Federal Register Vol. 81, No.2,

We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

EASA, which is the Technical Agent for the Member States of the European Union, issued AD No. 2014-0098-E, dated April 25, 2014, to correct an unsafe condition for AS332L2 and EC225LP helicopters. EASA AD No. 2014-0098-E applies to helicopters with a frame 5295 that have been reinforced by installing aluminium splices on the RH and LH fuselage external skins. EASA advises of a report of a crack detected on the reinforced frame during a scheduled inspection of a helicopter. According to EASA, the crack initiated on a splice in an area hidden by the overlapping junction profile of the cabin sliding door rail support, and then spread to the frame.

EASA states that a crack in frame 5295, if not detected and corrected, could lead to loss of structural integrity of the helicopter frame and subsequent loss of control of the helicopter. To address this condition, EASA issued AD No. 2014-0098-E to require repetitive inspections of the splices for a crack, as well as cutting out the rail support junction profiles to provide a convenient access to identify cracks in a splice.

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in its AD. We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type design.

We reviewed Airbus Helicopters Alert Service Bulletin (ASB) No. EC225-05A038 for Model EC225LP helicopters and ASB No. AS332-05.00.97 for Model AS332L2 helicopters. The ASBs, both Revision 0 and both dated April 15, 2014, report cracks were found in the splice and frame 5295 on a Model AS332L2 helicopter during a major inspection. The splice had been added in compliance with Modification 0726517. Had an optional rail support cut-out been accomplished on the aircraft to allow for a visual check of the splice for frame 5295, it would have revealed the crack in the splice, prompting its repair and consequently limiting the damage to frame 5295. As a result, the ASBs call for the rail support cut-out on the RH and LH side of the frame as well as periodic visual inspections of frame 5295 and related equipment. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We reviewed Airbus Service Bulletin (SB) No. 53-003, Revision No. 4, for Model EC225LP helicopters and SB No. 53.01.52, Revision 5, for Model AS332L2 helicopters, both dated July 23, 2010. The SBs specify procedures to reinforce frame 5295 by installing a new titanium plate underneath the fitting and a new widened aluminum splice below the upper corner of the door. We also reviewed Airbus Helicopters Service Bulletin No. 05-019, Revision 4, dated September 22, 2014, for Model EC225LP helicopters, which proposes that you cut out the junction profiles to perform periodic visual inspections.

This proposed AD would require the following before a splice reaches 1,700 hours time-in-service (TIS), within 50 hours TIS, or before the helicopter reaches 11,950 hours TIS, whichever occurs later:

• Installing the rail support cut-out and identifying the right-hand and left-hand junction profile.

• Inspecting each splice for a crack, and repairing or replacing the splice if there is a crack.

This proposed AD would then require, at intervals not to exceed 110 hours TIS, inspecting each splice for a crack, and repairing or replacing the splice if there is a crack.

The EASA AD requires contacting Airbus Helicopters if there is a crack in the affected parts. This proposed AD would make no such requirement.

The EASA AD sets various timelines for the repair or replacement of affected parts if a crack exists. This proposed AD would require the repair or replacement of affected parts before further flight if a crack exists.

We estimate that this proposed AD would affect 4 helicopters of U.S. Registry and that labor costs average $85 a work-hour. Based on these estimates, we expect the following costs:

Installing the cut-outs on frame 5295 would require 40 work hours for a labor cost of $3,400. Parts would cost $5,000 for total cost per helicopter of $8,400 and $33,600 for the U.S. fleet.

Inspecting helicopter frame 5295 would require 2 work-hours for a labor cost of $170 per helicopter. No parts would be needed for a total U.S. fleet cost of $680 per inspection cycle.

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.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed, I certify this proposed regulation:

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

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

3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

4. 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 an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

On December 7, 2015, the Department announced its intention to explore the feasibility of conducting a reg neg to:

• Ensure that the same in-flight entertainment (IFE) available to all passengers is accessible to passengers with disabilities;

• Provide individuals dependent on in-flight medical oxygen greater access to air travel consistent with Federal safety and security requirements;

• Determine the appropriate definition of a service animal;

• Establish safeguards to reduce the likelihood that passengers wishing to travel with their pets will be able to falsely claim that their pets are service animals;

• Address the feasibility of accessible lavatories on new single aisle aircraft;

• Address whether premium economy is a different class of service from standard economy as airlines are required to provide seating accommodations to passengers with disabilities within the same class of service; and

• Require airlines to report annually to the Department the number of requests for disability assistance they receive and the time period within which wheelchair assistance is provided to passengers with disabilities.

The Department requested that all comments be submitted no later than January 6, 2016.

On December 21, 2015, the Department received a letter from 11 disability advocacy organizations representing diverse interests expressing their concern that the designated comment period does not allow enough time for stakeholders to fully consider the impact of engaging in a negotiated rulemaking on these issues of critical concern to people with disabilities. The disability advocacy organizations noted that as a result of the holidays, the 30-day comment period is effectively reduced by nearly two weeks. They noted that the notice and comment process would be more effective if all stakeholders had sufficient time to consider and comment on the efficacy of conducting a negotiated rulemaking on each of the proposed issues.

We agree that an extension of the comment period is appropriate given the effective shortening of the comment period by observance of the holidays. We believe that a 15-day extension to the comment filing period is reasonable to provide stakeholders with ample opportunity to more fully analyze and respond to the issues to be considered during the reg neg. Accordingly, the deadline for filing comments is extended to January 21, 2016.

A notice of proposed rulemaking by cross-reference to temporary regulations and a notice of public hearing that appeared in the Federal Register on September 18, 2015 (80 FR 56415) announced that a public hearing was scheduled for January 15, 2016, at 10 a.m. in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue NW., Washington, DC. The subject of the public hearing is under section 871(m) of the Internal Revenue Code.

The public comment period for these regulations expired on December 17, 2015. The notice of proposed rulemaking and notice of public hearing instructed those interested in testifying at the public hearing to submit a request to speak and an outline of the topics to be addressed. As of December 28, 2015, no one has requested to speak. Therefore, the public hearing scheduled for January 15, 2016 at 10 a.m. is cancelled.

The legal basis for this rule is: 33 U.S.C. 471, 1221 through 1236, 2071; 33 CFR 1.05-1; and Department of Homeland Security Delegation No. 0170.1, which collectively authorize the Coast Guard to define anchorage grounds.

On December, 12, 1967, the Coast Guard Fifth District published a final rule establishing an anchorage area on the Delaware River in Philadelphia, Pennsylvania in the Federal Register (32 FR 17726, 17749). The anchorage area established is contained in 33 CFR 110.157(a)(11). This proposed rule would change the shape and the dimensions of anchorage “10”, and remove the “restricted naval anchorage” verbiage from the regulation. The anchorage currently remains unused by the Naval Yard. Removing the restrictions on anchorage “10” would alleviate congestion within the port, allowing the anchorage to be used as a general anchorage for commercial traffic.

The new anchorage area would encompass all waters of the Delaware River on the north side of the channel along West Horseshoe Range, bounded as follows: Beginning off of the southeasterly corner of Pier 1 at 39°53′07″ N., 075°10′30″ W., thence south to the to the north edge of the channel along West Horseshoe Range to 39°52′58″ N., 075°10′29″ W., thence east along the edge of the channel to 39°52′56″ N., 075°09′53″ W., thence north to 39°53′07″ N., 075°09′54″ W., thence continuing west to the beginning point at 39°53′07″ N., 075°10′30″ W. Additionally, the restrictions on the use of the anchorage will be removed, permitting all vessels to anchor within its bounds. The regulatory text we are proposing appears at the end of this document.

We developed this proposed rule after considering numerous statutes and executive orders (E.O.s) related to rulemaking. Below we summarize our analyses based on a number of these statutes and E.O.s, and we discuss First Amendment rights of protestors.

E.O.s 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This NPRM has not been designated a “significant regulatory action,” under E.O. 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget.

This proposed rule is not a significant regulatory action because it will not interfere with existing maritime activity on the Delaware River. Moreover, it is enhancing navigational safety along the Delaware River by providing an additional anchorage for commercial and recreational vessels. The proposed anchorage maintains the same parallel distance along the channel boundaries as the existing anchorage. The impacts to navigational safety are expected to be minimal because the proposed anchorage area would not unnecessarily restrict traffic, as it is located outside of the established navigation channel. Vessels may navigate in, around, and through the proposed anchorage.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

For the reasons stated in paragraph IV.A, this proposed rule would not have a significant economic impact on a substantial number of small entities. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under E.O. 13132, Federalism, if it has 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. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.

Also, this proposed rule does not have tribal implications under E.O. 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves the alteration of the size and use of anchorage “10,” restricted Naval Anchorage. It is categorically excluded from further review under paragraph 34(f) of Figure 2-1 of Commandant Instruction M16475.lD. A preliminary environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions. Documents mentioned in this NPRM, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that Web site's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, you may review a Privacy Act notice regarding the Federal Docket Management System in the March 24, 2005, issue of the Federal Register (70 FR 15086).

For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 110 as follows:

Under 38 U.S.C. 1722A(a), VA must require veterans to pay a $2 copayment for each 30-day supply of medication furnished on an outpatient basis for the treatment of a non-service-connected disability or condition, unless the veteran is exempt from having to pay a copayment because the veteran has a service-connected disability rated 50 percent or more, is a former prisoner of war, or has an annual income at or below the maximum annual rate of VA pension that would be payable if the veteran were eligible for pension. Under 38 U.S.C. 1722A(b), VA “may,” by regulation, increase that copayment amount and establish a maximum annual copayment amount (a “cap”). We have consistently interpreted section 1722A(b) to mean that VA has discretion to determine the appropriate copayment amount (as long as that amount is at least $2) for medication furnished on an outpatient basis for covered treatment, provided that any increase in the copayment amount or annual cap is the subject of a rulemaking proceeding. VA is also prohibited under 38 U.S.C. 1722A(a)(2) from requiring a veteran to pay an amount in excess of the cost to VA. We have implemented this statute in 38 CFR 17.110.

Under 38 CFR 17.110(b)(1), veterans are obligated to pay a copayment for each 30-day or less supply of medication provided by VA on an outpatient basis (other than medication administered during treatment). Under the current regulation, for the period from July 1, 2010, through December 31, 2015, the copayment amount for veterans in priority categories 2 through 6 of VA's health care system is $8. 38 CFR 17.110(b)(1)(i). For the period July 1, 2010, through December 31, 2015, the copayment amount for veterans in priority categories 7 and 8 is $9. 38 CFR 17.110(b)(1)(ii). Thereafter, the copayment amount for all affected veterans is to be established using a formula based on the prescription drug component of the Medical Consumer Price Index (CPI-P), set forth in regulation in 38 CFR 17.110(b)(1)(iii).

Current § 17.110(b)(2) also includes a “cap” on the total amount of copayments in a calendar year for a veteran enrolled in one of VA's health care enrollment system priority categories 2 through 6. Through December 31, 2015, the annual cap is set at $960. Thereafter, the cap increases “by $120 for each $1 increase in the copayment amount” applicable to veterans enrolled in one of VA's health care enrollment system priority categories 2 through 6.

VA has found that the current regulatory model has produced and will continue to produce copayment amounts that increase at a higher rate than the larger, non-VA retail market for prescribed medications. For this reason, VA has published a series of rulemakings that have “frozen” copayments from 2009 to the present. In these rulemakings, we stated that these freezes were appropriate because higher copayments reduce the utilization of VA pharmacy benefits. Even with the freezes VA has instituted, however, VA's copayment rates have exceeded those charged in other pharmacy benefits programs.

In addition to higher copayments increasing the risk that veterans will not fill their prescriptions, VA's lack of competitive copayment pricing increases the likelihood that veterans will obtain their prescribed medications from other sources. Fragmentation of prescription records to more than one pharmacy increases the risk of an incomplete medication record, which can lead to unintended adverse reactions. Different clinicians caring for the patient may not be aware of all the medications that the patient is taking. VA medical providers need to be aware of all of the medications a veteran is taking to avoid unintended prescribing of contraindicated medications. Through this rulemaking, we believe that we can prevent or minimize these unintended or adverse effects of patients choosing multiple pharmacies to fill their prescriptions.

A large body of academic research supports this position. Researchers have found that prescription copayments can affect medication adherence (Lieberman, D.A., J.M. Polinski, N.K. Choudhry, J. Avorn, and M.A. Fischer. 2014. Unintended consequences of a Medicaid prescription copayment plan. Medical Care. 52(5):422). Research also has found that higher copayment levels are associated with poor adherence, discontinuation, and non-initiation of therapy (Mann, B.S., L. Barnieh, K. Tang, D.J.T. Campbell, F. Clement, B. Hemmelgarn, M. Tonelli, D. Lorenzetti, B.J. Manns. Association between drug insurance cost sharing strategies and outcomes in patients with chronic diseases: a systematic review. PLOS ONE. 9(3):e89168). These findings are evident in a veteran study regarding lipid-lowering medication adherence. (Doshi, J.A., Zhu, J., Lee, B.Y., Kimmel, S.E., Volpp, K.G. 2009. Impact of a Prescription Copayment Increase on Lipid-Lowering Medications Adherence in Veterans. Circulation. 2009;119:390-397.). Other studies have also found that high copayment requirements can negatively influence adherence to prescription medication plans (Kazerooni, R., K. Vu, A. Tazikawa, C. Broadhead, and A.P. Morreale. Association of copayment and socioeconomic status with hormonal contraceptive adherence in a female veteran population. 2014. Women's Health Issues. 24(2):e237). Another team of researchers found that adherence rates are negatively affected by copayment rates, and that these effects vary based upon the disease burden of the patient; they also found that patients with low-comorbidity risks were more likely to be more affected by copayments, which may subsequently lead to adverse events that require more intensive and expensive health care services (Wang, V., C.F. Liu, C.L. Bryson, N.D. Sharp, and M.L. Maciejewski. 2011. Does medication adherence following a copayment increase differ by disease burden? HSR: Health Services Research. 46(6):1963).

The proposed rule would focus on the type of medication being prescribed and would remove the automatic escalator provision, meaning that changes in copayments would only occur through subsequent rulemakings. Veterans exempt by law from copayments under 38 U.S.C. 1722A(a)(3) would continue to be exempt. VA proposes to include a definition of “medication” and to establish three classes of medications: Tier 1 medications, Tier 2 medications, and Tier 3 medications. Tiers 1 and 2 would include multi-source medications, a term that would be defined in § 17.110(b)(1)(iv). Tier 3 would include medications that retain patent protection and exclusivity and are not multi-source medications. Copayment amounts would vary depending upon the Tier in which the medication is classified. A 30-day or less supply of Tier 1 medications would have a copayment of $5. For Tier 2 medications, the copayment would be $8, and for Tier 3 medications, the copayment would be $11.

This proposed change would provide a financial benefit to many veterans because it would reduce their copayment liabilities for most medications and their overall liability under the copayment cap. An average veteran would be better off under this model than the current approach in nearly every scenario; the sole exception is veterans who only fill Tier 3 medications, but even this group would face the same copayment liabilities under the current regulation in 2017, and would face higher copayments in future years. These veterans would also often pay substantially more in the private sector to fill the same prescriptions. Based on a comparison of the current and proposed copayment amounts, we anticipate that most veterans would realize between a 10 and 50 percent reduction in their overall pharmacy copayment liability each year based on historic utilization patterns. By our estimates, 94 percent of copayment eligible veterans would experience no cost increase, and 80 percent would realize a savings of between $1 and $5 per 30-day equivalent of medications. The proposed copayment amounts intends to support patient adherence, reduce instances of veterans not filling prescription medications and assisting veteran health improvements from chronic disease. The following table shows how copayments would vary for veterans and different types of medications. Annual savings would be even greater for veterans with a large number of medication copayments. VA estimates that at least 50 percent of all billable prescriptions would be in Tier 1, with no more than 35 percent in Tier 2, and approximately 15 percent in Tier 3. Exact estimates for Tier 1 and Tier 2 are not possible at this time and would depend on the final list of medications selected for Tier 1.

Initially, VA would make a clarifying amendment to § 17.110(a) to define the term “medication.” As noted previously, VA is required by 38 U.S.C. 1722A to charge veterans at least a $2 copayment for each 30-day or less supply of medication furnished on an outpatient basis for the treatment of non-service-connected disabilities or conditions, unless the veteran is otherwise exempt. VA has interpreted the term “medication” in the past to include prescription and over-the-counter medications as determined by the Food and Drug Administration (FDA), but not medical supplies and nutritional items. This change would clarify that interpretation in regulation. Medical supplies and nutritional items, such as bandages, diabetic supplies, and catheters, would be excluded from the definition of medication, and hence not subject to the medication copayment requirements of this section. These are not considered medications and are not regulated by FDA as such, and consequently should be excluded from this definition.

Medications are conventionally classified as either “generic” or “brand name” medications, and generic medications generally are less expensive and more available than brand name medications. However, this simple classification does not capture all of the factors that affect the price and availability of medications. For example, when a brand manufacturer's patent protection and/or regulatory exclusivity ends, it sometimes authorizes the marketing of its brand name medication under a private label at generic prices; the FDA describes these products as “authorized generics” at 21 CFR 314.3. In addition, even without the entry of an authorized generic, the price of most brand name drugs declines as generic competitors enter the market. Because generic medications, authorized generic medications, and brand name medications that face competition from generic medications typically are sold at lower prices than brand name medications that do not face such competition, VA would include all three classes of medications in a single class for copayment purposes. Because brand name medications that face competition from generic medications may still be sold at a higher price than their generic equivalents, however, VA would only include those brand name medications that face generic competition and are procured by VA under a contracting strategy in place that makes the brand name medication lower in cost than other generic sources. VA would be able to determine if these medications are lower in cost because the contracting strategy would have reviewed available prices and identified prices that are preferable to generic competition.

Some medications also have multiple brand name products capable of being substituted because they work in the same way and in a comparable amount of time with the same active ingredients. This competition between brand name medications generally results in a lower price and so, VA would also include them in the same class as generic medications, authorized generic medications, and brand name medications that face competition from generic medications and are procured by VA under a contracting strategy in place that makes the brand name medication lower in cost than other generic sources. To avoid confusion that could arise by placing brand name medications and generic medications in the same class, VA would simply refer to these four types of medications together as multi-source medications. The term multi-source medication would be defined in § 17.110(b)(1)(iv)(A). VA would then designate medications as Tier 1, Tier 2, and Tier 3. The first two tiers would consist of multi-source medications, but those in Tier 1 would have been selected by VA using a process described below and would be available at a lower copayment than medications in Tier 2. Tier 3 medications would include all other medications and would have the highest copayment amount.

VA proposes to amend § 17.110(b)(1) by revising the subparagraphs that currently identify the copayment rates for different priority groups of veterans. Specifically, VA would revise paragraph (b)(1)(i) to state that the copayment amount for a 30-day or less supply of Tier 1 medications, as defined in paragraph (b)(1)(iv), is $5. Paragraph (b)(1)(ii) of this section would state the copayment amount for a 30-day or less supply of Tier 2 medications is $8, and paragraph (b)(1)(iii) of this section would state the copayment amount for a 30-day or less supply of Tier 3 medications is $11.

These copayment amounts are cost competitive with other health care plans, while still in line with VA's appropriated resources. Many large retailers offer a limited range of generic or multi-source medications between $1 and $4, but these plans often include premiums of more than $10 per month. VA does not charge veterans a premium, so their only out-of-pocket costs are the copayment amounts. In this context, we believe the $5 and $8 copayment amounts are comparable to what many veterans would pay for selected generic or multi-source medications from these retailers. The $11 amount for Tier 3 medications is a small increase ($2) for veterans in priority groups 7 and 8, and a modest increase ($3) for veterans in priority groups 2 through 6. The vast majority of our billable prescriptions (85 percent) are for medications that would be categorized as Tier 1 or Tier 2. For veterans receiving Tier 1 medications, there would be a price decrease of $3 in priority groups 2 through 6 and $4 in priority groups 7 and 8. The price for Tier 2 medications would remain unchanged for veterans in priority groups 2 through 6, but veterans in priority groups 7 and 8 would experience a ($1) price decrease for medications in this category. Even with an increase in the copayment amount for Tier 3 medications from their current levels, VA's pharmacy copayments for these drugs would remain a significant value for veterans, as many non-VA pharmacy plans charge $20, $30, or $40 or more for brand name medications, which comprise the bulk of Tier 3 medications, in addition to regular premiums. Moreover, the pharmacy copayment amounts calculated using the existing regulations currently exceed $11 for veterans in priority categories 2 through 8.

VA estimates that the copayment amounts would increase three times over 6 years if the current regulations are left unchanged. These increases are projected using the current regulation's methodology because VA has taken action to freeze medication copayments over the last several years, which has generated greater separation from the initial CPI-P as of September 30, 2001.

VA would define the three classes of medications in proposed paragraph (b)(1)(iv)(B)-(D), which would be Tier 1, Tier 2, and Tier 3 medications.

As briefly described above, VA would define a “multi-source medication” that could be included in either Tier 1 or Tier 2 to include four types of medications. First, this would include a medication that has been and remains approved by the FDA either under sections 505(b)(2) or 505(j) of the Food, Drug, and Cosmetic Act (FDCA, 21 U.S.C. 355) and that has an A-rating in the current version of the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book), or under section 351(k) of the Public Health Service Act (PHSA, 42 U.S.C. 262) and that has been granted an I or B rating in the current version of FDA's Lists of Licensed Biological Products with (1) Reference Product Exclusivity and (2) Biosimilarity or Interchangeability Evaluations (the Purple Book). Second, a multi-source medication would also include medications that have been and remain approved by the FDA pursuant to FDCA section 505(b)(1) or PHSA section 351(a) and which are referenced by at least one FDA-approved product that meets the first definition of multi-source medication. These medications would be included only if they are covered by a contracting strategy in place with pricing such that it is lower in cost than other generic sources. Third, multi-source medications would include those medications that have been and remain approved by the FDA pursuant to FDCA section 505(b)(1) or PHSA section 351(a) and have the same active ingredient(s), work in the same way and in a comparable amount of time, and are determined by VA to be substitutable for another medication that has been and remains approved by the FDA pursuant to FDCA section 505(b)(1) or PHSA section 351(a). Insulin and levothyroxine are two examples of such medications. Finally, multi-source medications would also include a listed drug, as defined in 21 CFR 314.3, that has been approved under FDCA section 505(c) and is marketed, sold, or distributed directly or indirectly to retail class of trade with either labeling, packaging (other than repackaging as the listed drug in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trademark that differs from that of the listed drug. These definitions cover the full range of medications that are broadly available and lack patent protection and exclusivity and which can be procured at a low price. This includes all generic medications, as well as brand name medications that are marketed as generic medications and medications with multiple substitutable options. Such medications are widely prescribed and used by both VA and non-VA providers and represent generally the lowest cost medications available. As such, these are ideally suited for a lower copayment rate.

VA offers these medications to address a variety of chronic conditions common in our patient population, such as diabetes mellitus, hypertension, and hypercholesterolemia. If a significant portion of these prescriptions are filled with VA because of this rule, the potential clinical benefits could be far-reaching and significant, and therefore, we would encourage the use of these drugs by providing lower copayments. (We also note that, in addition to being a clear benefit to our veteran patients, far-reaching improved health outcomes would necessarily lead to lower future health care costs, although we cannot quantify these predicted cost benefits.) VA would separate multi-source medications into two categories: Tier 1 medications and Tier 2 medications. Tier 1 medications would be multi-source medications that meet all of the criteria in proposed paragraph (b)(2) as explained in further detail below. Tier 2 would include multi-source medications that do not meet all of the criteria in (b)(2).

Tier 3 medications would be defined as a medication approved by the FDA under a New Drug Application (NDA) or a biological product approved by the FDA pursuant to a biologics license agreement (BLA) that retains its patent protection and exclusivity and is not a multi-source medication identified in paragraph (b)(1)(iv)(A)(3). FDA publishes a list of the medications that have been approved under NDAs on its Web site at www.fda.gov.

Proposed paragraph (b)(2) would identify how VA will determine whether a multi-source medication qualifies as a Tier 1 medication; all other multi-source medications would be Tier 2 medications under proposed paragraph (b)(1)(iv)(C). Although we believe that lowering copayments for prescription medications would improve clinical outcomes for veterans who take those medications, for budgetary reasons we must limit the number of medications that would qualify for a lower copayment amount as selected multi-source medications. This limitation should effectively target VA's health care resources to achieve maximum health benefits for veterans. For example, the reduction in copayments for affected medication must be significant enough to increase the likelihood that veterans would choose to fill their medications with VA, thereby leading to the clinical benefits we discuss above. Reducing the copayment amount for a limited group of medications that are used on a long-term basis by a large number of veterans would allow us to reduce the copayment by a significant amount while still extending this financial and clinical benefit to as many veterans as possible.

Accordingly, in addition to excluding Tier 3 medications through the definition of the term “multi-source medication,” VA proposes to use seven exclusionary criteria to limit the medications that would be considered as Tier 1 medications entitled to the lowest copayment amount of $5. A medication must meet all of these criteria to be selected as a Tier 1 medication. These criteria would appear in proposed paragraph (b)(2) and its subparagraphs. VA would use these criteria not less than once per year to select which medications would qualify as Tier 1 medications. This annual (or more frequent) review would ensure that VA regularly reviews new medications and changes in prescription patterns and patient needs.

The first five criteria appear in paragraph (b)(2)(i). The first, in proposed paragraph (b)(2)(i)(A), would be that VA's acquisition cost for the medication must be less than or equal to $10 for a 30-day supply of medication. This is an economic criterion designed to limit the effects of the proposed rule on VA's overall budget. The $10 amount is currently the greatest amount that VA may consider while also keeping the cost of the reduced copayment amounts within acceptable budgetary limits.

Second, in proposed paragraph (b)(2)(i)(B), VA would exclude topical creams, products used to treat musculoskeletal conditions, antihistamines, and steroid-containing medications. These classes of medications generally are used on an “as needed” basis, and the quantity dispensed is not uniform for topical creams, lotions, and ointments. These medications would be excluded because they are not often used to treat chronic conditions, and their inclusion would result in a loss of revenue beyond what VA can support within its appropriated resources. Finally, excluding medications that are often used for short time periods and/or for acute skin infections or conditions is consistent with the criterion in proposed paragraph (b)(2)(i)(E), below.

Third, under proposed paragraph (b)(2)(i)(C), we would require that the medication be on the VA National Formulary (VANF). The VANF is a list of medications approved by VA for VA patients based on considerations of safety, quality, effectiveness, and the ability of the medications to meet the needs of VA's unique patient population. Requiring a medication to be on the VANF ensures that VA has already reviewed the medication in terms of its safety, quality, effectiveness, and general applicability, thereby ensuring sound clinical care. Medications that are not on the VANF are not approved on a national level, even if they may have specialized uses and may be appropriate for prescribing in individual cases. Non-formulary medications can be prescribed by VA when clinically warranted, on a case-by-case basis. However, these medications are much less likely to meet VA's goal of reaching the largest number of VA patients possible through this rulemaking. In addition, a drug may not be included on the VANF because we have determined that another medication from the same drug class is selected based on clinical effectiveness. Finally, many non-VANF drugs are prescribed by VA clinicians to treat conditions with a low prevalence among veterans or to treat non-chronic conditions. Requiring that the medication be on the VANF is medically appropriate and consistent with the purposes of this rulemaking. VA periodically revises the medications that appear on the formulary, and to the extent it appears that a drug meets the other criteria of this proposed rule, and a lower copayment for that drug would serve the clinical objectives animating this rulemaking, we would consider adding the drug to the VANF.

Fourth, under proposed paragraph (b)(2)(i)(D), VA would exclude antibiotics that primarily are used for short periods of time to treat infections. These medications may lead to harmful health outcomes if overprescribed, and this exclusion is intended to support clinical care. A veteran in need of antibiotics for a short-term illness likely only pays a single copayment for this prescription during the course of a year. Accordingly, the clinical incentive for patient medication adherence over time that VA intends to promote through this rulemaking is less relevant for these medications.

Fifth, under proposed paragraph (b)(2)(i)(E), VA would only consider medications that primarily are prescribed to either treat or manage a chronic condition, or to reduce the risk of adverse health outcomes of secondary conditions that are often more dangerous than the chronic condition itself. We believe this is crucial to maximizing the clinical benefit under this proposed rule. For example, VA would select medications used to treat high blood pressure because they reduce the risks of heart attack, stroke, and kidney failure. Some examples of chronic conditions prevalent among veterans include hypertension (more than 40 percent of enrolled veterans), diabetes (25 percent), and various types of heart disease (between 5 and 10 percent). VA anticipates that reducing copayments for medications treating these conditions would improve health outcomes for veterans by increasing the rate of adherence to prescribed medication regimens. VA may also benefit from secondary cost savings resulting from improved health outcomes and reduced demand for high cost treatments, such as surgery, for potentially life-threatening conditions that could have been prevented.

This criterion is also crucial because it serves to focus budgetary resources onto drugs used to treat and prevent conditions for which we expect the clinical benefits of this proposed rule will be the most pronounced. Improving our ability to monitor patients' compliance and increased patient compliance with treatment plans would have the most dramatic health benefits for veterans who take medications that fall within this criterion. It is well established that adherence to medications used in the management of chronic diseases such as hypertension, diabetes, hyperlipidemia and heart disease slows progression of major diseases that result in disability and increased consumption of health care resources.

Further, we propose that conditions that persist for 3 months or more will be considered chronic. We are aware that 38 CFR 3.317(a)(4) provides that a condition must persist for 6 months before it may be considered chronic. However, that section is designed to identify conditions that form the basis of a monthly monetary payment of compensation, which is a different goal than the treatment of a medical condition. Treating a persistent medical condition can be critical in preventing additional or worsening symptoms as well as secondary illnesses. Moreover, § 3.317(a)(4) of 38 CFR deals with undiagnosed illnesses arising out of the comparatively narrow context of the Gulf War. When a disease is difficult to diagnose, requiring a longer period of persistence helps VA ensure that condition in question actually is chronic as that term is commonly understood. We would also apply this criterion to conditions, not to individual patients. For example, just because it is technically possible for a common cold to persist for 3 months does not mean that colds are chronic. Rather, conditions which typically persist for 3 months in most or all patients would meet this criterion. For example, VA would select medications used to treat high blood pressure because that condition typically persists for more than 3 months and, under the proposed rule, we would charge the $5 copayment for such medication (as long as it met all other criteria) regardless of whether the patient for whom the medication is prescribed has actually been diagnosed as having had high blood pressure for 3 months.

Under the sixth criterion in proposed paragraph (b)(2)(ii), we would consider, among those medications that satisfy all of the criteria in paragraph (b)(2)(i), those medications that are among the top 75 most commonly prescribed multi-source medications based on the number of prescriptions issued for a 30-day or less supply on an outpatient basis during a fixed period of time to determine our annual list of Tier 1 medications. This would enable VA to consider veteran utilization when adopting the list. By looking at how many prescriptions are filled by veterans, VA can identify those medications that are in greatest demand and reduce their copayments, thereby providing the greatest benefit to veterans in terms of cost reduction. VA clinicians are also most likely to prescribe medications that have the greatest clinical benefit to veterans, and as a result, veterans are also likely to benefit from improved health care delivery. This factor would also ensure that, as the clinical needs of veterans change, VA reassesses the list to determine if new drugs should qualify or if drugs currently identified as selected should be removed. VA proposes to identify up to 75 medications under this paragraph because this number would allow VA to identify a broad spectrum of pharmaceuticals while limiting the potential budgetary impact of reduced copayment collections. VA would review utilization data for a fixed period of time, likely a 12-month period either consisting of a fiscal year or a calendar year. This requirement would allow VA to regularly assess the available data and make any necessary changes.

After identifying the top multi-source medications prescribed that also satisfy the criteria in paragraph (b)(2)(i), VA would evaluate these medications to determine their clinical value under the seventh criterion, which appears in proposed paragraph (b)(2)(iii), and in the context of VA's available budgetary resources, as described in more detail below. VA would make a medical determination concerning the clinical value of each entry on the list of the most utilized medications. New developments, such as a shift in the health care needs of the veteran population, newly released data or clinical treatment guidelines, or newly released multi-source medications could help VA determine which medications should be Tier 1 medications, but the possible range of factors are too numerous to be set forth in regulation. For example, many veterans have cardiovascular conditions that require treatment or management, such as high blood pressure, high cholesterol, heart disease, diabetes, and others. VA would take the prevalence of these conditions into account when selecting medications to ensure that a large number of veterans would be able to receive medications at a reduced copayment. As another example, VA would consider the recommendations of clinical practice guidelines it follows in the treatment of serious, chronic conditions. These clinical practice guidelines are developed in consultation with experts in each disease and are based on the latest available research in terms of efficacy and health outcomes. A medication that is identified as a first course of treatment would likely receive preference over a medication that is primarily used as second treatment option. In a similar way, VA would also look to empirical data on morbidity and mortality rates for conditions following treatment with certain medications. If one medication does a better job at improving health outcomes than another based on these measures, VA would likely select that better performing medication. There may be certain medications that treat a larger segment of the population than others, and VA would likely consider these attributes as well. If one medication is particularly effective with a sub-group, but is less effective with the average patient, it would be less likely to be selected. Similarly, VA may apply public health principles to identify conditions that are either under-treated or that, if treated early, can prevent the onset of more complex conditions that are more expensive to treat. For example, VA may look for medications that treat glaucoma or osteoporosis, which have a low prevalence in the veteran population, but that if treated and managed early can prevent more serious conditions such as blindness or broken bones. Ultimately, these determinations would be made by VA using the clinical expertise of its physicians, pharmacists, public health specialists, and other clinicians as appropriate to ensure that VA is able to offer at a reduced copayment the right mix of medications for its patient population. This approach is commonly used by other health care plans to select medications under their pharmacy benefits programs. As new multi-source medications become approved and available, VA would need to reassess this list and, as the health profile of its patient population changes, VA would need to maintain flexibility to ensure that the medications identified for a reduced copayment are appropriate.

The purpose of the criterion of clinical value in paragraph (b)(2)(iii) would be to ensure that those medications that would most improve clinical care would be available at a reduced copayment; however, we note that this evaluation should not be read to suggest that other multi-source mediations do not have clinical value. The Tier 1 and Tier 2 classifications are designed simply to distinguish between two similar classes of medications and do not reflect on the quality of the medication itself. VA would make determinations regarding which medications should be included in Tier 1 in light of available budgetary resources to ensure that it does not select more medications than it can afford to maintain at a reduced copayment amount.

The decision regarding which medications qualify for Tier 1 would also be made in the context of VA's available budgetary resources, as noted in proposed paragraph (b)(2)(iii). Each year, VA assembles a budget request that is carefully calculated based on its enrolled patient population, their clinical needs, and the cost of delivering health care. Included in VA's budget projections is an estimate for how much VA will receive from first- and third-party payers for certain types of treatment. These payments are deposited into the Medical Care Collections Fund (MCCF). Medication copayments are one source of revenue for the MCCF. In each year's budget recommendation submitted by VA, we identify the MCCF estimates, and in each budget enacted by Congress, the MCCF estimates are also included. VA's budget for the Medical Services, Medical Support and Compliance, and Medical Facilities accounts are appropriated in advance under 38 U.S.C. 117, so VA knows in one year what resources it will have in the following year. VA would use these figures to determine how it can enhance the value of the pharmacy portion of the medical benefits package by offering the maximum number of Tier 1 medications while maintaining the established budget parameters. VA does not anticipate dramatic changes in the numbers or types of medications that are available for a Tier 1 reduced copayment from year to year.

VA is aware that as a result of using these proposed criteria, some veterans who have conditions that are very serious but not very common may receive no Tier 1 medication copayment reduction under the proposed rule. Whether a particular veteran realizes reduced medication expenditures in a given year would depend on the medications VA selects for a reduced copayment amount and the medications prescribed to that veteran. However, as explained above, the purpose of this rule is to improve clinical outcomes for a large number of veterans while maintaining a responsible budget. VA does not expect that veterans' obligations for copayments would increase by a notable amount, and any increases resulting from this rule would be less than they would have been over time with the current regulations.

VA would also modify § 17.110(b)(3) to state that VA would publish a list of Tier 1 medications not less than once per year in the Federal Register and on VA's Web site at www.va.gov/health. The current paragraph (b)(3) requires VA to publish and distribute information on copayment amounts, but as these amounts would be established in regulation, there would be no need to continue that practice. VA expects it would publish a list of Tier 1 medications only once per year, but there may be situations when a change during the year would be justified. For example, if a medication that VA has identified as a Tier 1 medication is removed from the market or if significant safety concerns are raised with its use, VA physicians and pharmacists would likely shift patients to a different multi-source medication to treat the same conditions. In this scenario, VA may elect to designate this alternative medication as a Tier 1 medication so that a large number of veterans do not experience a mid-year increase in the cost of filling their medications as a result of events outside their control.

VA has published a list of medications that it would classify as Tier 1 medications on its Web site, www.va.gov/health. This list was compiled using the process described above to show what medications would be placed in Tier 1 if the proposed rule were effective today, and as such, this list is intended to be demonstrative only. We expect the list of Tier 1 medications to change before January 1, 2017, as new medications become available, prices vary for different for medications, and new clinical evidence is published showing the efficacy of different medications. If the proposed rule is finalized and takes effect prior to January 1, 2017, VA will publish an updated list showing those medications that will be placed in Tier 1 for purposes of copayments starting on January 1, 2017.

VA would further modify § 17.110(b) by moving the discussion of the copayment cap from current paragraph (b)(2) to a new paragraph (b)(5). VA would amend this provision, which establishes a current rate and a methodology for increasing that rate, and replace it with a single rate that could only be changed through subsequent rulemaking. VA proposes to establish a fixed copayment cap of $700 in a calendar year for all enrolled veterans. VA is extending application of the copayment cap to include veterans in priority groups 7 and 8. A typical veteran fills two to three prescriptions per month, and at the current copayment rates, a veteran must fill 10 prescriptions per month each month of the year to hit the copayment cap. Presently, less than three percent of all veterans realize savings as a result of the copayment cap. With a copayment cap of $700, veterans filling six to eight prescriptions per month would likely reach the cap over a calendar year. Reducing the copayment cap would also provide a unique benefit to veterans who exclusively use Tier 3 medications, as their total annual expenses would be no more than $700, whereas under the current regulations, they would be $960 or more. We estimate approximately nine percent of veterans subject to a copayment would benefit from a $700 copayment cap. If, in the future, VA engaged in further rulemaking to raise the copayment rates from those proposed in this rule, it could also then consider whether to raise the copayment cap.

VA would also make a formatting revision to paragraph (b)(4), titling this section “Veterans Choice Program,” to maintain consistency with other paragraph headings. This would result in no formal or substantive change to the copayment rule articulated in this paragraph for the Veterans Choice Program, authorized by 38 CFR 17.1500-17.1540.

The Code of Federal Regulations, if revised as proposed by this rulemaking, would represent the exclusive legal authority on this subject. No contrary rules or procedures would be authorized. All VA guidance would be read to conform with this rulemaking once made final, if possible or, if not possible, such guidance would be superseded by this rulemaking.

This proposed rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB), as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been determined that it is an economically significant regulatory action under Executive Order 12866.

This rulemaking proposes to amend its regulations concerning copayments and the copayment cap charged to certain Veterans for medications required on an outpatient basis to treat non-service connected conditions. In addition, this rule would eliminate the formula used to calculate future rate increases and change the copayment amount beginning January 1, 2017, to $5 for a 30-day supply of Tier 1 medications, to $8 for a 30-day supply of Tier 2 medications, and $11 for a 30-day supply of Tier 3 medications. The Tiers of medications would be defined in regulation, but generally would reflect selected multi-source medications (Tier 1), other multi-source medications (Tier 2), and single source medications (Tier 3), with certain exceptions.

Based on a comparison of the current and proposed copayment amounts, we anticipate that most veterans would realize between a 10 and 50 percent reduction in their overall pharmacy copayment liability each year based on historic utilization patterns. By our estimates, 94 percent of copayment eligible veterans would experience no cost increase, and 80 percent would realize a savings of between $1 and $5 per 30-day equivalent of medications. The proposed copayment amounts are intended to support patient adherence, reduce instances of veterans not filling prescription medications and assisting veteran health improvements from chronic disease. Table 1 above, shows how copayments would vary for veterans and different types of medications. Annual savings would be even greater for veterans with a large number of medication copayments. VA estimates that at least 50 percent of all billable prescriptions would be in Tier 1, with no more than 35 percent in Tier 2, and approximately 15 percent in Tier 3. Exact estimates for Tier 1 and Tier 2 are not possible at this time and would depend on the final list of medications selected for Tier 1.

VA anticipates the implementation of a tiered copayment plan in CY2017 would reduce First Party Pharmacy copayment revenue from current budget levels for Veterans in PGs 2 through 8 who are required to make a copayment for certain medications. VA's regulatory impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of the rulemaking and its impact analysis are available on VA's Web site at http://www.va.gov/orpm/, by following the link for “VA Regulations Published From FY 2004 Through Fiscal Year to Date.”

The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). This proposed rule would generally be small business neutral. The rule would not affect pharmaceutical manufacturers, as it does not change the amount VA pays for medications to supply its pharmaceutical benefits program, only the amount VA collects from veterans as copayments. To the extent there are effects on pharmaceutical companies, we believe it would most likely have a positive affect if VA is purchasing more medications and supplies from them. Similarly, VA does not believe that this rule would have a significant economic impact on small pharmacies. It is possible that some veterans would choose to fill their prescriptions within VA rather than from a community pharmacist, but we anticipate such a shift would not result in a significant economic impact on a substantial number of such entities. Therefore, under 5 U.S.C. 605(b), this rulemaking would be exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

This proposed rule is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can take effect, the Federal agency promulgating the rule shall submit to each House of the Congress and to the Comptroller General a report containing a copy of the rule along with other specified information, and has been submitted to Congress and the Comptroller General for review.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence; and 64.022, Veterans Home Based Primary Care.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Robert L. Nabors II, Chief of Staff, Department of Veterans Affairs, approved this document on September 1, 2015, for publication.

For the reasons set out in the preamble, VA proposes to amend 38 CFR part 17 as follows:

The revisions and additions read as follows:

This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM) in WT Docket No. 15-285; FCC 15-155, adopted November 19, 2015, and released on November 20, 2015. This summary should be read with its companion document, the Fourth Report and Order summary published elsewhere in this issue of the Federal Register. The full text of the NPRM is available for public inspection and copying during business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. It also may be purchased from the Commission's duplicating contractor at Portals II, 445 12th Street SW., Room CY-B402, Washington, DC 20554; the contractor's Web site, http://www.bcpiweb.com; or by calling (800) 378-3160, facsimile (202) 488-5563, or email [email protected]. Additionally, the complete item is available on the Commission's Web site at http://www.fcc.gov.

1. In this NPRM, the Commission seeks comment on potential revisions to the Commission's part 20 rules governing wireless hearing aid compatibility. The Commission initiates this proceeding to develop a record on an innovative and groundbreaking proposal, advanced collaboratively by industry and consumer groups, to replace the current fractional regime with the staged adoption of a system under which all covered wireless handsets will be hearing aid-compatible. The Commission proposes to adopt this consensus approach, which recognizes that the stakeholders themselves are best positioned to craft a regime that ensures full accessibility while protecting incentives to innovate and invest.

2. The Joint Consensus Proposal provides that within two years of the effective date of the adoption of the new benchmark rules, 66 percent of wireless handset models offered to consumers should be compliant with the Commission's acoustic coupling radio frequency interference (M rating) and inductive coupling (T rating) requirements. The proposal provides that within five years of the effective date of new rules adopted, 85 percent of wireless handset models offered to consumers should be compliant with the Commission's M and T ratings.

3. The proposal provides that these new benchmarks should apply to manufacturers and carriers that offer six or more digital wireless handset models in an air interface, except that Tier I and Non-Tier I carriers would receive six months and eighteen months of additional compliance time, respectively, to account for availability of handsets and inventory turn-over rates. The proposal states that the existing de minimis exception should continue to apply for manufacturers and carriers that offer three or fewer handset models in an air interface and that manufacturers and carriers that offer four or five digital wireless handset models in an air interface should ensure that at least two of those handsets models are compliant with our M and T rating requirements. In addition, the proposal provides that these benchmarks should only be applicable if testing protocols are available for a particular air interface.

4. In addition to these two-year and five-year benchmarks, the proposal provides that “[t]he Commission should commit to pursue that 100% of wireless handsets offered to consumers should be compliant with [the M and T rating requirements] within eight years.” The Joint Consensus Proposal conditions the transition to 100 percent, however, on a Commission determination within seven years of the rules' effective date that reaching the 100 percent goal is “achievable.” The Joint Consensus Proposal prescribes the following process for making that determination:

5. The Commission proposes to adopt the general approach discussed in the Joint Consensus Proposal, including the staged benchmark revisions, the Commission's determination of achievability, and the process for moving to a 100 percent compliance standard, and the Commission seeks comment on this proposal and its various components. The Commission recognizes that the Joint Consensus Proposal reflects the intensive efforts and commitment of consumer and industry stakeholders to develop an approach that expands access for consumers with hearing loss while preserving the flexibility that allows innovation to flourish. The Commission notes that the current hearing aid compatibility rules, including the current benchmarks, are also based on a consensus proposal developed and submitted in 2007 by representatives of the wireless industry and consumers with hearing loss. In substantially adopting the terms of that proposal, the Commission found that broad multi-stakeholder support “testifie[d] to the success of the proffered proposals in meeting the goals of the Hearing Aid Compatibility Act, and in addressing the concerns of manufacturers and service providers while still advancing the interests of consumers with hearing loss in having greater access to advanced digital wireless communications.” Given the success of the previous consensus proposal, and recognizing that the Joint Consensus Proposal was generated by the very stakeholders that it will impact most directly, the Commission considers favorably the Joint Consensus Proposal—particularly to the extent that it moves toward a 100 percent hearing aid compatibility requirement without discouraging or impairing the development of improved technology. The Commission also believes that an approach developed through consensus among the relevant stakeholders may yield outcomes that most effectively leverage innovative technological solutions.

6. Accordingly, below, the Commission seeks comment on the merits of the Joint Consensus Proposal, both with respect to its overall effectiveness in fulfilling Congress's intent to ensure access to telephones for people with hearing loss under Section 710 of the Communications Act as amended by the CVAA, and more specifically with respect to its various components as these have been presented jointly by the consumer and industry stakeholders. The Commission also seeks comment on several related matters.

7. Benchmarks. First, the Commission asks commenters to address the timeframes that the proposal describes as well as the process for the Commission's determination of achievability. Are the proposed new benchmarks appropriate for all covered entities and handsets? How will these benchmarks effectively meet the needs of consumers while protecting innovation and competition for current and future operations? The Commission asks commenters who recommend different benchmarks for small entities, for certain technologies or services, or for meeting the standards for acoustic coupling and inductive coupling to explain their reasoning in detail, along with justifications for why their preferred alternatives would be better than the approach contained in the Joint Consensus Proposal, taking into consideration the purposes and goals of Section 710. The Joint Consensus Proposal provides that the Commission should commit to pursuing a goal of 100 percent compatibility within eight years of the effective date at the time the revised benchmarks are established. The Commission seeks comment on this eight-year period. Would a longer or shorter transition period be more appropriate and, if so, why?

8. De minimis exception to two- and five-year benchmarks. The proposal recommends that the existing de minimis exception to the benchmarks should continue to apply for manufacturers and carriers that offer three or fewer handset models in an air interface and that the rule should further provide that manufacturers and carriers that offer four or five digital wireless handset models in an air interface should ensure that at least two of those handsets models are compliant with sections 20.19(b)(1) and (b)(2). The Commission seeks comment on these proposed exceptions to the new benchmarks.

9. Determination of Achievability. The Commission seeks comment on the proposed process for determining achievability. For example, in determining achievability, should the Commission limit itself to assessing information and data collected in years four and five, or should it also take account of more recent data and information that may be available at that time? Should the Commission seek public comment in connection with reaching the achievability determination? Are there any aspects of the Joint Consensus Proposal's benchmarks, timing, and achievability determination that the Commission should not adopt? Should the Commission supplement them with any additional requirements or considerations? Regarding the proposed task force, the Commission seeks comment on how and through what process or mechanism the Commission should establish the task force, on whether the task force should be established without delay even if its primary functions would not begin until year four, and on how the task force should be structured and its membership determined, including how to ensure that “all stakeholders” are adequately represented. The Commission also seeks comment on which issues or questions the Commission should ask the task force to explore, on the scope and content of the task force's report, and on the processes or rules, if any, that should govern its activities.

10. The Commission also seeks comment on how the Commission should determine achievability, including the appropriate substantive definition, standard, or framework to govern the Commission's determination. For example, should the determination of achievability be based on relevant factors specified in Section 710, e.g., technological feasibility, marketability, and impact on the use and development of technology? The Commission notes that the CVAA contains a specific definition of achievability that applies in the context of sections 716 and 718 of the Act. Specifically, Section 716(g) of the Act defines the term “achievable” to mean “with reasonable effort or expense, as determined by the Commission.” Section 716 requires providers of advanced communications services and manufacturers of equipment used for those services to make their offerings accessible to and usable by individuals with disabilities, unless not achievable. Section 718 requires manufacturers of telephones used with public mobile services to ensure that web browsers on those devices are accessible to and usable by individuals who are blind or have a visual impairment, unless doing so is not achievable. Given that these sections similarly contain mandates for equipment accessibility by people with disabilities, is it appropriate to apply the CVAA achievability definition here as well? Or would an alternative be preferable in the context of the Joint Consensus Proposal?

11. In considering whether the 100 percent goal is achievable, should the Commission consider innovative approaches, including standards or technologies that are different from the currently applicable ANSI standard, that can achieve telephone access for consumers with hearing loss? For example, Apple has explained that it “work[ed] outside the existing Part 20 framework to advance its goal of dramatically improving the user experience for individuals with hearing loss,” and that it developed a new hearing aid platform that relies on Bluetooth® technology. The Commission urges stakeholders to think broadly in developing alternative approaches, whether they build on Apple's experience or other efforts, as the Commission is confident that creativity and innovation can significantly advance the interests of consumers with hearing loss without hobbling wireless innovation. The Commission is particularly interested in commenters' insights regarding alternative compliance approaches that can, in a technologically neutral manner, ensure that devices are fully accessible for users with hearing loss.

12. The Joint Proposal itself recommends that the Commission seek comment on various issues related to modifying the benchmark regime. In particular, it suggests that the Commission seek comment on the following issues, which it now does:

13. In connection with the suggested questions regarding waivers, the Commission also seeks comment on how to best to apply the Section 710(b)(3) waiver process in the context of the Joint Consensus Proposal. Should the Commission establish a fixed time period within which the Commission must take action on waiver requests? If so, would 180 days be an appropriate amount of time, considering both the need to develop a full record and the importance of avoiding delay in the introduction of new technologies? If not 180 days, what amount of time would be appropriate? If the Commission establishes a time period for Commission action, are there situations in which the Commission should have the ability to extend the deadline?

14. The Commission seeks comment on whether the Joint Consensus Proposal is consistent with and warranted under Section 710 of the Communications Act. Section 710(b)(2)(B) directs the Commission to use a four-part test to periodically reassess exemptions from the hearing aid compatibility requirements for wireless handsets. Specifically, the statute directs the Commission to revoke or limit an exemption if it finds that (1) Continuing the exemption without such revocation or limitation would have an adverse effect on individuals with hearing loss; (2) compliance with the hearing aid compatibility requirements would be technologically feasible for devices to which the exemption applies; (3) the cost of compliance would not increase costs to such an extent that the newly covered devices could not be successfully marketed; and (4) revoking or limiting the exemption is in the public interest. The Commission seeks comment on whether this analysis is applicable to the changes proposed in the Joint Consensus Proposal, whether such changes would meet this four-part test, and whether the proposal requires any modifications to satisfy the statutory standard.

15. Section 710 further directs that, in any rulemaking to implement hearing aid compatibility requirements, the Commission should (1) specifically consider the costs and benefits to all telephone users, including people with and without hearing loss, (2) ensure that hearing aid compatibility regulations encourage the use of currently available technology and do not discourage or impair the development of improved technology, and (3) use appropriate timetables and benchmarks to the extent necessary due to technical feasibility or to ensure marketability or availability of new technologies to users. The Commission therefore asks commenters to address these factors in their analysis of the proposal and to explain whether modifications are warranted.

16. The Commission seeks comment on whether the compatibility requirement—revised pursuant to the Joint Consensus Proposal or in any other manner—should specifically require both a minimum M3 and minimum T3 rating, or whether manufacturers should be allowed to meet the requirement by incorporating other methods of achieving compatibility with hearing aids, such as Bluetooth®. The Commission is mindful that some innovative advances in accessibility features have resulted from outside-of-the-box solutions, and the Commission does not wish to discourage these types of pioneering advances. The Commission seeks comment on the extent to which such alternative approaches are able to meet the communications needs of people with hearing loss. Specifically, in addition to commenting on the effectiveness of such alternatives for aiding in comprehending telephone conversation, the Commission asks commenters to provide information about the cost of such devices to consumers, as well as the ease of procuring devices needed to use such alternatives. Given these criteria, what approaches should the Commission recognize as viable alternatives, how should such alternative approaches be incorporated into the hearing aid compatibility rules, what customer disclosures should be required for alternative approaches, and what standards should apply to the alternative approaches, particularly with respect to testing and rating alternative devices and technologies? How, if at all, would such alternative approaches impact the efficacy of the Joint Consensus Proposal?

17. What are the costs and benefits of allowing these alternative approaches? For example, Apple proposes that the Commission apply the ANSI standards as a “safe harbor” for hearing aid compatibility but to “reward innovators for finding other, better solutions that result in real accessibility even if they do not meet the ANSI standards.” Although Apple proposes this approach as an alternative method of meeting the existing benchmarks, the Commission seeks comment on whether to adopt it in conjunction with the Joint Consensus Proposal. The Commission also seeks comment on how to determine hearing aid compatibility outside of compliance with the applicable ANSI standard. The Commission invites commenters to consider alternatives of this kind when evaluating the Joint Consensus Proposal.

18. The current de minimis exception provides that small manufacturers and service providers that offer two or fewer digital wireless handset models operating over a particular air interface are exempt from the benchmark deployment requirements in connection with that air interface, while larger manufacturers and service providers with two or fewer handset models have a limited obligation. The provision further states that any manufacturer or service provider that offers three digital wireless handset models operating over a particular air interface must offer at least one such handset model that meets the M3 and T3 standards for that air interface. Although the Joint Consensus Proposal recommends retaining this exception for the new two and five year benchmarks (with an added provision for entities offering four or five handsets), it does not expressly address whether and how the exception will continue to apply under a subsequent 100 percent requirement.

19. The Commission seeks comment on whether to preserve the de minimis exception in whole or in part in the event the Commission adopts a 100 percent requirement. Should the Commission preserve the exception during the transitional periods prior to implementation of a 100 percent compatibility requirement, as proposed in the Joint Consensus Plan? Alternatively, should the Commission phase out the de minimis exception over the course of the transitional periods? Should the Commission preserve the exception even in the event of a 100 percent compatibility obligation? How would the de minimis exception operate under a 100-percent compatibility requirement? If a qualifying manufacturer were to offer a non-compliant handset, could any provider make it available to consumers, or would it only be available to providers that are also eligible for the exception? If such handsets were unavailable to providers that were not eligible for the exception, would preserving the exception effectively limit consumer choice in many cases? If so, are there distinct aspects or features of the exception that the Commission should preserve?

20. The Commission seeks comment on whether it should include any other exceptions in the event the Commission adopts a 100 percent compatibility requirement, and how such exceptions are consistent with and warranted under Section 710's requirements. The Commission seeks comment on whether there are particular air interfaces, such as GSM operating in the 1900 MHz band, which will face particular difficulties in meeting a 100 percent compatibility requirement and, if so, whether and how such difficulties should be specifically addressed or accommodated under a 100 percent compatibility requirement. Are there new technological solutions that should better enable GSM/1900 handsets to achieve hearing aid compatibility and, if so, what requirements should apply to GSM/1900 handsets given such solutions?

21. In the event the Commission adopts a 100 percent compatibility requirement, the Commission seeks comment on the appropriate treatment of legacy models. Should non-hearing aid-compatible handsets that received equipment authorization prior to the end of any transition period be grandfathered to better ensure that manufacturers are able to recoup their investments in their legacy handsets? The Commission seeks comment on this option, on alternative approaches to grandfathering, and on whether, following some additional period after a transition to a 100 percent compatibility regime, the Commission should require hearing aid compatibility for all handset models offered (as opposed to just models released after transitioning to the 100 percent regime).

22. The Commission further seeks comment on how best to ensure that people with hearing loss are able to find hearing aid compatible phones that can meet their communication needs during the transition period to a 100 percent compatibility requirement. The Commission notes that Section 717(d) of the Communications Act, added by the CVAA, requires the Commission to maintain a clearinghouse of information about accessible products and services required under sections 255, 716, and 718 of the Act. The Commission launched its Accessibility Clearinghouse in October 2011. Among other things, this database allows consumers to search for wireless handsets with accessibility features that meet the needs of various disabilities, including hearing aid compatible handsets. Does this Accessibility Clearinghouse, or the Web sites upon which it relies, effectively provide the information needed by consumers to locate hearing aid compatible phones? In other words, does it enable a consumer to determine without difficulty whether any particular handset model is hearing aid compliant? If not, the Commission seeks comment on the format and type of information that the Commission should include in the Accessibility Clearinghouse in order to empower consumers to make educated decisions about their handset purchases. The Commission notes, for example, that currently, manufacturers are required to electronically file annual compliance reports with the Commission on FCC Form 655 in July of each year and service providers must electronically file this form with the Commission in January of each year. These reports include, among other information, the M and T ratings for each handset. Is there a way that such information can be used to automatically supplement the information now provided in the Accessibility Clearinghouse database? In addition, in the event the Commission adopts a 100 percent compatibility requirement, will it be necessary to continue providing information on hearing aid compatible phones in the Accessibility Clearinghouse? It is not the Commission's intention to create additional reporting burdens on manufacturers and service providers, therefore, the Commission seeks comment on approaches to ensuring that the improvements contemplated above do not impose such burdens.

23. The Commission also seeks comment on whether service providers should be able to rely on information in the Accessibility Clearinghouse and on Form 655 to the extent that it reflects compliance information submitted by manufacturers. Are there any reasons service providers should not be able to rely on the Accessibility Clearinghouse or Form 655? For example, how should the Commission treat a service provider if it offers a handset that a manufacturer has included in the Accessibility Clearinghouse and indicated to be compliant in the manufacturer's annual FCC Form 655, even if it is later determined that the handset does not in fact meet the hearing aid compatibility requirements? Should such information create a presumption that the service provider is not in breach of the Commission's hearing aid compatibility rules?

24. In the event the Commission ultimately transitions to a 100-percent compatibility regime, the Commission proposes to ease or eliminate the reporting, disclosure, labeling, and other requirements imposed under the current rules. The Commission seeks comment on the extent to which these requirements are unnecessary or unwarranted in the event the Commission moves to a 100 percent regime, and on the costs and benefits of easing such requirements as they relate to consumers, manufacturers, and service providers.

25. Currently, manufacturers are required to electronically file annual compliance reports with the Commission on FCC Form 655 in July of each year and service providers must electronically file this form with the Commission in January of each year. The Commission seeks comment on whether to end the reporting requirements for manufacturers and service providers in the event the Commission moves to a 100 percent regime or at some point thereafter. The Commission notes that numerous parties, especially rural and small service providers, have asserted that preparing these annual reports is burdensome. While these reports help the Commission monitor compliance with the hearing aid compatibility benchmarks, will such monitoring still be necessary, and will the benefits of these reports still outweigh the burdens, in the event the Commission moves to a 100 percent compatibility regime? Alternatively, should the Commission eliminate the reporting requirement only for service providers, on the grounds that manufacturers' reports will be sufficient under a 100 percent regime to ensure all models available to consumers are compliant? Should the Commission maintain the reporting requirement for other groups for a certain period of time while non-compliant legacy models remain in inventory? Should the Commission maintain reporting requirements for manufacturers and service providers who offer handsets that are exempt from hearing aid compatibility requirements or can be used for services that are exempt from these rules? The Commission notes that the Joint Consensus Plan would establish two new benchmarks, at year two and year five. Should the Commission modify the content or applicability of the reporting requirements that apply during the period following either the two or five year benchmark but prior to the implementation of a 100 percent compatibility requirement?

26. The existing hearing aid compatibility rules also require manufacturers and service providers to label their hearing aid-compatible handsets with the appropriate M and T ratings and provide information on the rating system, and to meet certain disclosure requirements for hearing aid-compatible handsets that are not compatible over all their operations. The rules also require manufacturers and service providers to provide information on their Web sites, such as a list of all hearing aid-compatible models currently offered, the associated rating information for those handsets, and an explanation of the rating system. The Commission seeks comment on whether, in the event the Commission moves to a 100 percent compatibility regime, the current labeling and disclosure requirements should be eliminated, simplified, or amended. Alternatively, should the Commission continue to require disclosure of rating information in packaging and on Web sites for hearing aid-compatible handset models so that consumers can distinguish between M3 and M4 ratings, between T3 and T4 ratings, and between hearing aid-compatible handsets and grandfathered non-compatible models?

27. The Commission also seeks comment on whether to eliminate the product refresh rule applicable to manufacturers and the differing levels of functionality rule applicable to service providers if the Commission moves to a 100 percent compatibility regime or adopts other modifications to the benchmarks. The product refresh rule requires manufacturers that offer new handset models in a year to ensure that a certain number of the new models are hearing aid-compatible. The differing levels of functionality rule requires service providers to offer a range of hearing aid-compatible models with differing levels of functionality in terms of capabilities, features, and price. In the context of benchmarks that do not require 100 percent of handsets to be hearing aid-compatible, these additional requirements help to ensure that people with hearing loss have access to handsets with the latest features and functions and at different price points. The Commission tentatively concludes that a refresh rule would serve no purpose after a 100 percent requirement takes effect, given that it merely imposes a fractional obligation on new models, which would be entirely subsumed by the new requirement. The Commission seeks comment on this conclusion. The Commission further seeks comment on whether a 100 percent requirement on manufacturers would also be sufficient to ensure that service providers offer a range of hearing aid-compatible models with differing levels of functionality. Will maintaining the differing levels of functionality requirement help to ensure that low-income Americans with hearing loss have access to affordable hearing aid-compatible handsets?

28. Finally, to the extent the Commission moves to a 100 percent compatibility regime, the Commission seeks comment on whether the Commission should eliminate or otherwise ease the deployment benchmarks applicable to the overall handset portfolios of manufacturers and service providers. Will benchmarks remain necessary, even after a transition to a 100 percent requirement, to ensure that manufacturers and service providers do not weight their portfolios toward non-compliant grandfathered handsets? If so, for how long? Would an additional two-year period be an appropriate time-frame to sunset these service provider requirements? Alternatively, should the Commission eliminate deployment benchmarks for Tier III service providers immediately upon moving to a 100 percent regime, but preserve it for Tier I and II service providers for an additional two or three years? What are the costs and benefits of eliminating the benchmarks on service providers if all or nearly all new models offered by manufacturers will be compliant?

29. The Commission seeks comment on whether and how to revise the current benchmark system in the event that, based on the record the Commission receives, the Commission determines not to adopt the Joint Consensus Proposal. Should the Commission pursue another approach to transition to a 100 percent compatibility requirement, consistent with the factors identified in Section 710? What would be an appropriate transition period? Should the Commission consider exceptions, waivers, burden reductions, legacy handset rules, and alternative approaches to measuring compliance, as discussed above in connection with the Joint Consensus Proposal?

30. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities of the policies and rules proposed in this Notice of Proposed Rulemaking (NPRM). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM provided above. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA).

31. To ensure that a wide selection of digital wireless handset models is available to consumers with hearing loss, the Commission's rules require both manufacturers and service providers to meet defined benchmarks for offering hearing aid-compatible wireless phones. Specifically, manufacturers and service providers are required to offer minimum numbers or percentages of handset models that meet specified technical standards for compatibility with hearing aids operating in both acoustic coupling and inductive coupling modes. These benchmarks apply separately to each air interface for which the manufacturer or service provider offers handsets.

32. The wireless hearing aid compatibility rules have incorporated this fractional benchmark approach since the provision was first established in 2003, but the Commission has on occasion revised the specific benchmarks that manufacturers and service providers are required to meet. The current benchmarks were established in 2008 when the Commission adopted the Joint Consensus Plan submitted by an Alliance for Telecommunications Industry Solutions (ATIS) working group that included Tier I carriers, handset manufacturers, and several organizations representing the interests of people with hearing loss. That plan provided for benchmarks to increase over time, up to a final set of benchmarks that became effective in 2010 and remain in place today.

33. The current deployment benchmarks require that, subject to a de minimis exception described below, a handset manufacturer must meet, for each air interface over which its models operate, (1) at least an M3 rating for RF interference reduction for at least one-third of its models using that air interface (rounded down), with a minimum of two models, and (2) a T3 rating for inductive coupling for at least one-third of its models using that interface (rounded down), with a minimum of two models. Similarly, for each of the air interfaces their handsets use, service providers also must meet an M3 rating for at least 50 percent of their models or ten models, and must meet a T3 rating for at least one-third of their models or ten models. In general, under the de minimis exception, manufacturers and service providers that offer two or fewer wireless handset models for any given covered air interface are exempt from these benchmarks for those models.

34. In the NPRM, the Commission seeks comment on a historic agreement (hereinafter, the “Joint Consensus Proposal”) among key consumer and industry stakeholders that would revise the current benchmarks. In brief, the Joint Consensus Proposal provides that within two years of the effective date of new rules adopted, 66 percent of wireless handsets offered to consumers should be compliant with the Commission's acoustic coupling radio frequency interference (M rating) and inductive coupling (T rating) requirements. The proposal provides that within five years of the effective date of new rules adopted, 85 percent of wireless handsets offered to consumers should be compliant with the Commission's M and T ratings. The proposal provides that this benchmark should apply directly to manufacturers and carriers that offer six or more digital wireless handset models in an air interface, with additional compliance periods for Tier I and Non-Tier I carriers of six months and eighteen months, respectively, to account for limits on handset availability and inventory turn-over rates. In addition to these two-year and five-year benchmarks, the proposal provides that the Commission should commit to pursue that 100 percent of wireless handsets offered to consumers should be compliant within eight years. The Joint Consensus Proposal conditions the transition to 100 percent, however, on a Commission determination within seven years of the rules' effective date that reaching the 100 percent goal is achievable, based in part on review of a report by a task force to be established for this purpose.

35. While the Commission finds that the existing fractional benchmarks have been successful in making a broad variety of hearing aid-compatible handsets available to consumers with hearing loss, the Commission recognizes its statutory obligation to periodically reassess any exemptions from the hearing aid compatibility requirements. The Commission proposes to adopt the Joint Consensus Proposal, finding that it provides an effective approach to replacing the fractional system with one that will give consumers with hearing loss the same selection of wireless handsets that is available to the general public.

36. The potential actions about which comment is sought in this NPRM would be authorized pursuant to the authority contained in sections 4(i), 303(r), and 710 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), and 610.

37. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. To assist the Commission in analyzing the total number of potentially affected small entities, the Commission requests commenters to estimate the number of small entities that may be affected by any rule changes that might result from this NPRM.

38. As discussed above, in the NPRM, the Commission seeks comment on a revision to the deployment benchmarks. While these changes would affect the specific obligations of covered entities under the rules, it would not alter the scope of entities subject to the rules, and accordingly, the Commission finds that the analysis of the categories and number of small entities that may be affected by the proposed rules is the same as for the Final Regulatory Flexibility Analysis the Commission provided in connection with the revision to those rules adopted in the Fourth Report and Order. Accordingly, the Commission incorporates the analysis in the Final Regulatory Flexibility Analysis accompanying the Fourth Report and Order, as the description and estimate of the number of small entities to which the proposed rules would apply.

39. The Commission is not proposing to impose any additional reporting or record keeping requirements. Rather, as discussed in the next section, the Commission is seeking comment on whether, if it adopts a 100 percent requirement, it can reduce regulatory burden on all wireless handset manufacturers and wireless service providers regardless of size by eliminating and streamlining the related hearing aid compatibility requirements. Presently, these requirements include annual reporting, disclosure, labeling, and other regulatory requirements. As part of its decision to eliminate or reduce regulatory burden, the Commission will consider whether it can reduce regulatory burden for small service providers and manufactures, if it cannot be done for all service providers and manufacturers.

40. The RFA requires an agency to describe any significant, specifically small business alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): “(1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) exemption from coverage of the rule, or any part thereof, for small entities.”

41. In the NPRM, the Commission proposes to adopt the terms of the Joint Consensus Proposal, including provisions that will help to minimize impact on small entities. The Joint Consensus Proposal recommends, and the Commission proposes, that while increasing the benchmarks at year two and year five, the Commission keeps in place the existing de minimis exception for manufacturers and service providers offering three handsets or less. The current de minimis exception provides that small manufacturers and service providers that offer two or fewer digital wireless handsets operating over a particular air interface are exempt from the benchmark deployment requirements in connection with that air interface, while larger manufacturers with two or fewer handsets have a limited obligation. The provision further states that any manufacturer or service provider that offers three digital wireless handset models operating over a particular air interface must offer at least one such handset model with at least an M3 and T3 rating for that air interface. In addition to retaining this exception to the benchmarks, the Commission proposes to adopt the Joint Consensus Proposal's recommendation that manufacturers and service providers offering either four or five handsets in an air interface be required to ensure that at least two of those handset models comply with the Commission's M and T rating requirements, rather than be required to meet the new 66 percent and 85 percent benchmarks. Finally, the Joint Consensus Proposal also provides additional time to small carriers to meet the benchmarks. Specifically, it provides that, while manufacturers must meet the new 66 percent and 85 percent benchmarks after two and five years, respectively, following the effective date of the rules, all non-nationwide carriers will have eighteen additional months to reach each benchmark (i.e., eighteen months after the two and five year deadlines applicable to manufacturers).

42. With respect to adoption of a 100 percent requirement, the Joint Consensus Proposal conditions the transition to 100 percent hearing aid compatibility on a Commission determination, after the receipt and review of a report from a newly established task force, that reaching the 100 percent goal is “achievable.” The NPRM seeks comment on how the Commission should determine achievability and what criteria should be utilized in making this determination. The NPRM also seeks comment on whether the current de minimis exception or the expanded de minimis exception, as proposed by the Joint Consensus Proposal, should be preserved in whole or in part if the Commission determines that adopting a 100 percent benchmark is achievable. In making the determination of achievable and whether to keep or expand the de minimis exception, the Commission will be considering, in part, whether small handset manufacturers and service providers have the resources to meet a 100 percent obligation or whether some accommodation, such as an exception, needs to be made for these entities.

43. In addition to the de minimis exception, the Commission seeks comment on other possible exceptions to the 100 percent requirement. These exceptions could apply to all manufacturers of wireless handsets or to some subset of wireless handset manufacturers, such as small entities generally (i.e., including those that do not fall within the de minimis exception). Further, the Commission seeks comment on which compliance process, such as waivers, should be modified to accommodate innovation and carriers', especially rural and regional carriers', handset inventories and turn-over rates, within a compliance regime with the enhanced benchmarks. These modifications would benefit all wireless handset manufacturers, including small entities, with their compliance obligations.

44. In the event the Commission adopts a 100 percent requirement, the NPRM seeks comment on grandfathering legacy handsets that are not hearing aid-compatible. The NPRM ask whether the Commission should allow manufacturers, including small manufacturers, of wireless handsets the ability to recoup their investment in non-hearing aid-compatible legacy handsets. Under this proposal, the Commission would allow wireless handset manufacturers to continue to offer handset models that have not been certified as hearing aid-compatible after the transition period to 100 percent ends if the manufacturer received equipment authorization for the handset prior to the end of that period. This proposal should help to minimize the economic impact of a 100 percent requirement on small entities.

45. The NPRM also seeks comment on whether transitioning to a 100 percent requirement would justify easing or eliminating several requirements associated with the hearing aid compatibility rules, which would further reduce the net economic impact of the adopted changes on these manufacturers and providers, including small entities. First, under the current rules, manufacturers are required to electronically file annual compliance reports with the Commission on FCC Form 655 in July of each year and service providers must electronically file this form with the Commission in January of each year. While these reports help the Commission to monitor compliance with the hearing aid compatibility benchmarks, numerous parties, especially rural and small entities, have asserted that having to file these annual reports is burdensome. The Commission seeks comment on whether to end or modify the reporting requirements for manufacturers and service providers at some point as the benchmarks increase. These changes to the reporting requirements would benefit all service providers and manufacturers, including small providers and manufacturers.

46. The existing hearing aid compatibility rules also require that manufacturers and service providers meet certain labeling and disclosure requirements for hearing aid-compatible handsets, and provide information on their Web sites, such as making available on their publicly-accessible Web sites a list of all hearing aid-compatible models currently offered, the associated rating information for those handsets, and an explanation of the rating system. The Commission seeks comment on whether, upon implementation of the 100 percent requirement, the current labeling and disclosure requirements should be eliminated or amended.

47. The Commission also seeks comment on whether, if it adopts a 100 percent requirement or other modifications to the benchmarks, it should eliminate the product refresh rule applicable to manufacturers, which provides that each manufacturer that offers any new model for a particular air interface during the calendar year must “refresh” its offering of hearing aid-compatible handset models by offering a mix of new and existing models that comply with the hearing aid compatibility technical standards. It further seeks comment on eliminating the differing levels of functionality rule applicable to service providers. Finally, if the Commission adopts a 100 percent requirement, the NPRM seeks comment on whether to eliminate or otherwise ease the deployment benchmarks applicable to the overall handset portfolios of manufacturers and service providers. Elimination of these rules would benefit small entities as well as larger manufacturers and service providers.

48. The Commission seeks comment generally on the effect, economic impact, or burden of the rule changes considered in the NPRM on small entities. It further seeks comment on any alternatives that would reduce the economic impact on small entities. It also seeks comment on whether there are any alternatives the Commission could implement that could achieve the Commission's goals while at the same time minimizing or further reducing the burdens on small entities, and on what effect such alternative rules would have on those entities. The Commission invites comment on ways in which it can achieve its goals while minimizing the burden on small wireless handset manufacturers and service providers. For the duration of this docketed proceeding, the Commission will continue to examine alternatives with the objectives of eliminating unnecessary regulations and minimizing any significant economic impact on small entities.

49. None.

50. The Notice of Proposed Rulemaking contains proposed modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees.

51. The proceeding that the Notice of Proposed Rulemaking initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

52. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. All filings related to this Notice of Proposed Rulemaking should refer to WT Docket No. 15-285. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (May 1, 1998).

• Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

• Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington, DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to [email protected] or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

53. It is ordered, pursuant to sections 4(i), 303(r), and 710 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), and 610, this Notice of Proposed Rulemaking is hereby adopted.

54. It is further ordered that pursuant to applicable procedures set forth in sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments on this Notice of Proposed Rulemaking on or before January 14, 2016, and reply comments on or before January 29, 2016.

55. It is further ordered that the Commission's Consumer & Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

For the reason discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 20 as follows:

We are reopening the public comment period for 30 days on our October 13, 2015, proposed rule to list the five American Samoa species (80 FR 61568), to allow all interested parties additional time to comment on the proposed rule. We received a request for a public hearing and to extend the public comment period beyond the December 14, 2015, due date in our October 13, 2015, proposal. We will accept comments and information until the date specified above in DATES or at the public hearing. We will consider all information and recommendations from all interested parties.

For details on specific information that we are requesting, please see the Information Requested section in our proposed listing rule (80 FR 61568) for the five American Samoa species. The proposed rule is available at the Federal eRulemaking Portal at http://www.regulations.gov (see ADDRESSES, above). Our final determination concerning this proposed rulemaking will take into consideration all written and oral comments and any additional information we receive. If you previously submitted comments or information on the proposed rule, please do not resubmit them. We have incorporated them into the public record, and we will fully consider them in our final rulemaking.

You may submit your comments and materials concerning the proposed rule by one of the methods listed in ADDRESSES. We request that you send comments only by the methods described in ADDRESSES.

If you submit a comment via http://www.regulations.gov, your entire comment—including any personal identifying information—will be posted on the Web site. We will post all hardcopy comments on http://www.regulations.gov as well. If you submit a hardcopy comment that includes personal identifying information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so.

Comments and materials we receive, as well as supporting documentation we used in preparing the proposed rule, will be available for public inspection on http://www.regulations.gov at Docket No. FWS-R1-ES-2015-0128 or by appointment, during normal business hours, at the U.S. Fish and Wildlife Service, Pacific Islands Fish and Wildlife Office (see FOR FURTHER INFORMATION CONTACT).

The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).

Ocean fisheries in the EEZ off Washington, Oregon, and California are managed under the Council's CPS, Groundfish, HMS, and Salmon FMPs. The Council also maintains a Fishery Ecosystem Plan (FEP), which includes an ecosystem initiative process for reviewing fisheries management issues that may affect multiple FMPs and for developing policies and regulations to address those issues under the authority of its FMPs. Under the ecosystem initiative process, the Council has reviewed trophic connections between the West Coast EEZ's unfished forage fish species and the EEZ's predator species managed under the MSA, the Marine Mammal Protection Act, and the Endangered Species Act. Through that review, the Council determined that it wanted to bring a suite of unfished and unmanaged forage fish species into its FMPs as ecosystem component (EC) species, and to prohibit directed fisheries for those species (unless and until science indicates that the stocks could support such fisheries).

The Council has recommended amending its FMPs to include the following species as Shared EC Species: Round herring (Etrumeus teres) and thread herring (Opisthonema libertate and O. medirastre); mesopelagic fishes of the families Myctophidae, Bathylagidae, Paralepididae, and Gonostomatidae; Pacific sand lance (Ammodytes hexapterus); Pacific saury (Cololabis saira); silversides (family Atherinopsidae); smelts of the family Osmeridae; and pelagic squids (families: Cranchiidae, Gonatidae, Histioteuthidae, Octopoteuthidae, Ommastrephidae except Humboldt squid (Dosidicus gigas,) Onychoteuthidae, and Thysanoteuthidae). Under Federal regulations at 50 CFR 600.310(d)(5)(iii,) a species may be included in an FMP as an EC species for: Data collection purposes, to inform the understanding of ecosystem considerations related to specification of optimum yield for the associated fishery, to assist in the development of conservation and management measures for the associated fishery, or to address other ecosystem issues. The Council recommended including the suite of Shared EC Species in its FMPs as EC species to address “other ecosystem issues,” because these species are the broadly used prey of marine mammal, seabird, and fish species in the U.S. West Coast EEZ. The Council also noted that Shared EC Species are among the known prey of fishery management unit species of all four of the Council's FMPs; therefore, Shared EC Species support predator species' growth and development and may also be identified as EC species “for ecosystem considerations related to specification of optimum yield for the associated fishery.”

CEBA 1, through its implementing FMP amendments and regulations, would prohibit the future development of fisheries for Shared EC Species within the U.S. West Coast EEZ until the Council has had an adequate opportunity to both assess the scientific information relating to any proposed directed fishery and consider potential impacts to existing fisheries, fishing communities, and the greater marine ecosystem. CEBA 1 includes these FMP amendments: Amendment 15 to the CPS FMP, Amendment 25 to the Pacific Coast Groundfish FMP, Amendment 3 to the FMP for U.S. West Coast HMS, and Amendment 19 to the Pacific Coast Salmon FMP. NMFS published a notice of availability of CEBA 1 in the Federal Register (80 FR 76924, December 11, 2015) to notify the public of the availability of the FMP amendments and invite comments. Comments received by the end of the CEBA 1 comment period, whether specifically directed to the FMP amendments or the proposed rule, will be considered and addressed in the preamble to the final rule for this action.

FMPs for EEZ fisheries off the U.S. West Coast are implemented under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (MSA) by regulations at 50 CFR 660. This proposed rule would revise 50 CFR 660.1(a,) subpart A, to clarify that the regulations in Part 660 of Title 50 of the Code of Federal Regulations apply to all vessels fishing within the U.S. West Coast EEZ. This proposed rule would also add new regulations at 50 CFR part 660, subpart B, that: (1) Identify Shared EC Species as including the unfished forage species listed earlier in the preamble to this proposed rule; (2) define what is meant by “directed commercial fishing” for Shared EC Species within the U.S. West Coast EEZ; (3) prohibit directed commercial fishing for Shared EC Species; and (4) prohibit at-sea processing of Shared EC Species, except while otherwise lawfully processing groundfish in accordance with 50 CFR part 600, subpart D. Directed commercial fishing for Shared EC Species is proposed to be defined as: Any vessel landing Shared EC Species without landing any other species; or any vessel landing Shared EC Species with other species and in amounts more than 10 mt combined weight of all Shared EC Species from any fishing trip, or 30 mt combined weight of all Shared EC Species in any calendar year.

Proposed landings limits are based on historic daily and annual per vessel landings levels of Shared EC Species, and take into account 99 percent of all Shared EC Species daily vessel landings and 97 percent of annual vessel total landings from the 2005-2014 period. This proposed rule also addresses the potential for incidental catch of Shared EC Species within the at-sea whiting sectors of the groundfish trawl fishery by providing an exception to the prohibition on at-sea processing of Shared EC Species when those species are retained and processed in amounts smaller than 1 mt for all Shared EC Species other than squid, and 40 mt for all Shared EC squid species. Over the 2002-2014 period, the highest annual catch of Shared EC Species other than squid, for the combined catcher-processor and mothership whiting fleets was 1.2 mt in 2011. Over the 2006-2014 period, all at-sea processors received fewer than 40 mt of Shared EC squid species, except for one vessel that in one year received 60 mt of Shared EC squid species.

This action is needed to proactively protect unmanaged, unfished forage fish of the U.S. West Coast EEZ, in recognition of the importance of these forage fish to the species managed under the Council's FMPs and to the larger California Current Ecosystem. Shared EC Species have not historically been targeted or processed in EEZ fisheries, and the limits provided in this proposed rule are intended to recognize that low levels of incidental catch if Shared EC Species may continue to occur. This action does not supersede tribal or state fishery management for these species.

Pursuant to section 304(b)(1)(A) of the MSA, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the CPS FMP, the Pacific Coast Groundfish FMP, the FMP for U.S. West Coast HMS, the Pacific Coast Salmon FMP, and other applicable law, subject to further consideration after public comment.

An environmental assessment (EA) for this action is available on NMFS's Web site at www.westcoast.fisheries.noaa.gov/fisheries/ecosystem/index.html.

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires agencies to assess the economic impacts of their proposed regulations on small entities. The objective of the RFA is to consider the impacts of a rulemaking on small entities, and the capacity of those affected by regulations to bear the direct and indirect costs of regulation.

An initial regulatory flexibility analysis (IRFA) was prepared, as required by section 603 of the RFA (RFA). The IRFA describes the economic impact this proposed rule, if adopted, would have on small entities. A description of the action, why it is being considered, and the legal basis for this action are contained at the beginning of this section in the preamble and in the SUMMARY section of the preamble. A summary of the analysis follows, with significant alternatives identified per 603(c).

Small entities include “small businesses,” “small organizations,” and “small governmental jurisdictions.” The SBA has established size standards for all major industry sectors in the U.S. including commercial finfish harvesters (NAICS code 114111), commercial shellfish harvesters (NAICS code 114112), other commercial marine harvesters (NAICS code 114119), for-hire businesses (NAICS code 487210), marinas (NAICS code 713930), seafood dealers/wholesalers (NAICS code 424460), and seafood processors (NAICS code 311710). A business primarily involved in finfish harvesting is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $20.5 million for all its affiliated operations worldwide (13 CFR part 121; August 17, 2015). For commercial shellfish harvesters, the other qualifiers apply and the receipts threshold is $5.5 million. For other commercial marine harvesters, for-hire businesses, and marinas, the other qualifiers apply and the receipts threshold is $7.5 million. A business primarily involved in seafood processing is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual employment not in excess of 500 employees for all its affiliated operations worldwide. For seafood dealers/wholesalers, the other qualifiers apply and the employment threshold is 100 employees. A small organization is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. Small governmental jurisdictions are governments of cities, counties, towns, townships, villages, school districts, or special districts, with populations less than 50,000.

The Council considered three alternatives for the implementation of this rule. The No Action and the selected/preferred alternatives are not expected to have a signficiant impact on any small entities. The third alternative was not selected and would likely increase costs for a substantial number of small entities. A summary of each alternative and the economic impacts follows below.

Alternative 1: If it is in conformance with all current Federal requirements, such as the Federal list of authorized fisheries and gear, the No Action alternative could allow a new fishery for Shared EC Species to begin without advance Council action to ensure the fishery's long-term sustainability. Participants in fisheries that currently take Shared EC Species incidentally (CPS and groundfish trawl) could more easily develop new fisheries for Shared EC Species under the No Action alternative than under the selected alternative. However, there have not been substantial historical U.S. West Coast landings of Shared EC Species. Barring notable shifts in composition of resident and transient species in the U.S. West Coast EEZ, it is unlikely that there are any current or future potentially important directed fishing opportunities for Shared EC Species in the EEZ. Alternative 1 is therefore not expected to have direct impacts on small entities.

Alternative 2 (preferred/Selected): The selected (preferred) alternative will not impose any changes in existing fishing behavior and is unlikely to have any effect on West Coast fisheries, either small or large entities, compared to the No Action Alternative. The selected alternative would prohibit the future development of directed commercial fisheries for currently unfished species; recreational fisheries and associated entities are not regulated by this action. The selected alternative is not expected to change fisheries harvest rates, the types of gears used off the U.S. West Coast, fishing seasons, or the geographical location of any fishery. The selected alternative could have minor, indirect, and positive effects on fishery management practices compared to the No Action Alternative 1 and is expected to have no direct impacts on small entities.

Alternative 3: Alternative 3 would have moderate, indirect and negative effects on coastal pelagic species net, shrimp, bottom trawl, and whiting fisheries and fishery management practices. These four fisheries comprise a substantial number of small entities, many of which likely fish in federal waters and would experience increased costs resulting from increased sorting, recordkeeping and reporting requirements.

Fifty-eight vessels are currently permitted in the Federal CPS limited entry fishery. All of these vessels currently fish off California. Average annual per vessel revenue in 2013 for the West Coast CPS finfish fleet was well below $20.5 million; therefore, all of these vessels are considered small businesses under the RFA. Approximately 95 vessels participated in the pink shrimp fishery on the West Coast in 2014, all of which would be considered small businesses according to the standards. Because each affected vessel is a small business, this proposed rule has an equal effect on all of these small entities, and therefore will impact a substantial number of these small entities in the same manner.

Currently, the Shorebased IFQ Program is composed of 149 Quota Share permits/accounts, 152 vessel accounts, and 43 first receivers. Many companies participate in multiple sectors of the fishery. After accounting for cross participation, multiple Quota Share account holders, and for affiliation through ownership, NMFS estimates that there are 103 non-tribal entities directly affected by these proposed regulations, 89 of which are considered to be “small” businesses.

The mothership (MS) fishery is currently composed of a single cooperative, the Whiting Mothership Cooperative with six mothership processor permits, and 34 mothership/catcher-vessel (MS/CV) endorsed permits, with three permits each having two catch history assignments. The catcher/processor (C/P) Program is composed of 10 C/P permits owned by three companies that have formed a single cooperative, the Pacific Whiting Conservation Cooperative. These two cooperatives are considered large entities from several perspectives: They have participants that are large entities, cooperative revenues exceed or have exceeded $20.5 million, combined employment exceeds 500 employees, and co-op members are connected to American Fishing Act permits or co-ops where the NMFS Alaska Region has determined they are all large entities (79 FR 54597, September 12, 2014).

Therefore, 17 large groundfish fishery entities and 242 small entities would be affected by Alternative 3 (the non-preferred alternative): 89 small entities in the trawl fishery, 58 small entities in the CPS fishery, and 95 small entities in the pink shrimp fishery. We expect Alternative 3 would have moderate, indirect and negative effects on coastal pelagic species, shrimp, bottom trawl, and whiting fisheries and fishery management practices; however, these effects cannot be quantified without better data on the costs vessels would incur discarding at sea.

This proposed rule was developed after meaningful collaboration, through the Council process, with the tribal representative on the Council. NMFS is not aware of any Treaty Indian tribe or subsistence fisheries in the EEZ other than those listed in 50 CFR 600.725(v). This action does not supersede or otherwise affect exemptions that exist for Treaty Indian fisheries.

This proposed rule does not contain a collection of information requirement subject to review and approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA).

For the reasons set out in the preamble, 50 CFR part 660 is proposed to be amended as follows: