downstream of West 3rd Street +910 Cleghorn Creek Tributary 11 At the confluence with Cleghorn Creek +868 Town of Rutherfordton. Approximately 20 feet downstream of Laurel Drive +1,041 Cleghorn Creek Tributary 12 At the confluence with Cleghorn Creek +892 Town of Rutherfordton. Approximately 0.8 mile upstream of the confluence with Cleghorn Creek +988 Cleghorn Creek Tributary 13 At the confluence with Cleghorn Creek +898 Town of Rutherfordton. Approximately 0.4 mile upstream of North Main Street/U.S. Highway 221 +954 Cleghorn Creek Tributary 7 At the confluence with Cleghorn Creek +795 Unincorporated Areas of Rutherford County, Town of Rutherfordton. Approximately 1,000 feet upstream of Hugh Street +990 Cleghorn Creek Tributary 9 At the confluence with Cleghorn Creek +832 Unincorporated Areas of Rutherford County, Town of Rutherfordton. Approximately 150 feet downstream of NC Highway 108 +886 Copper Mine Branch At the confluence with Morrow Creek +804 Unincorporated Areas of Rutherford County, Town of Forest City. Approximately 800 feet upstream of Fairview Street +953 Cove Creek At the confluence with Broad River +836 Unincorporated Areas of Rutherford County. Approximately 1.0 mile upstream of Painters Gap Road (State Road 1328) +1,129 Crawley Branch At the confluence with Big Camp Creek +936 Unincorporated Areas of Rutherford County. Approximately 1,800 feet upstream of the confluence with Big Camp Creek +947 Dills Creek At the confluence with Broad River +714 Unincorporated Areas of Rutherford County. Approximately 0.8 mile upstream of the confluence with Broad River +716 Duncans Creek At the Rutherford/Cleveland County boundary +914 Unincorporated Areas of Rutherford County. Approximately 2.2 miles upstream of Duncans Creek Road (State Road 1749) +987 East Branch Mountain Creek At the confluence with Mountain Creek and West Branch Mountain Creek +823 Unincorporated Areas of Rutherford County. Approximately 350 feet downstream of Piney Knob Road (State Road 1331) +981 First Broad River Approximately 1,000 feet downstream of the Rutherford/Cleveland County boundary +931 Unincorporated Areas of Rutherford County. Approximately 1,400 feet upstream of Golden Valley Church Road (State Road 1726) +1,110 Floyds Creek At the confluence with Broad River +699 Unincorporated Areas of Rutherford County. Approximately 500 feet upstream of Sunset Memorial Road (State Road 2179) +941 Frasheur Creek At the confluence with Greasy Creek +1,125 Unincorporated Areas of Rutherford County. At the Rutherford/McDowell County boundary +1,152 Goodes Creek At the confluence with Broad River +695 Unincorporated Areas of Rutherford County. Approximately 400 feet upstream of Island Ford Road +695 Grab Branch At the confluence with Floyds Creek +886 Unincorporated Areas of Rutherford County. Approximately 90 feet downstream of U.S. 221S Highway +943 Grab Branch Tributary 1 At the confluence with Grab Branch +924 Unincorporated Areas of Rutherford County. Approximately 900 feet upstream of Burch Hutchins Road (State Road 2171) +944 Grays Creek At the confluence with Broad River +747 Unincorporated Areas of Rutherford County. Approximately 1.1 miles upstream of confluence with Broad River +762 Greasy Creek At the confluence with Cove Creek +1,125 Unincorporated Areas of Rutherford County. At the Rutherford/McDowell County boundary +1,153 Grog Creek At the Rutherford/Cleveland County boundary +833 Unincorporated Areas of Rutherford County. Approximately 600 feet upstream of U.S. Highway 74 Bypass +892 Heaveners Creek At the confluence with Roberson Creek +902 Unincorporated Areas of Rutherford County. Approximately 200 feet downstream of Joe Bostic Road (State Road 1712) +915 Hensons Creek At the confluence with Broad River +720 Unincorporated Areas of Rutherford County. Approximately 20 feet upstream of County Line Road (State Road 1101) +822 Hills Creek At the confluence with Second Broad River +722 Unincorporated Areas of Rutherford County. Approximately 290 feet upstream of Dobbins Road +825 Hinton Creek At the Rutherford/Cleveland County boundary +979 Unincorporated Areas of Rutherford County. Approximately 200 feet upstream of Hinton Creek Road (State Road 1753) +1,054 Holland Creek At the confluence with Second Broad River +792 Unincorporated Areas of Rutherford County. Approximately 450 feet upstream of Old Caroleen Road (State Road 1901) +807 Hollands Creek At the confluence with Catheys Creek +836 Unincorporated Areas of Rutherford County, Town of Ruth, Town of Rutherfordton, Town of Spindale. Approximately 1,800 feet upstream of U.S. Highway 221 +950 Hollands Creek Tributary 4 At the confluence with Hollands Creek +909 Unincorporated Areas of Rutherford County, Town of Ruth. Approximately 500 feet upstream of Shady Woods Lane +959 Hunting Creek At the confluence with Roberson Creek +875 Unincorporated Areas of Rutherford County. Approximately 250 feet upstream of Depriest Road (State Road 1713) +1,067 Jarrets Creek At the confluence with Broad River +727 Unincorporated Areas of Rutherford County. Approximately 0.5 mile upstream of the confluence with Broad River +744 Knob Creek (into Broad River) At the confluence with Broad River +816 Unincorporated Areas of Rutherford County. Approximately 800 feet upstream of McEntire Road (State Road 1341) +921 Knob Creek (into Broad River) Tributary 11 At the confluence with Knob Creek (into Broad River) +874 Unincorporated Areas of Rutherford County. Approximately 0.5 mile upstream of Pleasant Grove Road (State Road 1345) +1,070 Knob Creek (into Broad River) Tributary 9 At the confluence with Knob Creek (into Broad River) +862 Unincorporated Areas of Rutherford County. Approximately 0.6 mile upstream of McEntire Road (State Road 1341) +1,006 Little Camp Creek At the confluence with Big Camp Creek +870 Unincorporated Areas of Rutherford County. Approximately 0.4 mile upstream of Old Morganton Road (State Road 1513) +926 Maple Creek At the confluence with Mountain Creek +784 Unincorporated Areas of Rutherford County. Approximately 200 feet upstream of U.S. 64/74A Highway +903 McKinney Creek At the confluence with Broad River +705 Unincorporated Areas of Rutherford County. Approximately 1,500 feet upstream of Ted Smith Road (State Road 1104) +789 Mill Creek (into Catheys Creek) At the confluence with Catheys Creek +957 Unincorporated Areas of Rutherford County. Approximately 0.8 mile upstream of the confluence with Catheys Creek +967 Morrow Creek At the confluence with Second Broad River +803 Unincorporated Areas of Rutherford County, Town of Forest City. Approximately 0.8 mile upstream of Pine Street (State Road 1903) +873 Mountain Creek At the confluence with Broad River +758 Unincorporated Areas of Rutherford County. At the confluence with East Branch Mountain Creek and West Branch Mountain Creek +823 Mountain Creek Tributary 16 At the confluence with Mountain Creek +816 Unincorporated Areas of Rutherford County. Approximately 1.0 mile upstream of Clearwater Parkway +954 Mountain Creek Tributary of Tributary 16 At the confluence with Mountain Creek Tributary 16 +834 Unincorporated Areas of Rutherford County, Town of Rutherfordton. Approximately 700 feet downstream of Thompson Road (State Road 1367) +987 North Fork First Broad River At the confluence with First Broad River +1,082 Unincorporated Areas of Rutherford County. Approximately 1.5 miles upstream of the confluence of Sally Queen Creek +1,397 Piney Creek At the confluence with Cedar Creek +895 Unincorporated Areas of Rutherford County. Approximately 310 feet upstream of the confluence of Piney Creek Tributary 1 +982 Piney Creek Tributary 1 At the confluence with Piney Creek +967 Unincorporated Areas of Rutherford County. Approximately 0.7 mile upstream of Bills Creek Road (State Road 1008) +1,328 Piney Knob Creek At the confluence with West Branch Mountain Creek +879 Unincorporated Areas of Rutherford County. Approximately 300 feet upstream of Elliott Road (State Road 1348) +908 Pool Creek At the confluence with Broad River (Lake Lure) +998 Town of Lake Lure. Approximately 1,900 feet upstream of Bottomless Pools Drive +1,122 Pot Branch At the confluence with Brier Creek +1,102 Unincorporated Areas of Rutherford County. Approximately 2.3 miles upstream of the confluence with Brier Creek +1,415 Puzzle Creek At the confluence with Second Broad River +804 Unincorporated Areas of Rutherford County, Town of Bostic. Approximately 200 feet upstream of Piney Mountain Church Road (State Road 1007) +893 Reynolds Creek At the confluence with Hollands Creek +897 Unincorporated Areas of Rutherford County, Town of Spindale. Approximately 0.6 mile upstream of West Street +1,046 Richardson Creek At the confluence with Broad River +705 Unincorporated Areas of Rutherford County. Approximately 100 feet upstream of Sulphur Springs Church Road (State Road 1135) +807 Roberson Creek At the confluence with Second Broad River +825 Unincorporated Areas of Rutherford County, Town of Bostic. Approximately 200 feet upstream of Calton Road (State Road 1745) +1,056 Rosy Branch At the confluence with Taylor Creek +1,962 Unincorporated Areas of Rutherford County. Approximately 1.5 miles upstream of Twin Chimneys Road +2,727 Sally Queen Creek At the confluence with North Fork First Broad River +1,292 Unincorporated Areas of Rutherford County. Approximately 2.2 miles upstream of the confluence with North Fork First Broad River +1,706 Sandy Run At the Rutherford/Cleveland County boundary +835 Unincorporated Areas of Rutherford County. Approximately 150 feet upstream of Hopewell Road (State Road 1760) +906 Second Broad River At the confluence with Broad River +680 Unincorporated Areas of Rutherford County, Town of Forest City. Approximately 1.9 miles upstream of Box Creek Road (State Road 1500) +990 Second Broad River Tributary 7 At the confluence with Second Broad River +750 Unincorporated Areas of Rutherford County. Approximately 1.4 miles upstream of Old Henrietta Road (State Road 2129) +786 Second Broad River Tributary 8 At the confluence with Second Broad River +758 Unincorporated Areas of Rutherford County. Approximately 40 feet upstream of Chime Lane +799 Somey Creek At the confluence with First Broad River +1,110 Unincorporated Areas of Rutherford County. Approximately 400 feet upstream of Camp McCall Road (State Road 1749) +1,231 South Creek At the confluence with First Broad River +1,075 Unincorporated Areas of Rutherford County. Approximately 1.3 miles upstream of Golden Valley Church Road (State Road 1726) +1,121 Stoney Creek At the confluence with Second Broad River +974 Unincorporated Areas of Rutherford County. Approximately 1,400 feet upstream of Thermal City Road (State Road 1321) +1,001 Suck Creek (into Broad River) Approximately 1.1 miles downstream of Kirby Road +769 Unincorporated Areas of Rutherford County. Approximately 300 feet upstream of Kirby Road (State Road 1978) +779 Taylor Creek At the confluence with Cedar Creek +1,147 Unincorporated Areas of Rutherford County. Approximately 0.5 mile upstream of the confluence of Rosy Branch +2,009 Taylor Creek Tributary 1 At the confluence with Taylor Creek +1,841 Unincorporated Areas of Rutherford County. Approximately 0.6 mile upstream of Bison Meadows +2,535 Webbs Branch At the confluence with Second Broad River +805 Town of Forest City. Approximately 0.4 mile upstream of Railroad +907 Webbs Creek At the confluence with Second Broad River +789 Unincorporated Areas of Rutherford County. Approximately 340 feet upstream of U.S. Highway 74 +833 West Branch Mountain Creek At the confluence with East Branch Mountain Creek and Mountain Creek +823 Unincorporated Areas of Rutherford County. Approximately 0.6 mile upstream of Darlington Road (State Road 1351) +884 West Fork Sandy Run At the Rutherford/Cleveland County boundary +801 Unincorporated Areas of Rutherford County. Approximately 1,000 feet upstream of Hollis Road (State Road 1749) +901 West Fork Sandy Run Tributary 7 At the confluence with West Fork Sandy Run +825 Unincorporated Areas of Rutherford County. Approximately 0.9 mile upstream of the confluence with West Fork Sandy Run +842 * National Geodetic Vertical Datum. + North American Vertical Datum. # Depth in feet above ground. ADDRESSES Town of Bostic Maps are available for inspection at the Bostic Town Hall, 104 Pearidge Road, Bostic, North Carolina. Town of Forest City Maps are available for inspection at the Forest City Town Hall, 128 North Powell Street, Forest City, North Carolina. Town of Lake Lure Maps are available for inspection at the Lake Lure Town Hall, 2948 Memorial Highway, Lake Lure, North Carolina. Town of Ruth Maps are available for inspection at the Ruth Town Hall, 199 Northview-Dorsey Street, Ruth, North Carolina. Town of Rutherfordton Maps are available for inspection at the Rutherfordton Town Hall, 129 North Main Street, Rutherfordton, North Carolina. Town of Spindale Maps are available for inspection at the Spindale Town Hall, 104 Reveley Street, Spindale, North Carolina. Unincorporated Areas of Rutherford County Maps are available for inspection at the Rutherford County Building Inspections and Planning Department, 141 West Third Street, Rutherfordton, North Carolina. Village of Chimney Rock Maps are available for inspection at the Village of Chimney Rock Office, 109 Terrace Drive, Chimney Rock, North Carolina. Flooding source(s) Location of referenced elevation * Elevation in feet

(NGVD)+ Elevation in feet

(NAVD)# Depth in feet above ground Effective Modified Communities affected Coffee County, Tennessee, and Incorporated Areas Docket No.: FEMA-B-7705 Duck River Approximately 740 feet downstream of U.S. Highway 41 *999 +1001 City of Manchester. Approximately 263 feet downstream of U.S. Highway 41 *999 +1001 Duck River Approximately 263 feet downstream of U.S. Highway 41 *999 +1001 Coffee County (Unincorporated Areas). Just upstream of Interstate 24 *1013 +1012 * National Geodetic Vertical Datum. + North American Vertical Datum. # Depth in feet above ground. ADDRESSES City of Manchester Maps are available for inspection at Planning and Use Department, 1329 McArthur Street, Manchester, TN 37355. Coffee County (Unincorporated Areas) Maps are available for inspection at Manchester City Hall, 200 West Fort Street, Manchester, TN 37355. (Catalog of Federal Domestic Assistance No. 97.022, “Flood Insurance.”) Dated: February 12, 2008. David I. Maurstad, Federal Insurance Administrator of the National Flood Insurance Program, Department of Homeland Security, Federal Emergency Management Agency. [FR Doc. E8-3347 Filed 2-21-08; 8:45 am] BILLING CODE 9110-12-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 070213032-7032-01] RIN 0648-XF74 Fisheries of the Exclusive Economic Zone Off Alaska; Pacific Cod by Vessels Catching Pacific Cod for Processing by the Inshore Component in the Central Regulatory Area of the Gulf of Alaska AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Temporary rule; closure. SUMMARY: NMFS is prohibiting directed fishing for Pacific cod by vessels catching Pacific cod for processing by the inshore component in the Central Regulatory Area of the Gulf of Alaska (GOA). This action is necessary to prevent exceeding the 2008 total allowable catch

(TAC)of Pacific cod apportioned to vessels catching Pacific cod for processing by the inshore component of the Central Regulatory Area of the GOA. DATES: Effective 1200 hrs, Alaska local time (A.l.t.), February 20, 2008, until 1200 hrs, A.l.t., September 1, 2008. FOR FURTHER INFORMATION CONTACT: Jennifer Hogan, 907-586-7228. SUPPLEMENTARY INFORMATION: NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska

(FMP)prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679. The A season allocation of the 2008 TAC of Pacific cod apportioned to vessels catching Pacific cod for processing by the inshore component of the Central Regulatory Area of the GOA is 15,350 metric tons

(mt)as established by the 2007 and 2008 harvest specifications for groundfish of the GOA (72 FR 9676, March 5, 2007) and revision (73 FR 1554, January 9, 2008). In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the A season allocation of the 2008 TAC of Pacific cod apportioned to vessels catching Pacific cod for processing by the inshore component of the Central Regulatory Area of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 12,850 mt, and is setting aside the remaining 2,500 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific cod by vessels catching Pacific cod for processing by the inshore component in the Central Regulatory Area of the GOA. After the effective date of this closure the maximum retainable amounts at § 679.20(e) and

(f)apply at any time during a trip. Classification This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of Pacific cod apportioned to vessels catching Pacific cod for processing by the inshore component of the Central Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of February 15, 2008. The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment. This action is required by § 679.20 and is exempt from review under Executive Order 12866. Authority: 16 U.S.C. 1801 *et seq.* Dated: February 15, 2008. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. 08-808 Filed 2-19-08; 2:47 pm]

Connectionstraces to 16

Traces to 16 documents