Federal Register Vol. 83, No.11,

The NOSB makes recommendations to the Department of Agriculture about whether substances should be allowed or prohibited in organic production and/or handling, assists in the development of standards for organic production, and advises the Secretary on other aspects of the implementation of the Organic Foods Production Act. The NOSB is holding a public meeting to discuss and vote on proposed recommendations to the USDA, receive updates from the USDA National Organic Program (NOP) on issues pertaining to organic agriculture, and receive comments from the organic community. The meeting and webinars are open to the public. All meeting documents, including the meeting agenda, NOSB proposals and discussion documents, instructions for submitting and viewing public comments, and instructions for requesting time for oral comments, will be available on the AMS website at www.ams.usda.gov/NOSBMeetings. Please check the website periodically for updates. Meeting topics will encompass a wide range of issues, including substances petitioned for addition to or deletion from the National List of Allowed and Prohibited Substances (National List), substances on the National List that are under sunset review, and guidance on organic policies. Participants and attendees may take photos and video at the meeting, but not in a manner that disturbs the proceedings.

Public Comments: Comments should address specific topics noted on the meeting agenda.

Written Comments: Written public comments will be accepted on or before 11:59 p.m. ET on April 4, 2018, via http://www.regulations.gov: Document #AMS-NOP-17-0057. Comments submitted after this date will be provided to the NOSB, but Board members may not have adequate time to consider those comments prior to making recommendations. The NOP strongly prefers comments to be submitted electronically. However, written comments may also be submitted (i.e., postmarked) via mail to the person listed under FOR FURTHER INFORMATION CONTACT by or before the deadline.

Oral Comments: The NOSB is providing the public multiple dates and opportunities to provide oral comments and will accommodate as many individuals and organizations as time permits. Persons or organizations wishing to make oral comments must pre-register by 11:59 p.m. ET, April 4, 2018, and can register for only one speaking slot: Either during the webinars scheduled for April 17 and 19, or at the in-person meeting, scheduled for April 25-27, 2018. Due to the limited time allotted for in-person public comments during the in-person meeting, commenters are strongly encouraged to comment during the webinar(s). Instructions for registering and participating in the webinar can be found at www.ams.usda.gov/NOSBMeetings.

Meeting Accommodations: The meeting hotel is ADA Compliant, and the USDA provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in this public meeting, please notify the person listed under FOR FURTHER INFORMATION CONTACT. Determinations for reasonable accommodation will be made on a case-by-case basis.

Comments Invited

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2017-1247; Product Identifier 2017-NM-085-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this NPRM. We will consider all comments received by the closing date and may amend this NPRM based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this NPRM.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian AD CF-2017-22, dated June 23, 2017 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc., Model BD-100-1A10 airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-1247.

Bombardier, Inc., has issued Service Bulletin 100-35-08, dated April 11, 2017. This service information describes procedures for replacing the lanyards in the passenger oxygen masks located in the passenger entry area. 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.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.

We estimate that this proposed AD affects 187 airplanes of U.S. registry.

We estimate the following costs to comply with this proposed AD:

According to the manufacturer, some of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all available costs in our cost estimate.

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.

This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes to the Director of the System Oversight Division.

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 above, 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; 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.

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

We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2017-1248; Product Identifier 2017-NM-162-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this NPRM. We will consider all comments received by the closing date and may amend this NPRM because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

We have received reports indicating that a crack was found in the MLG beam forward support fitting around the fastener locations common to the rear spar web, below the upper chord on the inboard side of the wing buttock line (WBL) 157 rib. Cracks were found on airplanes having 62,706 to 65,827 total flight hours and 50,152 to 53,039 total flight cycles. Because cracks in the MLG beam forward support fitting at this location are entirely hidden—the forward side of the fitting (inside fuel tanks) by sealant, and the aft side by the rear spar web and MLG beam—they cannot be detected reliably during normal maintenance and therefore require additional inspections. This cracking of the MLG beam forward support fitting, if not corrected, could lead to a fuel leak, the inability of a principal structural element to carry limit load, or an MLG collapse that could prevent continued safe flight and landing.

We reviewed Boeing Alert Service Bulletin 737-57A1334, dated September 26, 2017. The service information describes procedures for repetitive high frequency eddy current (HFEC) inspections for cracking of the MLG beam forward support fitting around the fastener locations common to the rear spar web, below the upper chord on the inboard side of the WBL 157 rib, and applicable on-condition actions (e.g., repair). 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 are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would require accomplishment of the actions identified as “RC” (required for compliance) in the Accomplishment Instructions of Boeing Alert Service Bulletin 737-57A1334, dated September 26, 2017, described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD.

For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-1248.

Model 737 airplanes having line numbers 1 through 291 have a limit of validity (LOV) of 34,000 total flight cycles, and the actions proposed in this NPRM, as specified in Boeing Alert Service Bulletin 737-57A1334, dated September 26, 2017, would be required at a compliance time occurring after that LOV. Although operation of an airplane beyond its LOV is prohibited by 14 CFR 121.1115 and 129.115, this NPRM would include those airplanes in the applicability so that these airplanes are tracked in the event the LOV is extended in the future.

We estimate that this proposed AD affects 160 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this proposed AD. Because the number of work-hours can vary widely, depending on the inspection findings, these figures were not included in the service information.

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.

This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes to the Director of the System Oversight Division.

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 above, 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, 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.

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

We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-9523; Product Identifier 2016-NM-134-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this SNPRM. We will consider all comments received by the closing date and may amend this SNPRM because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

We issued AD 2014-12-13, Amendment 39-17874 (79 FR 39300, July 10, 2014) (“AD 2014-12-13”). AD 2014-12-13 requires actions to address an unsafe condition on all The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes. AD 2014-12-13 requires repetitive inspections for cracking of the aft support fitting for the main landing gear (MLG) beam, and the rear spar upper chord and rear spar web; and repair if necessary.

We issued an NPRM to amend 14 CFR part 39 by adding an AD to supersede AD 2014-12-13 that would apply to all The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes. The NPRM published in the Federal Register on January 5, 2017 (82 FR 1254) (“the NPRM”). The NPRM was prompted by reports of cracking in locations outside the inspection area identified in AD 2014-12-13, in the inspar upper skin at Wing Buttock Line (WBL) 157 and in the skin at two holes common to the rear spar in the same area, and in the rear spar web on both wings. Subsequent inspections revealed that the right rear spar upper chord was almost completely severed and the left rear spar upper chord was completely severed. The NPRM proposed to expand the inspection area and add applicable related investigative and corrective actions.

We subsequently issued an SNPRM, which was published in the Federal Register on August 11, 2017 (82 FR 37549) (“the first SNPRM”). The first SNPRM was prompted by reports of additional cracking in the inspar upper skin at WBL 157 and in the skin at two holes common to the rear spar in the same area, and rear spar web cracks were also noted on both wings. The first SNPRM proposed to expand the inspection area and terminate (rather than supersede) the requirements of AD 2014-12-13, after accomplishment of the initial inspections.

Since we issued the first SNPRM, we have determined that standard-size fasteners are required for installation for a certain configuration, as explained below under “Request to Install Standard-Size Fasteners.”

We reviewed Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016. The service information describes procedures for repetitive high frequency eddy current (HFEC) open hole inspections for any cracking in the forward support fitting, the aft support fitting, the rear spar upper chord, and the rear spar web at the 12 fastener holes (locations 1-12). The service information also describes procedures for optional HFEC open hole inspections for any cracking in the forward support fitting, the aft support fitting, the rear spar upper chord, and the rear spar web, and HFEC surface inspections for any cracking in the rear spar upper chord and rear spar upper web, as applicable. The service information also describes procedures for related investigative and corrective actions.

We also reviewed Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016. The service information describes procedures for repetitive eddy current inspections of the left and right wing for any cracking in the inspar upper skin and at the repair parts if applicable, and related investigative and corrective actions.

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 gave the public the opportunity to comment on the first SNPRM. The following presents the comments received on the first SNPRM and the FAA's response to each comment.

Boeing requested that standard-size fasteners be used for installation on the airplane instead of same-type and same-size fasteners. Boeing stated that for Group 7, Configuration 1 airplanes specified in Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016, the service information specifies to install standard-size fasteners (not oversize) and specifies a loose-fit design feature common to the aft fitting at fastener #5. Boeing commented that the loose-fit design feature is consistent with the type design and decreases the potential for future cracking. Boeing also stated that if the actions of Boeing Special Attention Service Bulletin 737-57-1318, dated May 15, 2013, have been done, it is possible that the fasteners have already been oversized and the loose-fit design feature has already been eliminated. Boeing commented that this recommendation will allow the opportunity to restore the fastener #5 location to the intended fastener fit (i.e., loose fit in the aft fitting and tight fit in the forward fitting, web and chord).

We agree with the commenter for the reasons provided above. We have revised paragraph (h)(2) of this proposed AD to require the installation of standard-size fasteners, and if the existing fastener holes exceed the permitted hole diameter, operators must do a repair before further flight using a method approved in accordance with the procedures specified in paragraph (l) of this proposed AD.

All Nippon Airlines (ANA) requested credit for previous actions specified in paragraph (h) of the proposed AD (in the first SNPRM). ANA stated that credit should be provided if those actions were performed before the effective date of the AD using option 1 or 2 of Boeing Special Attention Service Bulletin 737-57-1318, dated May 15, 2013, and the HFEC open hole inspection for the forward support fitting should be done at the same time as the existing inspection within a shortened inspection interval.

ANA commented that based on the current descriptions of the proposed AD (in the first SNPRM), all operators must do the initial inspection even if they have chosen option 1 or 2 of Boeing Special Attention Service Bulletin 737-57-1318, dated May 15, 2013. Since AD 2014-12-13 has been effective since July 25, 2014, ANA believes many operators have already completed the initial inspection and started the repetitive inspection in accordance with Boeing Special Attention Service Bulletin 737-57-1318, dated May 15, 2013. ANA questioned the reasonableness of the requirement for operators who have chosen option 1 or 2 of Boeing Special Attention Service Bulletin 737-57-1318, dated May 15, 2013, to do the initial inspection again within the compliance time specified in table 2 through table 9 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016.

We disagree with the commenter's request. Paragraph (h) of the proposed AD (in the first SNPRM) includes a requirement to do the HFEC open hole inspection of the forward fitting in addition to the inspections that were previously required by AD 2014-12-13 with updated service information, Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016. Since AD 2014-12-13 was issued, there have been reports of cracks found in the forward fitting. Therefore, Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016, has added an inspection of the forward fitting. Paragraph (l) of this proposed AD would allow operators to request approval of an alternative method of compliance (AMOC) if they previously performed the HFEC open hole inspection of this stack up, including the forward fitting, and they have documentation that the inspection of the forward fitting was done. We have not changed this proposed AD regarding this issue.

We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design. Certain changes described above expand the scope of the first SNPRM. As a result, we have determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on this second SNPRM.

This SNPRM would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.” For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9523.

The phrase “related investigative actions” is used in this SNPRM. Related investigative actions are follow-on actions that (1) are related to the primary action, and (2) further investigate the nature of any condition found. Related investigative actions in an AD could include, for example, inspections.

The phrase “corrective actions” is used in this SNPRM. Corrective actions correct or address any condition found. Corrective actions in an AD could include, for example, repairs.

Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016; and Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016; specify to contact the manufacturer for certain instructions, but this proposed AD would require accomplishment of repair methods, modification deviations, and alteration deviations in one of the following ways:

• In accordance with a method that we approve; or

• Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.

We estimate that this proposed AD affects 471 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

We have received no definitive data that will enable us to provide cost estimates for the on-condition actions specified in this SNPRM.

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.

This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes to the Director of the System Oversight Division.

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 above, 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, 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.

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

On November 30, 2017, the Commission published an ANPR in the Federal Register, initiating rulemaking under the Consumer Product Safety Act (15 U.S.C. 2051-2089) and seeking comments and information regarding the risk of injury associated with CSU tip overs. 82 FR 56752. The ANPR provided a 60-day comment period, which will close on January 29, 2018. The American Home Furnishings Alliance (AHFA) has requested that the Commission extend the comment period an additional 75 days, given AHFA's pending Freedom of Information Act (5 U.S.C. 552) request for the raw data underlying the ANPR; the numerous subjects on which the ANPR seeks comments; and the time necessary to analyze the preliminary findings, complex issues, and substantial amount of data in the ANPR.

The Commission grants this request, extending the comment period for an additional 75 days, until April 14, 2018.

Legal Authority

These proposed amendments are promulgated under the authority of the TVA Act, as amended, 16 U.S.C. 831-831ee, Title V of the Independent Offices Appropriations Act of 1955, 31 U.S.C. 9701, and OMB Circular No. A-25. Under Section 26a of the TVA Act, no obstructions affecting navigation, flood control, or public lands or reservations shall be constructed, operated, or maintained across, along, or in the Tennessee River System without TVA's approval. TVA has long considered nonnavigable structures such as floating cabins to be obstructions that require its approval. In addition, Section 9b of the TVA Act provides that TVA “may establish regulations to prevent the construction of new floating cabins.” 16 U.S.C. 831h-3(e).

TVA is a multi-purpose federal agency that has been charged by Congress with promoting the wise use and conservation of the resources of the Tennessee Valley region, including the Tennessee River System. In carrying out this mission, TVA operates a system of dams and reservoirs on the Tennessee River and its tributaries for the purpose of navigation, flood control, and power production. Consistent with those purposes, TVA uses the system to improve water quality and water supply and to provide a wide range of public benefits including recreation.

To promote the unified development and regulation of the Tennessee River System, Congress directed TVA to approve obstructions across, along, or in the river system under Section 26a of the TVA Act, as amended. “Obstruction” is a broad term that includes, by way of example, boat docks, piers, boathouses, buoys, floats, boat launching ramps, fills, water intakes, devices for discharging effluents, bridges, aerial cables, culverts, pipelines, fish attractors, shoreline stabilization projects, channel excavations, and nonnavigable houseboats. TVA also owns, as agent for the United States, much of the shoreline and inundated land along and under its Reservoir System.

Since 1971, TVA has used its authority under Section 26a to prohibit the mooring on the Tennessee River System of new nonnavigable houseboats that are used primarily for habitation or occupation and not for navigation or water transportation. In particular, TVA amended its regulations in 1971 to prohibit the mooring or anchoring of new nonnavigable houseboats except for those in existence before November 21, 1971. Criteria were established then to identify when a houseboat was considered “navigable” and the conditions under which existing nonnavigable houseboats would be allowed to remain. These criteria were characteristics that TVA determined were indicative of real watercraft; i.e., boats or vessels that are designed and used primarily to traverse water. Since 1971, TVA has made minor changes to its regulations affecting nonnavigable houseboats, most notably in 1978 when TVA updated the prohibited mooring of nonnavigable houseboats on its reservoir system except for those in existence on or before February 15, 1978. The navigability criteria, however, largely have remained unchanged.

A “nonnavigable houseboat” under TVA's current regulations is identified as any houseboat not in compliance with the following criteria:

Built on a boat hull or on two or more pontoons;

Equipped with a motor and rudder controls located at a point on the houseboat from which there is forward visibility over a 180-degree range;

Compliant with all applicable state and federal requirements relating to vessels;

Registered as a vessel in the state of principal use; and

State registration numbers clearly displayed on the vessel.

Despite the nonnavigable houseboat prohibition, new nonnavigable houseboats in the form of floating cabins have been moored on TVA reservoirs. TVA estimates that approximately 2000 floating cabins and older nonnavigable houseboats are now moored on TVA reservoirs. Some developers and owners of these floating cabins have asserted that they are not nonnavigable houseboats because they have been designed to meet the criteria for navigability in TVA's regulations. Whether or not this is true, these floating cabins are designed and used primarily for human habitation at a fixed location rather than for transportation or navigation. These floating cabins are a modern version of the pre-1978 nonnavigable houseboats that TVA addressed in its 1971 and 1978 regulatory actions. They are not in any real sense watercraft, and absent action by TVA, the mooring of floating cabins on TVA reservoirs will continue to increase. Until now, TVA has discouraged the increased mooring of floating cabins without using the full scope of its regulatory authority under the TVA Act.

In determining what action to take, TVA prepared an Environmental Impact Statement (EIS) in accordance with the National Environmental Policy Act. This EIS assesses the environmental and socioeconomic impacts of different policies to address the proliferation of floating cabins and nonnavigable houseboats on TVA's reservoirs. TVA released a draft of this EIS for public comment in June 2015 and held four public meetings and a webinar to provide information about its analyses and to facilitate public involvement. Public reaction to this situation widely varied.

Many members of the general public urged TVA to require the removal of all floating cabins because TVA's reservoirs are public resources and owners of floating cabins are occupying public areas. Floating cabin owners generally supported additional reasonable regulation of their structures but argued against policies requiring their removal because of the investments they have made in the structures. Other commenters had concerns about discharges of black (sewage) and gray (showers, sinks, etc.) water from floating cabins and shock and electrocution risks associated with the electrical connections to floating cabins. Commenting agencies consistently supported better regulation of floating cabins. The final EIS and associated documents can be found at https://www.tva.com/Environment/Shoreline-Construction/Floating-Cabins.

After considering the comments it received during the EIS process and its analyses of impacts, TVA identified as its preferred policy one that establishes standards for floating cabins to enhance compliance with applicable water quality discharge requirements set by other agencies, adherence to electrical safety codes, and location of floating cabins within identified harbor limits of commercial marinas. Under the preferred policy, the mooring of additional floating cabins would be prohibited on the TVA River System of which TVA reservoirs are a part. All existing floating cabins, including nonnavigable houseboats, would have to be removed from the Tennessee River System by January 1, 2036, and be subject to a regulatory program in the interim. On May 5, 2016, the TVA Board of Directors adopted the preferred policy with one exception—the Board changed the removal date to May 5, 2046.

On December 16, 2016, the Water Infrastructure Improvements for the Nation Act (WIIN Act) was enacted by the United States Congress. Title IV Section 5003 related to floating cabins and amended the TVA Act to include Section 9b. This new section of the TVA Act specifically addresses floating cabins and provides that TVA may allow the use of floating cabins where the structure was located on waters under TVA's jurisdiction as of December 16, 2016; and where the owner maintains the structure in accordance with reasonable health, safety, and environmental standards set by the TVA Board of Directors. Section 9b also states that TVA may establish regulations to prevent the construction of new floating cabins and may levy fees to ensure compliance.

Section 9b provides the circumstances under which TVA may require the removal of existing floating cabins; i.e., those located on waters under TVA's jurisdiction as of December 16, 2016. For floating cabins that have a TVA permit as of December 16, 2016, TVA may not require their removal for 15 years; i.e., until December 16, 2031. For those without permits on December 16, 2016, TVA may not require their removal for five years; i.e., until December 16, 2021. During these 15- and 5-year periods, however, TVA may levy necessary and reasonable fees to ensure compliance with TVA's regulations. The new legislation also provides that, with respect to existing floating cabins, TVA “shall approve and allow the use of the floating cabin on waters under the jurisdiction of [TVA] at such time and for such duration as (i) The floating cabin meets the requirements of [16 U.S.C. 831h-3(b)]; and (ii) the owner of the floating cabin has paid any fee assessed pursuant to [16 U.S.C. 831h-3(c)].” 16 U.S.C. 831h-3(d)(1)(B).

Section 9b of the TVA Act defines “floating cabin” as a watercraft or other floating structure (1) primarily designed and used for human habitation or occupation; and (2) not primarily designed or used for navigation or transportation on the water. This proposed rule clarifies the type of structure that TVA will regulate as a floating cabin and updates TVA's regulations to clarify that floating cabins placed on TVA waters after December 16, 2016, are prohibited. The proposed rule also establishes limited mooring requirements; clarifies limitations on expansions; and requires all owners of floating cabins to register their structures with TVA by January 1, 2019, regardless of whether they already have a Section 26a permit. Although this deadline allows plenty of time for owners to register their floating cabins, TVA would encourage owners to begin the registration process without delay. A subsequent rulemaking will address: (1) The permitting process for existing floating cabins; (2) health, safety, and environmental standards; and (3) fees.

To more clearly describe the type of floating structure that TVA regulates, the term “nonnavigable houseboat” would be replaced in TVA's Section 26a regulations with the term “floating cabin,” the term adopted by Congress in the WIIN Act. Floating cabins are structures determined by TVA, in its sole judgment, to be designed and used primarily for human habitation or occupation and not designed or used primarily for navigation or transportation on the water. TVA's judgment will be guided by, but not limited to, the following factors:

1. Whether the structure is usually kept at a fixed mooring point;

2. Whether the structure is actually used on a regular basis for transportation or navigation;

3. Whether the structure has a permanent or continuous connection to the shore for electrical, plumbing, water, or other utility service;

4. Whether the structure has the performance characteristics of a vessel typically used for navigation or transportation on the water;

5. Whether the structure can be readily removed from the water;

6. Whether the structure is used for intermittent or extended human-habitation or occupancy;

7. Whether the structure clearly has a means of propulsion and appropriate power/size ratio;

8. Whether the structure is safe to navigate or use for transportation purposes.

Existing floating cabins, i.e., those located on the TVA River System on or before December 16, 2016, may continue to be moored within harbor limits of a commercial marina or, if the floating cabin is not associated with a marina, along shoreline approved in writing by TVA on or before December 16, 2016. However, to prevent sprawl and to better contain the impacts of floating cabins, TVA would not allow an existing floating cabin to relocate except to the harbor limits of a commercial marina that complies with 18 CFR 1304.404, the TVA regulation governing commercial marina harbor limits. Existing floating cabins without TVA permits would have to be moored within identified and approved harbor limits of commercial marinas that comply with 1304.404. In some cases, existing floating cabins moored at a commercial marina are located outside of the designated harbor limits or the marina's land ownership has changed since the harbor limits were originally designated. In these and other situations, TVA may require a floating cabin to relocate to another location within the marina's harbor limits. Relocations to alternate marinas would require advance approval from TVA in the form of a new permit.

Separate from the proposed amendments to regulations concerning floating cabins, the proposal would result in a minor change to clarify TVA's intent concerning the size of some water-use facilities (e.g., docks). The current regulation requires water-use facilities to be sited within a 1000-square-foot rectangular or square area. The proposed change would allow some water-use facilities to be as large as 1800 square feet, but only in one of two circumstances (1) where the water-use facility will be located in a subdivision recorded before November 1, 1999, and TVA permitted at least one water-use facility in the subdivision prior to November 1, 1999; or (2) if there is no subdivision, where the water-use facility will be located within a quarter-mile radius of another water-use facility that TVA permitted prior to November 1, 1999. TVA's current waiver or variance provisions, set forth in 1304.212 and 1304.408 respectively, may allow even larger facilities where an applicant requests and justifies a waiver or variance, but such allowances shall be made in TVA's discretion and on a case-by-case basis.

This proposal contains no federal mandates for state, local, or tribal government or for the private sector. TVA has determined it will not have a significant annual effect of $100 million or more or result in expenditures of $100 million in any one year by state, local, or tribal governments or by the private sector. The proposal will not have a substantial direct effect on the States or Indian tribes, on the relationship between the Federal Government and the States or Indian tribes, or on the distribution of power and responsibilities between the federal Government and States or Indian tribes. Nor will the proposal have concerns for environmental health or safety risks that may disproportionately affect children, have significant effect on the supply, distribution, or use of energy, or disproportionally impact low-income or minority populations. Unified development and regulation of the Tennessee River System through an approval process for obstructions across, along, or in the river system, and management of United States-owned land entrusted to TVA are federal functions for which TVA is responsible under the TVA Act. In general, the proposal updates or clarifies TVA's regulations to align them with the status quo. First, the proposal clarifies that no new structures are allowed and codifies (1) an updated definition for floating, habitable structures that are allowable on TVA reservoirs; (2) where such structures may be located; and (3) the types of modifications that are allowed. The proposal also amends TVA's regulations to align better with its policy for allowing some obstructions, usually docks, to be larger than 1,000 square feet. Accordingly, the proposal has no implications for any of the referenced authorities, including the Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs dated January 30, 2017, which affects only “significant regulatory actions” as defined by Executive Order 12866.

Under the Regulatory Flexibility Act, 5 U.S.C. 605, TVA is required to prepare a regulatory flexibility analysis unless the head of the agency certifies that the proposal will not have a significant economic impact on a substantial number of small entities. The statute defines “small entity” as a “small business,” “small organization” (further defined as a “not-for-profit enterprise”), or a “small governmental jurisdiction.” Most applications for water-use facilities are submitted by residential landowners for personal use. Since residential landowners are not businesses, not-for-profit enterprises, or small governmental jurisdictions, there are relatively few “small entities” affected by TVA's proposal. Moreover, nothing in this proposal significantly adds to the cost of applying for and constructing any regulated facility. Accordingly, this rule will not have a significant impact on a substantial number of small entities; no regulatory flexibility analysis is required; and TVA's Chief Executive Officer has made the requisite certification.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), this notice announces TVA's intent to request approval from the Office of Management and Budget (OMB) for amendment of a currently approved information collection. The information collection requirements proposed under this rule for registration of floating cabins will be included within the Section 26a Permit Application information collection. For this information collection, we estimate an increase in the number of responses and the burden hours in the first year of the floating cabin registration process. The number of responses is estimated to increase from 1,500 to 3,700 in the first year, then return to close to the previous number in following years. The estimated burden per response remains at 2 hours. Therefore in the first year, the estimated burden will increase from 3,000 hours to 7,400 hours. The estimated overall burden for the information collection will return to about 3,000 hours in following years.

Title of Information Collection: Section 26a Permit Application.

Current OMB Approval Number: 3316-0060.

Type of Affected Public: Individuals or households, state or local governments, farms, businesses, or other for-profit organizations, federal agencies or employees, non-profit institutions, small businesses or organizations.

Small Businesses or Organizations Affected: Yes.

Federal Budget Functional Category Code: 452.

Estimated Number of Annual Responses: 3,700.

Estimated Total Annual Burden Hours: 7,400.

Estimated Average Burden Hours per Response: 2.0.

Need for and Use of Information: TVA Land Management activities and Section 26a of the Tennessee Valley Authority Act of 1933, as amended, require TVA to collect information relevant to projects that will impact TVA land and land rights and review and approve plans for the construction, operation, and maintenance of any dam, appurtenant works, or other obstruction affecting navigation, flood control, or public lands or reservations across, along, or in the Tennessee River or any of its tributaries. The information is collected via paper forms and/or electronic submissions and is used to assess the impact of the proposed project on TVA land or land rights and statutory TVA programs to determine if the project can be approved. Rules for implementation of TVA's Section 26a responsibilities are published in 18 CFR part 1304.

The information collection requirements in this proposed rule have been submitted for review by OMB under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

An Information Collection Request (ICR) document has been prepared by TVA, and a copy may be obtained from the Senior Privacy Program Manager: Christopher A. Marsalis, Tennessee Valley Authority, 400 W. Summit Hill Dr. (WT 5D), Knoxville, Tennessee 37902-1401; telephone (865) 632-2467 or by email at [email protected]; or to the Agency Clearance Officer: Philip D. Propes, Tennessee Valley Authority, 1101 Market Street (MP 2C), Chattanooga, Tennessee 37402-2801; telephone (423) 751-8593 or email at [email protected].

Under the Paperwork Reduction Act, TVA is soliciting public comment before the ICR is submitted to OMB for final review and approval. We are soliciting comment to:

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

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

(3) Enhance the quality, utility, and clarity of the information to be collected; and

(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

Comments on the ICR must be submitted to TVA by the date indicated above. Comments must be submitted by mail or hand delivery to David B. Harrell, Program Manager, Floating Cabins, Tennessee Valley Authority, 260 Interchange Park Drive, Lenoir City, TN 37772 or by email to [email protected].

Comments may also be sent to OMB at: Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street NW, Washington, DC 20503, marked “Attention: Desk Officer for Tennessee Valley Authority, OMB #3316-0060.” Comments on the ICR will be summarized and included in the request for OMB approval.

For the reasons set out in the preamble, the Tennessee Valley proposes to amend 18 CFR part 1304 of the Code of Federal Regulations as follows:

The revisions and additions read as follows:

The addition and revision read as follows:

The additions read as follows:

I. Executive Summary A. Purpose of the Proposed Rule

The purpose of this proposed rule is to implement regulations on the procedures regarding internal agency supervisory review of certain decisions made by CDRH under the FD&C Act. Section 603 of FDASIA added new section 517A to the FD&C Act (21 U.S.C. 360g-1), which was amended by sections 3051 and 3058 of the Cures Act. These provisions established procedures and timeframes for supervisory review under § 10.75 (21 CFR 10.75) of significant decisions by CDRH pertaining to devices. After the enactment of FDASIA, FDA issued a guidance document entitled “Center for Devices and Radiological Health Appeals Processes: Questions and Answers About 517A—Guidance for Industry and Food and Drug Administration Staff” (Q&A Guidance) to provide interpretation of key provisions of section 517A, including those that pertain to requests for supervisory review of significant decisions by CDRH (Ref. 1). FDA is proposing this regulation to codify (1) the procedures and timeframes for § 10.75 appeals of “significant decisions” by CDRH established under section 517A and (2) the interpretation of key provisions of section 517A of the FD&C Act regarding supervisory review. In addition, the proposed regulations would introduce new procedural requirements for supervisory review within CDRH of other CDRH decisions that were not addressed in FDASIA and the Cures Act.

The proposed regulations will provide transparency and clarity for internal and external stakeholders on CDRH's process for supervisory review of decisions and will give requesters new predictability through binding deadlines for FDA action on a request for supervisory review within CDRH and the Center's internal agency review of “significant decisions.” Furthermore, this proposal, when finalized, will codify the types of decisions that are considered “significant decisions,” for which the timeframes apply. The proposed regulations will also codify the timeframe for submission of requests for the review of other decisions within CDRH.

FDA proposes to amend part 10 (21 CFR part 10) by adding § 10.75(e). Section 10.75 currently provides that an interested person outside the Agency may request internal agency review of a decision of an FDA employee. FDA proposes to amend § 10.75 to add paragraph (e), which would require that requests for internal agency supervisory review within CDRH of a decision also comply with proposed § 800.75 (21 CFR 800.75). This proposed change to the regulations would encompass both significant decisions under section 517A of the FD&C Act and other decisions by CDRH employees.

The proposed rule would also add new § 800.75 to part 800 (21 CFR part 800). Proposed § 800.75 would incorporate in the regulations the provisions of section 517A of the FD&C Act for review of “significant decisions” related to devices regulated under the FD&C Act by CDRH. Proposed § 800.75 would define “significant decisions.” Section 800.75 would also include the timeframes for submission of requests for internal agency review of significant decisions within CDRH and for responses to such requests.

Proposed § 800.75 would further address requests for supervisory review within CDRH of decisions other than section 517A decisions and would indicate the timeframe for submission of these requests for internal agency review.

FDA's legal authority to implement requirements pertaining to the process and timelines for § 10.75 appeals of decisions within CDRH derives from sections 510(k), 515, 515C, 517A, and 520(g) of the FD&C Act (21 U.S.C. 360(k), 360e, 360e-3, 360g-1, and 360j) and other provisions under which a decision might be appealed, and 701(a) of the FD&C Act (21 U.S.C. 371(a)). Section 701(a) of the FD&C Act gives FDA general rulemaking authority to issue regulations for the efficient enforcement of the FD&C Act.

We expect the costs and benefits of the proposed rule to be negligible.

FDA has long provided a path for outside parties to request internal agency review of decisions. A procedure for this type of review was first published as a proposed regulation in 1975 (40 FR 40682, September 3, 1975) (Ref. 2). In the preamble for the proposed rule, the Agency recognized that a process for administrative review of Agency decisions would advise outside parties how they should pursue matters that interest and concern them (40 FR 40682 at 40693). A final rule published in 1977 incorporated these provisions into the Code of Federal Regulations at 21 CFR 2.17 (42 FR 4680, January 25, 1977) (Ref. 3).

These regulations provided that any decision of an FDA employee, other than the Commissioner, on any matter was subject to review by the employee's supervisor under any of the following circumstances: (1) At the request of the employee, (2) on the initiative of the supervisor, (3) at the request of any interested person outside of the Agency, or (4) as required by duly promulgated delegations of authority. The review shall be accomplished by consultation between the employee and the supervisor, by review of the administrative file, or both. The review shall ordinarily follow established Agency channels of supervision. Internal agency review shall be based on the data and information available in the administrative file. If an interested person presents new data or information not contained in the administrative file, then the matter shall be returned to the appropriate lower level within the Agency for a reevaluation based upon the new information (§ 2.17 (1977)).

The following year, in 1978, a proposed rule was published to reorganize and revise the Agency's administrative practices and procedures regulations (43 FR 51966, November 7, 1978) (Ref. 4). When the final rule for this action was published, the regulations for internal agency review were moved from § 2.17 and redesignated as § 10.75 (44 FR 22318, April 13, 1979) (Ref. 5), where these regulations remain today.

In 1998, § 10.75 was amended to add provisions allowing a sponsor, applicant, or manufacturer of a drug or device to request review of a scientific controversy by an appropriate scientific advisory panel or advisory committee (63 FR 63978, November 18, 1998). Aside from the specific situation addressed by the amendment, the elements of internal agency review under § 10.75 relating to who may request the review and the information on which the review must be based remained unchanged.

Section 10.75 contains regulations that establish an orderly process for internal agency review of decisions, based on information in the FDA administrative file. Section 10.75 applies to requests for review of decisions made by any FDA employee, other than decisions by the Commissioner of Food and Drugs. Section 10.75 does not establish timelines for requests for Agency review or for the Agency to act upon these requests. The FDA guidance document entitled “Center for Devices and Radiological Health Appeals Processes—Guidance for Industry and Food and Drug Administration Staff” describes the § 10.75 appeal processes available to outside stakeholders to request review of decisions or actions by CDRH employees (Ref. 6).

On July 9, 2012, the FD&C Act (21 U.S.C. 301 et seq.) was amended by FDASIA. Section 603 of FDASIA added new section 517A to the FD&C Act, which specifies procedures and timeframes for the supervisory review of significant decisions pertaining to devices regulated by CDRH.

On December 13, 2016, the FD&C Act (21. U.S.C. 301 et seq.) was further amended by the Cures Act. Section 3051 of the Cures Act, “Breakthrough Devices,” added section 515C to the FD&C Act and amended section 517A(a)(1) to include any significant decision by CDRH regarding a request for designation as a breakthrough device under section 515C.

In addition, section 3058, “Least Burdensome Device Review,” of the Cures Act amended section 517A(a) by adding subsection (3), which requires that the substantive summary include a brief statement of how the least burdensome requirements were considered and applied consistent with sections 513(i)(1)(D), 513(a)(3)(D), and 515(c)(5) of the FD&C Act, as applicable.

Section 517A of the FD&C Act provides that any person may request a supervisory review of any significant decision of CDRH regarding the submission or review of a report under section 510(k), an application under section 515, a request for designation under section 515C, or an application for an exemption under section 520(g) of the FD&C Act. Any person may request such review, which may be conducted at the next supervisory level or higher above the individual who made the significant decision. Where the request for supervisory review was made at the organizational level, any person may request a supervisory review to the next organizational level or higher above the level at which the decision was made. In addition, the Office or Center Director may designate a Deputy Director to be their representative as the authority for a request made to that level. In this situation, a request for review heard by a Deputy is rendered on behalf of the Director and constitutes a review by that level of the organization (Ref. 6).

Section 517A of the FD&C Act includes specific timeframes both for the person requesting review and for FDA to respond to such a request. A request for review of a significant decision is required to be submitted to FDA not later than 30 days after such decision. In responding to this request, if the requester seeks an in-person meeting or a teleconference review, FDA is required to schedule the requested interaction not later than 30 days after the request is made. FDA is required to issue a decision not later than 30 days after the interaction, or, in the case of a person who does not seek an in-person meeting or teleconference review, FDA is required to issue a decision no later than 45 days after the request for supervisory review is received by FDA. An exception to the timeframes related to scheduling an in-person meeting or teleconference review, and to FDA's decision on a request for supervisory review of the significant decision, is provided in cases that are referred to experts outside of FDA. Although the procedures and timeframes in section 517A of the FD&C Act apply to an initial request for supervisory review of a significant decision by CDRH, CDRH has chosen to enhance transparency and predictability and apply those procedures and timeframes as well to sequential requests for supervisory review of significant decisions that are submitted to CDRH.

We are proposing to codify the procedures and timeframes in section 517A of the FD&C Act, added by section 603 of FDASIA and amended by the Cures Act, for § 10.75 appeals of “significant decisions” regarding the submission or review of a report under section 510(k), an application under section 515, a request for designation under section 515C, or an application for an exemption under section 520(g) of the FD&C Act.

We are also proposing additional procedural requirements for § 10.75 appeals submitted to CDRH of other types of CDRH decisions not addressed in the FDASIA and the Cures Act.

FDA's legal authority to implement requirements pertaining to the process and timelines for § 10.75 appeals submitted to CDRH derives from sections 510(k), 515, 515C, 517A, and 520(g) of the FD&C Act and other provisions under which a decision might be appealed, and 701(a) of the FD&C Act. Section 701(a) of the FD&C Act gives FDA general rulemaking authority to issue regulations for the efficient enforcement of the FD&C Act.

The proposed rule would, if finalized, incorporate the procedures and timeframes in section 517A to an initial or sequential request for supervisory review within CDRH of “significant decisions” by CDRH into FDA's regulations. The proposed regulations would also introduce new procedural requirements for requests for supervisory review within CDRH under § 10.75 of decisions that do not fall under “significant decisions” under section 517A of the FD&C Act.

FDA proposes to amend part 10 by adding § 10.75(e). Section 10.75 currently provides that an interested person outside the Agency may request internal agency review of a decision of an FDA employee. FDA proposes to amend § 10.75 to add paragraph (e), which would require that requests for internal agency supervisory review within CDRH also comply with proposed § 800.75. This proposed change to the regulations would encompass both significant decisions under section 517A of the FD&C Act and other types of decisions.

The proposed rule would add new § 800.75 to part 800. Proposed § 800.75 would incorporate, into the regulations, the provisions of section 517A of the FD&C Act for review of significant decisions related to devices regulated under the FD&C Act by CDRH. Proposed § 800.75 would define “significant decisions.” Section 800.75 would also include the timeframes for submission of requests for internal agency review of significant decisions within CDRH and for responses to such requests.

Proposed § 800.75 would further address the review of decisions other than 517A decisions and would indicate the timeframe for submission of these requests for internal agency review within CDRH.

Part 10 would be amended to add § 10.75(e). FDA proposes to add language to clarify that requests by interested persons outside the Agency for internal agency review of a decision within CDRH must also comply with proposed § 800.75. Proposed § 10.75(e) would not be limited to significant decisions under section 517A of the FD&C Act. Rather, proposed § 10.75(e) would also encompass review of decisions other than 517A decisions made by CDRH.

Section 517A of the FD&C Act establishes procedural requirements, including timeframes for a request for internal agency review of a “significant decision” by CDRH. “Significant decision” is not defined in the statutory provision. FDA is proposing to define “significant decision,” to provide greater clarity regarding which decisions fall within this statutory term.

A “517A decision” would be defined as a significant decision regarding a device as set forth in section 517A of the FD&C Act. We are proposing to use the term “517A decision” rather than the term “significant decision” because we do not want to imply that all other decisions of the Agency that do not fall within section 517A of the FD&C Act are not significant. Similarly, we did not want to use the term “non-significant decision” when speaking of decisions outside of the scope of section 517A, as that might imply some unintended assessment on our part concerning the importance of these types of decisions. In addition, because we are proposing these regulations to include regulatory decisions by CDRH besides those set forth in section 517A, we wanted to avoid any confusion that might occur in distinguishing between these two categories of decisions. For these reasons, we instead are proposing to use the term “517A decision” for those decisions that are identified under section 517A as significant decisions, and to refer to other decisions by CDRH as “non-517A decisions.”

The review procedures under section 517A of the FD&C Act apply only to a request for review of a significant decision by CDRH regarding submission or review of a report under section 510(k) (Premarket Notification), an application under section 515 (Premarket Approval or “PMA”/Humanitarian Device Exemption or “HDE”), a request for designation under section 515C (Breakthrough Devices), or an application for an exemption under section 520(g) of the FD&C Act (Investigational Device Exemption or “IDE”). CDRH is proposing that only the following decisions be considered significant decisions under section 517A of the FD&C Act and, thus, defined for purposes of this proposed rule as “517A decisions”:

• 510(k): Not substantially equivalent; Substantially equivalent.

• PMA/HDE: Not approvable; Approvable; Approval; Denial.

• Breakthrough Devices: Expedited access pathway (Ref. 7) program request for breakthrough designation for devices subject to premarket notification, premarket approval, or de novo requests. Grant; Denial of request for breakthrough designation.

• IDE: Disapproval; Approval.

• Failure to reach agreement on protocol under section 520(g)(7) of the FD&C Act.

• “Clinical Hold” determinations under section 520(g)(8) of the FD&C Act.

In proposing § 800.75, we are mindful that outside parties may use § 10.75 to request review of decisions other than 517A decisions. For this reason, we are also proposing new procedural requirements for internal agency supervisory review within CDRH under § 10.75 of non-517A decisions made by CDRH employees. A request for supervisory review of a CDRH decision other than a 517A decision is to be received no later than 60 days after the date of the decision that is subject to review. Any request received after 60 days in these cases will be denied as untimely, unless CDRH, for good cause related to circumstances beyond the control of the submitter, such as snow emergency, Federal Government shutdown, or other unforeseen emergency event, permits the request to be filed after 60 days.

Section 800.75 proposes that requests for CDRH review of 517A decisions and non-517A decisions must be addressed to the next organizational level or higher above the individual who made the decision. Requests to elevate the review of such decisions should include a rationale. The decision to collapse two or more levels of review or to elevate a review would solely be at CDRH's discretion. In addition, requesters should have exhausted review through the supervisory chain below the Center Director level prior to request for review at the Center Director level.

As provided in the FDA guidance, entitled “eCopy Program for Medical Device Submissions—Guidance for Industry and Food and Drug Administration Staff” (eCopy guidance), appeals to submission types identified under section 745A(b) of the FD&C Act are subject to the electronic format requirements. (Ref. 8). Therefore, 10.75 requests for supervisory review of 517A decisions within CDRH, and certain decisions other than 517A decisions, must be submitted in accordance with section 745A(b) and the standards established by the eCopy guidance, when applicable. In addition, requests for breakthrough designation under section 515C of the FD&C Act for devices under sections 510(k), 513(f)(2), and 515(c) of the FD&C Act would be considered “presubmissions” to those submission types as identified under section 745A, and, therefore, requests for breakthrough designation would be subject to section 745A(b), and likewise, § 10.75 requests for review within CDRH.

Further, § 800.75 proposes that requests for supervisory review of CDRH decisions other than 517A decisions must be sent to the CDRH Ombudsman, and those decisions, other than 517A decisions not subject to section 745A, are to be submitted in electronic format. Further instructions will be provided regarding submission of such requests in electronic format.

FDA is proposing that any final rule based on this proposal become effective 90 days after the date of publication of a final rule in the Federal Register or at a later date if stated in the final rule.

We have examined the impacts of the proposed rule under E.O. 12866, E.O. 13563, E.O. 13771, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). E.O. 12866 and 13563 direct us to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). E.O. 13771 requires that the costs associated with significant new regulations “shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.” We believe that this proposed rule is not a significant regulatory action as defined by E.O. 12866. It has been determined that this proposed rule is an action that does not impost more than de minimis costs.

The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because we anticipate that the costs of the rule would be de minimis, we propose to certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $148 million, using the most current (2016) Implicit Price Deflator for the Gross Domestic Product. This proposed rule would not result in an expenditure in any year that meets or exceeds this amount. We have developed a comprehensive Economic Analysis of Impacts that assesses the impacts of the proposed rule.

The proposed rule would (1) define “517A decision,” (2) apply to requests submitted to CDRH for review of 517A decisions and decisions other than 517A decisions made by CDRH, and (3) establish timelines and procedures for an interested person to request supervisory review of these decisions by CDRH. By setting specific timelines for persons to submit requests for supervisory review, the proposed rule would help clarify the supervisory review process and provide firms with an incentive to promptly submit review requests. The proposed rule would also establish timelines for CDRH review of 517A decisions, reducing uncertainty about when interested persons would know the outcome of their requests for supervisory review. Because the proposed rule would not change the effort needed to prepare and submit a request for supervisory review, we anticipate that affected interested persons would incur only negligible costs to read and learn about the provisions of the proposed rule. We do not expect additional costs for FDA.

We received 42 requests for review in 2013, 28 requests for review in 2014, 20 requests for review in 2015, and 20 requests for review in 2016. We estimate that each request for review required 70 hours of CDRH staff time. One possible benefit of the proposed rule, if finalized, is that it may reduce the number of hours required per request for review. If firms have more clarity about the request for review process, they may not have to spend as much time navigating the process, and we may not need to spend as much time guiding them through the process.

We have determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This proposed rule refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information regarding the appeals process for devices in the guidance document entitled “Center for Devices and Radiological Health Appeals Processes” have been approved under OMB control number 0910-0738; the collections of information in 21 CFR part 807, subpart E (premarket notification) have been approved under OMB control number 0910-0120; the collections of information for De Novo classification requests have been approved under the OMB control number 0910-0844; the collections of information in 21 CFR part 812 (investigational device exemption) have been approved under OMB control number 0910-0078; the collections of information in 21 CFR part 814 (premarket approval) have been approved under OMB control number 0910-0231; and the collections of information in 21 CFR part 814, subpart H (humanitarian use devices) have been approved under OMB control number 0910-0332.

We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. We have determined that the proposed rule does not contain policies that would have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we conclude that the proposed rule does not contain policies that have federalism implications as defined in the Executive Order and, consequently, a federalism summary impact statement is not required.

The following references are on display in the Dockets Management Staff (see ADDRESSES) and is available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; they are also available electronically at http://www.regulations.gov. FDA has verified the website addresses, as of the date this document publishes in the Federal Register, but websites are subject to change over time.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR parts 10 and 800 be amended as follows:

In the Federal Register of October 31, 2017, FDA published a proposed rule to revoke our regulation authorizing the use of health claims on the relationship between soy protein and coronary heart disease on the label or in the labeling of foods. We proposed this action based on our review of the totality of publicly available scientific evidence currently available and our tentative conclusion that such evidence does not support our previous determination that there is significant scientific agreement among qualified experts for a health claim regarding the relationship between soy protein and reduced risk of coronary heart disease. We provided a 75-day comment period for the proposed rule.

We have received requests for a 60-day extension of the comment period for the proposed rule. Each request conveyed concern that the current comment period does not allow sufficient time to develop a meaningful or thoughtful response to the proposed rule.

FDA has considered the requests and is extending the comment period for the proposed rule until March 19, 2018. We believe that this extension allows adequate time for interested persons to submit comments without significantly delaying rulemaking on these important issues.

The Coast Guard proposes to establish temporary safety zones for the following fireworks displays:

(1) On November 7, 2017, the New Orleans Tourism & Marketing Corporation notified the Coast Guard that it would be conducting a fireworks display from 7:45 p.m. through 8:45 p.m. on May 25, 2018. The fireworks are to be launched from a barge on the Lower Mississippi River at approximate mile marker (MM) 95.9, above Head of Passes, New Orleans, LA.

(2) On March 14, 2017, the NOLA 2018 Foundation notified the Coast Guard that it would be conducting a fireworks display from 8 p.m. through 8:20 p.m. on May 6, 2018. The fireworks are to be launched from a barge on the Lower Mississippi River at approximate MM 95.4, above Head of Passes, New Orleans, LA.

The purpose of this rulemaking is to ensure the safety of vessels on the navigable waters within a one-mile range of the fireworks barge before, during, and after the scheduled event. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1231.

The COTP proposes to establish two temporary safety zones within the Captain of the Port Sector New Orleans (COTP) Zone on two different dates and locations. Both safety zones will encompass a one-mile stretch of river with a duration lasting no more than one hour. The duration of the zones is intended to ensure the safety of vessels on these navigable waters before, during, and after the scheduled fireworks displays. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The proposed zones are as follows:

(1) Bayou Country Music Fest: a safety zone from 7:45 p.m. through 8:45 p.m. on May 25, 2018. The safety zone would cover all navigable waters of the Lower Mississippi River between MM 95.4 and MM 96.4, above Head of Passes.

(2) NOLA Tricentennial 2018 Jazz and Heritage Fest: A safety zone from 8 p.m. through 9 p.m. on May 6, 2018. This safety zone would cover all navigable waters of the Lower Mississippi River between MM 95 and MM 96, above Head of Passes.

We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders and we discuss First Amendment rights of protestors.

Executive Orders 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. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the size and short duration of the waterway closure, which would remain in effect for one hour on a one-mile section of the waterway. In addition, vessel traffic seeking to transit the areas would be able to seek permission from the COTP or his designated representative to do so.

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.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.

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 Executive Order 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 Executive Order 13132.

Also, this proposed rule does not have tribal implications under Executive Order 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.

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, which guides 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 two safety zones lasting one hour that would prohibit entry within a one-mile section of the Lower Mississippi River. They are categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is 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.

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, visit http://www.regulations.gov/privacyNotice.

Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that website'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.

For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 165 as follows:

The Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) is a health benefits program in which the Department of Veterans Affairs (VA) shares the cost of covered medical care services and supplies with spouses, children, survivors, and certain caregivers of veterans who meet eligibility criteria under 38 U.S.C. 1781. CHAMPVA beneficiaries must not be eligible for TRICARE, a health care program administered by the Department of Defense (DoD) that is also authorized to provide health care to certain family members of veterans. Certain Primary Family Caregivers designated under 38 U.S.C. 1720G(a)(7)(A) are eligible under section 1781 as long as they are not entitled to services under a health-plan contract as that term is defined in 38 U.S.C. 1725(f).

Under section 1781, VA “shall provide for medical care in the same or similar manner and subject to the same or similar limitations as medical care is furnished to certain dependents and survivors of active duty and retired members of the Armed Forces under chapter 55 of title 10 [United States Code] (CHAMPUS).” 38 U.S.C. 1781(b). CHAMPUS was the original program administered by DoD to provide civilian health benefits for active duty military personnel, military retirees, and their dependents. 32 CFR 199.1. Although the CHAMPUS program is still referenced in DoD regulations, DoD effectively replaced the CHAMPUS program with what is commonly known as the “TRICARE Standard” plan (“TRICARE”). See 32 CFR 199.1(r), 199.17(a)(6)(ii)(C) (identifying “TRICARE Standard” as the basic CHAMPUS program). TRICARE's current benefit structure offers varying degrees of medical benefits under multiple plan options beyond its Standard plan, but we administer CHAMPVA in the same or similar manner as TRICARE Standard only, because that basic program is the one that is referenced by the CHAMPUS authority. Thus, all references in this rulemaking to “TRICARE” are to the TRICARE Standard plan, which we refer to simply as “TRICARE” throughout most of this rulemaking for ease of reference.

VA interprets the mandate in 38 U.S.C. 1781(b) to administer CHAMPVA in the “same or similar manner . . . as medical care is furnished . . . under title 10 chapter 55 (CHAMPUS)” to mean that we must generally administer CHAMPVA in a “same or similar manner” as the TRICARE Standard plan. The phrase “same or similar manner” does not require the programs to be administered in an identical manner. Rather, we broadly interpret this language as affording us needed flexibility to administer the program for CHAMPVA beneficiaries. For this reason, not every aspect of CHAMPVA will find a corollary in the TRICARE Standard Plan.

TRICARE has undergone changes in legal authority and policy that have prompted these proposed revisions to our CHAMPVA regulations. This rulemaking is intended to ensure that our regulations continue to be, again broadly speaking, the same or similar to the regulations and policies governing TRICARE. As noted throughout this proposed rule, there are necessary variations from TRICARE, particularly due to TRICARE's current benefit structure with varying degrees of medical benefits under multiple plan options, but we believe these variations satisfy the same or similar requirement in 38 U.S.C. 1781(b).

This rulemaking also proposes clarifications and revisions that will improve our ability to effectively administer CHAMPVA, as well as technical revisions to make our regulations more understandable.

Current § 17.270(a) broadly discusses general administrative provisions of CHAMPVA, and current § 17.270(b) establishes certain definitions for the CHAMPVA regulations. We would revise the title of § 17.270 to clearly indicate that it contains both general provisions as well as definitions and would revise and reorganize the current definitions as well as add new definitions. Finally, we would add a new paragraph (c) to permit VA to waive, under certain circumstances, any requirements in the CHAMPVA regulations that are not otherwise required by statute, as is allowed under TRICARE. See 32 CFR 199.1(n). Waiver would be limited to very unusual and limited circumstances when waiver was determined to be in the best interests of VA; would not set a precedent for future decisions; and would not be used to deny any individual any right, benefit, or privilege provided to him or her by statute or these regulations.

Proposed § 17.270(a) would continue to provide an overview of CHAMPVA, including a general summary of the manner in which CHAMPVA is administered. We would refer to CHAMPUS, as we do in the current regulation, but would also reference TRICARE because the reference to CHAMPUS is outdated, as explained above, and may be misunderstood by CHAMPVA beneficiaries. Current § 17.270(a) states that CHAMPVA is administered by the “Health Administration Center” (HAC) (referred to now as the Office of Community Care (OCC)), which is located in Denver, Colorado. We propose to delete this statement because that fact is not substantively relevant to the regulations. These revisions are not substantively different from current § 17.270(a).

Proposed § 17.270(a)(1) would state that an authorized non-VA provider may provide medical services and supplies that are covered by CHAMPVA. This is current practice and would reflect in regulation VA's authority to provide CHAMPVA-covered services and supplies under 38 U.S.C. 1781(b)(2). As explained in greater detail below in connection with proposed § 17.272(b)(3), CHAMPVA-covered services and supplies are those provided by authorized non-VA providers who agree to provide covered services and supplies to CHAMPVA beneficiaries in exchange for payment of the CHAMPVA determined allowable amount. Proposed § 17.270(a)(2) would also reference VA's alternate authority under section 1781(b) to provide medical care to CHAMPVA beneficiaries through VA medical facilities equipped to provide the care and services if such resources are not being used for the care of eligible veterans. This initiative is called the CHAMPVA In-house Treatment Initiative (CITI) and would be referenced as such in proposed § 17.270(a)(2). CITI affords beneficiaries the same medical services available to veterans. CITI claims submitted to OCC are processed in the same manner as all other CHAMPVA claims. However, a monthly transfer of funds, or Transfer Dispersing Authority (TDA), from OCC to the providing VA facility is used to reimburse CITI claims whereas electronic funds transfer or paper checks are used to reimburse beneficiaries and providers for non-CITI claims.

With regards to CHAMPVA beneficiaries receiving care in VA medical facilities through CITI, we have historically interpreted section 1781(b) to mean that such care may be provided only if the CHAMPVA beneficiary is not also eligible for Medicare benefits. We base this interpretation on the fact that CHAMPVA has always been the last payer for CHAMPVA-covered medical services and supplies when a CHAMPVA beneficiary has Medicare (included in this rulemaking's definition of “other health insurance” (OHI), see 38 U.S.C. 1781(d)(2)). The mandated coordination of benefits found in section 1781(d)(2) is essentially the same as the requirement in TRICARE codified at 32 CFR 199.8, which provides that if a TRICARE beneficiary is eligible for both Medicare and TRICARE, Medicare is the primary payer and TRICARE is the secondary payer. In addition, this policy limitation for CITI is reasonable because VA is a publicly funded health care system that cannot bill Medicare (see section 1814(c) and section 1835(d) of the Social Security Act, codified at 42 U.S.C. 1395f(c) and 1395n(d)). Moreover, Medicare is an entitlement program, whereas the provision of CHAMPVA medical benefits is subject to the availability of appropriations which, for any given time period, might or might not be sufficient to cover all CHAMPVA-covered medical services and supplies in a VA medical facility. Requiring beneficiaries to use their Medicare benefits first accomplishes our goal of protecting all patients' access to care. Therefore, we would further clarify in proposed § 17.270(a)(2) that any CHAMPVA beneficiary who is also eligible for Medicare benefits may not receive medical services and supplies through CITI.

Proposed § 17.270(a)(3) would newly indicate in regulation that outpatient prescription medications may be provided to certain CHAMPVA beneficiaries through Medications by Mail (MbM), administered by VA. Proposed paragraph (a)(3)(i) would further provide that VA's MbM provides prescription medications through the mail to CHAMPVA beneficiaries who do not have any OHI that pays for prescriptions, including Medicare Part D. This restriction largely is consistent with TRICARE policy on the provision of medications by mail, except that TRICARE covers prescribed medications for beneficiaries with OHI in two instances: When the prescribed medication is not covered by the OHI or when the beneficiary's OHI prescription benefit has been exhausted. See TRICARE Pharmacy Program Handbook (October 2015), pages 18-19. CHAMPVA is unable to duplicate these two exceptions due to system limitations, meaning that CHAMPVA will only provide prescription medications through the mail to beneficiaries who do not have any OHI prescription coverage. Despite this, CHAMPVA's inclusion of prescription medications is, broadly speaking, sufficiently similar to TRICARE that VA remains in substantial compliance with the requirements of section 1781(b).

Proposed paragraph (a)(3)(ii) would provide that smoking cessation pharmaceutical supplies are available only through MbM. Section 713 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, Public Law 110-417 (October 14, 2008) (“2009 NDAA”) required DoD to establish a smoking cessation program under TRICARE under which specified smoking cessation benefits are to be made available to beneficiaries who are not also eligible for Medicare. This TRICARE benefit is codified at 32 CFR 199.4(e)(30). As to the pharmaceutical component of this TRICARE benefit, smoking cessation pharmaceutical agents (which VA refers to as pharmaceutical supplies) are available only through Military Treatment Facility (MTF) pharmacies or the TRICARE Mail Order Program. See 32 CFR 199.4(e)(30)(ii)(A) and 199.21(h)(2)(iii). Similar to 32 CFR 199.4(e)(30)(i), proposed § 17.270(a)(3)(ii) would provide that the same smoking cessation supplies will be made available to CHAMPVA beneficiaries who are not eligible for Medicare. Additionally, smoking cessation pharmaceutical supplies would be available only through MbM. For purposes of CITI, we would not provide smoking cessation pharmaceutical supplies through VA facility pharmacies because it is administratively more efficient for CHAMPVA to provide these through MbM, and because, in complying with the requirements of section 1781(b), as discussed above, VA facility pharmacies would be required to administer any needed smoking cessation pharmaceutical supplies first to veterans before providing them to CHAMPVA beneficiaries. We would also remove the restriction on smoking cessation services and supplies in current § 17.272(a)(57), as discussed later in this proposed rule.

For clarity, we would establish abbreviations for the Civilian Health and Medical Program of the Department of Veterans Affairs as “CHAMPVA” and the Department of Veterans Affairs as “VA.” The current regulations refer to the part of VA that administratively handles CHAMPVA claims as the “Center” in several places (see current §§ 17.275-17.277), and to the “Health Administration Center” in other places (see current §§ 17.270, 17.275-17.276), and we believe that referring to “VA” is more appropriately descriptive and would eliminate ambiguity.

Proposed § 17.270(b) would establish definitions for the CHAMPVA regulations. We would define “accepted assignment” as the action of an authorized non-VA provider who accepts responsibility for the care of a CHAMPVA beneficiary and thereby agrees to accept the CHAMPVA determined allowable amount as full payment for services and supplies rendered to the beneficiary. This extinguishes the beneficiary's payment liability to the provider with the exception of applicable cost shares and deductibles. This definition is consistent with our explanation for proposed § 17.272(b)(3), which further outlines the necessity for defining “accepted assignment.” Our current regulations do not define the term “authorized provider,” but the term “authorized provider” (and variations thereof) is used throughout current § 17.272 to refer to an institutional or individual provider of CHAMPVA-covered services and supplies. The term is used to describe persons or institutions that are considered appropriately licensed or credentialed to competently provide medical services and supplies to CHAMPVA beneficiaries and that VA will pay to provide such services and supplies. In addition, an “authorized provider” has historically been interpreted in CHAMPVA to be a non-VA medical provider. To capture this historical interpretation in full, we would define an “authorized non-VA provider” to mean an individual or institutional non-VA provider of CHAMPVA-covered medical services and supplies who is licensed or certified by a State to provide the covered medical services and supplies, or is otherwise certified by an appropriate national or professional association that sets standards for the specific medical provider. This requirement for State licensure or other certification would be similar to TRICARE, which requires that its providers be either licensed or certified by a State, or, where States do not offer licensure or certification, be otherwise certified by an appropriate national or professional association that sets standards for the specific medical provider. See TRICARE Policy Manual 6010.60-M, Chapter 11 (“Providers”), section 3.2 (“State Licensure And Certification”). (For general operational-type information, one can also refer to TRICARE Operations Manual 6010.59-M, Chapter 4, (“Provider Certification And Credentialing”) (April 1, 2015).)

We would define “calendar year” as the period of time between and including January 1 through December 31. This is plain language and is consistent with the generally understood meaning of the phrase “calendar year.”

The term “CHAMPVA beneficiary” would be defined as a person enrolled for CHAMPVA under § 17.271. This would be a program-specific definition, but it is in plain language and is consistent with the generally understood meaning of the word “beneficiary.” To clarify, an individual is enrolled in CHAMPVA only after the individual has successfully completed the application process (i.e., where the individual submits a completed VA Form 10-10d to VA, and VA has confirmed the individual's eligibility).

We would define “CHAMPVA-covered services and supplies” to mean those medical services and supplies that are medically necessary and appropriate for the treatment of a condition and that are not specifically excluded from coverage under proposed § 17.272(a)(1) through (84) (current § 17.272(a)(1) through (86)).

We would define “CHAMPVA determined allowable amount” by referencing the proposed paragraph that would relate to this term, proposed § 17.272(b)(1).

We would define “CHAMPVA In-house Treatment Initiative (CITI)” to mean the initiative under section 1781(b) under which participating VA medical facilities provide medical services and supplies to CHAMPVA beneficiaries who are not also eligible for Medicare, subject to availability of space and resources.

We would define the term “child” consistent with 38 U.S.C. 101, as we do in the current regulation at § 17.270(b).

We would define the term “claim” consistent with the current use and understanding of the term in the context of CHAMPVA, as a request by an authorized non-VA provider or CHAMPVA beneficiary for payment or reimbursement for medical services and supplies provided to a CHAMPVA beneficiary.

We would define “fiscal year” as the period of time starting on October 1 and ending on September 30. This is plain language and is consistent with the generally understood meaning of the phrase “fiscal year” as used within the Federal Government.

We would define “Medications by Mail (MbM)” to mean the initiative under which VA provides outpatient prescription medications through the mail to CHAMPVA beneficiaries.

We would define “other health insurance” (OHI) as a health insurance plan or program (to include Medicare) or third-party coverage that provides coverage to a CHAMPVA beneficiary for expenses incurred for medical services and supplies. The inclusion of Medicare is consistent with the TRICARE regulation related to double coverage. See 32 CFR 199.8(d)(1).

We would define the term “payer” to mean OHI, as defined in this rulemaking, that is obligated to pay for CHAMPVA-covered medical services and supplies. In a situation in which more than one insurer is responsible to pay for such services and supplies (e.g., a “double coverage” situation), there would be a primary payer (i.e., the payer obligated to pay first), a secondary payer (i.e., the payer obligated to pay after the primary payer), etc. In double coverage situations, CHAMPVA would be the last payer, after payment by the primary payer and all other secondary payers.

Defining a “payer” and designating different payer types would not affect the administration of CHAMPVA because these concepts of relative payment responsibility are all accepted and understood by the insurance industry and current CHAMPVA beneficiaries and are an essential part of current CHAMPVA billing practices. For instance, Medicare would be the primary payer in situations governed by current § 17.271(b) (which remains unchanged by this proposed rulemaking). See 38 U.S.C. 1781(d)(2).

The definition of “service-connected” in current § 17.270(b) would be unchanged and given the same meaning as that term in 38 U.S.C. 101. However, the terms “spouse” and “surviving spouse” would no longer have the definitions of these same terms in 38 U.S.C. 101(31) and (3), respectively, as those definitions are outdated; instead, these terms would both be determined by operation of 38 U.S.C. 103(c).

Consistent with the waiver provisions of TRICARE, see 32 CFR 199.1(n), new proposed paragraph (c) would establish the discretionary authority of VA to waive, when it is deemed to be in the best interest of VA, any regulatory requirement of this part that is not required by 38 U.S.C. 1781 or otherwise imposed by statute. This discretionary waiver authority would be limited to very unusual and limited circumstances and would not set a precedent for future decisions. In addition, it would not be used to deny any individual any right, benefit, or privilege provided by statute or these regulations. This new provision would enable VA to allow payment under CHAMPVA in cases, for example, where, by operation of CHAMPVA rules, the claim is subject to complex administrative or accounting procedures that ultimately result in determination of the claim's technical noncompliance when the underlying claim is otherwise appropriate. Where a claimant's non-compliance with a purely policy or administrative-based technical requirement is both unintentional and harmless, we believe it would be in VA's best interest to have the authority to waive the regulatory requirement and allow payment.

Current § 17.271 identifies persons who may be eligible for CHAMPVA benefits. We would revise § 17.271(a) to recognize as CHAMPVA beneficiaries those individuals designated as Primary Family Caregivers under 38 CFR 71.25(f). This substantive addition to the eligibility criterion would be made pursuant to the Caregivers and Veterans Omnibus Health Services Act of 2010, Public Law 111-163, section 102, which amended 38 U.S.C. 1781(a) by adding a new subsection (a)(4) authorizing VA to provide CHAMPVA benefits to “an individual designated as a primary provider of personal care services under [38 U.S.C. 1720G(a)(7)(A)] who is not entitled to care or services under a health-plan contract (as defined in [38 U.S.C. 1725(f)]).” We amend CHAMPVA eligibility criteria to recognize these Primary Family Caregivers as CHAMPVA beneficiaries but not to establish substantive eligibility rules in the CHAMPVA regulations to determine whether an individual is a Primary Family Caregiver. (VA's regulations governing the Caregivers Benefits Program established by 38 U.S.C. 1720G are codified at 38 CFR part 71, and the specific rules governing the identification of such individuals are found at 38 CFR 71.15 through 71.25.) We would redesignate current § 17.271(a)(4) as § 17.271(a)(5) and add a new proposed § 17.271(a)(4) to state that a Primary Family Caregiver is eligible for CHAMPVA benefits if they are not entitled to care or services under a health-plan contract (as defined in 38 U.S.C. 1725(f)(2)). We note that VA is already providing CHAMPVA services and supplies to these individuals pursuant to the statutory mandate in section 1720G(a)(3)(A)(ii)(IV) and under the Caregivers Benefits Program regulations. This revision would simply update the CHAMPVA regulations to conform to these laws.

Current § 17.272 provides general information about what medical services and supplies are covered by CHAMPVA and lists coverage limitations along with the exclusions. The general information concerning coverage in current § 17.272(a) continues to be accurate, and we do not propose any changes to paragraph (a). Some of the coverage limitations and exclusions listed in the numbered paragraphs under § 17.272(a) require revision due to either changed standards in clinical practice or changes in TRICARE coverage.

Current § 17.272(a)(2) excludes the provision of services and supplies required as a result of an occupational disease or injury for which benefits are payable under workers' compensation or a similar protection plan. We propose to update the verbiage to clarify the exclusion for the reader.

Current § 17.272(a)(3) excludes the provision of services and supplies that are paid directly or indirectly by local, State, or Federal government agencies, with certain exceptions listed in § 17.272(a)(3)(i) and (ii) where CHAMPVA assumes primary payer status. We propose to add Indian Health Service and CHAMPVA supplemental policies as exceptions where CHAMPVA assumes primary payer status. This would be consistent with current CHAMPVA practice as well as the TRICARE regulation related to double coverage. See 32 CFR 199.8(b)(4)(ii) and (iv). We also propose to remove the “(Medicaid excluded)” parenthetical language in current § 17.272(a)(3), because § 17.272(a)(3)(i) already expressly excepts “Medicaid” from the general exclusion in § 17.272(a)(3).

Current § 17.272(a)(21) excludes dental care generally, with exceptions to such exclusion listed in paragraphs (a)(21)(i) through (xii). We would amend paragraph (a)(21)(ix) to clarify that the provision of initial imaging services for the treatment of temporomandibular joint disorder (TMD) could specifically include Computed Tomography (CT) and Magnetic Resonance Imaging (MRI) services. We believe the sole reference to “initial radiographs” in current § 17.272(a)(21)(ix) is outdated and that modern industry standards include the use of CT scans as well as MRIs for diagnosing TMD. A CT scan provides a more detailed image of the bones in the joint, and an MRI provides a more detailed image of the soft tissue to determine proper positioning as the jaw moves. We would also update § 17.272(a)(21)(ix) to refer to the more updated and clinically appropriate terminology “temporomandibular joint disorder (TMD).” These revisions would update CHAMPVA regulations with current standards of clinical practice for the benefit of CHAMPVA beneficiaries.

A majority of the remaining proposed changes to CHAMPVA coverage exclusions in proposed § 17.272(a)(1) through (82) are based on changes to TRICARE coverage and policy. Virtually all coverage limitations and exclusions in current § 17.272(a)(1)-(86), as shown in the chart below, are substantially identical to services and supplies excluded from, or limited under, TRICARE coverage under 32 CFR 199.4(g), or as otherwise noted in the chart.

We note that even where our current provisions are not identical to a TRICARE provision, our intent has consistently been to apply CHAMPVA comparable exclusions or limitations in the same or similar manner to their TRICARE counterpart in accordance with 38 U.S.C. 1781(b). The same is true for our proposed revisions below, which are consistent with changes in DoD's administration of TRICARE.

The first change we would make to our limitations and exclusions based on TRICARE regulatory and policy changes concerns current § 17.272(a)(26), which is not addressed in the chart above because it correlates with a provision that has been removed from TRICARE regulations. See 60 FR 12419 (March 7, 1995). Therefore, we propose to remove this exclusion from our regulations as well. Paragraph (a)(26) in current § 17.272 excludes coverage for services and supplies, including psychological testing, provided in connection with a specific developmental disorder. By removing this exclusion, CHAMPVA would now cover this service, and we would redesignate current § 17.272(a)(27) through (38) as § 17.272(a)(26) through (37), respectively.

Under section 711 of the 2009 NDAA, TRICARE must waive all beneficiary costs associated with certain preventive services, unless the beneficiary is also Medicare-eligible. TRICARE regulations were revised to delete from 32 CFR 199.4(g)(37) the list of preventive services not excluded from coverage, and these services were moved to new § 199.4(e)(28) so that they instead would be reflected as preventive services under TRICARE for which out-of-pocket costs are eliminated. See 76 FR 81368 (December 28, 2011). We would revise our current exclusion of preventive care in § 17.272(a)(31) (proposed to be redesignated as § 17.272(a)(30)) to except the same preventive services identified in paragraphs (d)(1)(A) through (F) of section 711 of the 2009 NDAA and, further, do so in a manner that, on the whole, reflects the manner in which these services are provided under TRICARE. Section 711 of the 2009 NDAA sets forth the following preventive services for which beneficiaries shall pay no associated costs: Colorectal cancer screening; breast cancer screening; cervical cancer screening; prostate cancer screening; annual physical exam; vaccinations. Current § 17.272(a)(31)(i) through (x) set forth exceptions to the general exclusion of certain specific preventive care. Respectively, the terms of current paragraphs (a)(31)(v) and (vi) already except “[p]ap smears” and “[m]ammography tests” and so effectively capture “cervical cancer screening” and “breast cancer screening” as referred to in the 2009 NDAA. However, because the singular terms “mammography test” and “pap smear” are outdated, we are updating to “breast cancer screening” and “cervical cancer screening.” Therefore, proposed § 17.272(a)(30) would revise the exceptions to the general exclusion of preventive care to include the four remaining preventive services specified in the 2009 NDAA, namely colorectal cancer screening; prostate cancer screening; annual physical examination; and vaccinations/immunizations.

We note that the TRICARE final rule that implemented the amendments made by section 711 of the 2009 NDAA does not include an annual physical exam benefit for all TRICARE beneficiaries; instead, such benefit is limited to certain dependents of Active Duty military personnel who are traveling outside the United States and for beneficiaries ages 5 through 11 who require such exams for school enrollment. This benefit is also not exempt from cost sharing requirements. See 76 FR 81368, and 32 CFR 199.4(e)(29). Broadly interpreting our mandate in section 1781(b), VA proposes to modify the current exclusion of preventive care in current § 17.272(a)(31) insofar as it defines that term to include annual physical examinations and create an exception permitting such exams. Despite the limited availability of such examinations under TRICARE, it is noteworthy that TRICARE nonetheless covers some preventive services that are typically provided as part of an annual physical examination such as blood pressure screening, cholesterol testing, and body measurements. See TRICARE Policy Manual 6010.60-M (“Medicine”), Chapter 7, section 2.1 (“Clinical Preventive Services-TRICARE Standard”) (April 1, 2015). To be paid for by TRICARE, however, these types of health promotion and disease prevention services must be billed in connection with another preventive service delineated in TRICARE's policy manual. Id. We do not believe limiting the provision of annual physical examinations to only a few select groups is appropriate from a clinical perspective. Further, in the exercise of our discretion, when broadly interpreting the mandate of section 1781(b), we conclude it lies within our discretion to determine that this benefit should be made available to all CHAMPVA beneficiaries. This is particularly the case given that some individual health promotion and disease prevention services that are typically provided as part of an annual physical examination would eventually be approved by TRICARE as long as they are coupled or associated with billing submitted for a covered service. (The nature and delivery of those services remains the same whether delivered as part of an annual examination or under the umbrella of another service for which TRICARE billing is permitted.) Furthermore, VA finds that annual physical examinations are beneficial for both CHAMPVA beneficiaries and VA, by serving to identify serious medical issues before they progress and their clinical management becomes more difficult and resource-intensive. Even though our proposed approach would include elements of an annual physical examination not otherwise included as an adjunct service provided under a covered benefit as described above, we believe our approach is sufficiently “similar” to TRICARE. Therefore, we propose to create an exception to the exclusion of preventive care, permitting an annual physical examination to be among the benefits available to all CHAMPVA beneficiaries.

We also note that we would except “[v]accinations/immunizations” from the general exclusion of preventive services. Although subsection (d)(1)(F) of section 711 of the 2009 NDAA exempts “vaccination” only, TRICARE's guidance on this issue additionally exempts immunizations. See TRICARE Reimbursement Manual 6010.61-M Chapter 2 (“Beneficiary Liability”), section 1 (“Cost-Shares And Deductibles”) (April 1, 2015). We believe these terms have identical meanings and would use both terms just to be clear that this preventive service is covered regardless of whether it is called an “immunization” or a “vaccination.”

Current § 17.272(a)(39) excludes coverage for audiological services or speech therapy, except when prescribed by a physician and rendered as part of a treatment addressing a physical defect, which correlates with a provision not addressed in the chart above because it has been removed from TRICARE regulations. See 75 FR 50880 (August 18, 2010). Therefore, we propose to remove this exclusion from our regulations as well. By removing this exclusion, CHAMPVA would now cover this service, and we would redesignate current § 17.272(a)(40) through (56) as § 17.272(a)(38) through (54), respectively.

As stated earlier in this rulemaking, pursuant to section 713 of the 2009 NDAA, TRICARE must make available smoking cessation benefits, as specified in the law, to beneficiaries who are not also eligible for Medicare. The four categories of smoking cessation benefits available to these beneficiaries are set forth in TRICARE's regulations under 32 CFR 199.4(e)(30)(ii)(A)-(D). Hence, we would revise our regulations by removing our correlate restriction on smoking cessation services and supplies in current § 17.272(a)(57). In removing current § 17.272(a)(57), current paragraphs (a)(58) through (71) would be redesignated as paragraphs (a)(55) through (68), respectively.

Redesignated paragraphs (a)(57) through (59) would be revised to reference coverage of mental health benefits in a “calendar year” versus the current reference to “fiscal year.” We propose to change the yearly basis of this coverage because our beneficiaries and providers are more familiar with calendar year events, and the impact of the change from fiscal to calendar on the functioning of CHAMPVA would be minimal.

With the proposed removal of § 17.272(a)(57) and subsequent redesignations of paragraphs noted above, current paragraph (a)(67) would be redesignated as paragraph (a)(64). CHAMPVA would continue to exclude the performance of abortions, except when a physician certifies that the life of the mother would be endangered if the fetus were carried to term. This is the same restriction in current TRICARE regulations (see 32 CFR 199.4(e)(2)), although statute and TRICARE policy statements recently established an additional exception to the general ban on abortions. Specifically, section 704 of the National Defense Authorization Act for Fiscal Year 2013, Public Law 112-239 (2013 NDAA), amended 10 U.S.C. 1093(a) and (b) to expand the circumstances under which funds available to DoD and MTFs may be used to provide and perform abortions in cases of pregnancy resulting from an act of rape or incest. Despite the recent amendments to section 1093 of title 10 and TRICARE policy, we do not propose same or similar changes to CHAMPVA's current exclusion at this time because TRICARE regulations do not provide for it. Additionally, such changes would create an even greater disparity between the women's health care benefits afforded veterans and CHAMPVA beneficiaries.

Current § 17.272(a)(72) excludes from coverage drug maintenance programs where one addictive drug is substituted for another such as methadone substituted for heroin. A TRICARE final rule published on October 22, 2013, and effective November 21, 2013, removes a correlate restriction from TRICARE regulations, and so we propose to similarly remove § 17.272(a)(72). See 78 FR 62427 (October 22, 2013); 32 CFR 199.4(e)(4)(ii). We agree with the stated rationale in the related TRICARE proposed rule that the current restriction fails to recognize the accumulated medical evidence supporting certain maintenance programs as one component of the continuum of care necessary for the effective treatment of substance use disorders. See 76 FR 81899 (December 29, 2011). In removing current § 17.272(a)(72), current paragraphs (a)(73) through (86) would be redesignated as paragraphs (a)(69) through (82), respectively.

Current § 17.272(a)(80), as proposed to be redesignated as paragraph (a)(76), excludes from CHAMPVA benefits medications not requiring a prescription, except for insulin and related diabetic testing supplies and syringes. We would revise redesignated paragraph (a)(76) to instead exclude “over-the-counter products” and would additionally expand the exception to this exclusion to cover over-the-counter smoking cessation pharmaceutical supplies that are approved by the U.S. Food and Drug Administration (FDA), prescribed, and provided through MbM. These changes would be consistent with TRICARE regulations, which require a prescription from an authorized provider for smoking cessation pharmaceutical agents (even for FDA-approved over-the-counter smoking cessation agents). See 32 CFR 199.4(e)(30)(ii)(A).

Section 702 of the 2013 NDAA grants the Secretary of Defense the authority to add certain over-the-counter medications to the TRICARE formulary so that such medications may be administered as if they were prescription medications. CHAMPVA does not have a same or similar uniform formulary as DoD that could be altered to include certain over-the-counter medications, and we do not interpret section 702 as granting authority to alter VA's uniform formulary. Therefore, we would not amend our regulations in response to section 702 of the 2013 NDAA. Our regulation as revised and redesignated § 17.272(a)(76) would permit CHAMPVA to provide the same over-the-counter smoking cessation supplies as permitted in TRICARE policy.

Lastly, we would add two new exclusions to § 17.272. Proposed paragraph (a)(83) would exclude medications that are not approved by the FDA, excluding FDA exceptions to the approval requirement. Current CHAMPVA regulations are silent regarding the need for medications to meet FDA approval requirements; however, this has not been a problem as a matter of practice because applicable standards of care generally require prescribed medications to be FDA-approved or excluded as an exception from the approval requirement. Still, we wish to formally and expressly exclude medications that do not meet these requirements. In addition, to provide benefits in the same or similar manner and subject to the same or similar limitations as TRICARE, paragraph (a)(84) would establish exclusions for services and supplies related to the treatment of dyslexia. See 38 CFR 199.4(g)(32). This change merely reflects in regulation current CHAMPVA practice and policy.

Due to the multiple proposed deletions and additions in § 17.272(a)(1)-(86), we reiterate that we would redesignate most of the current paragraphs under § 17.272(a). With the proposed removal of current paragraph (a)(26), current paragraphs (a)(27) through (38) would be redesignated as (a)(26) through (37), respectively, with the substantive changes to redesignated (a)(30) as noted above. With the proposed removal of current paragraph (a)(39), current paragraphs (a)(40) through (56) would be redesignated as (a)(38) through (54), respectively, with no substantive changes. With the deletion of the current paragraphs (a)(57) and (72), current paragraphs (a)(58) through (86) would be redesignated as (a)(55) through (82), respectively, with the minor substantive changes as noted above to redesignated paragraphs (a)(57) through (59) and (a)(76). Lastly, we would add new paragraphs (a)(83) and (84).

Current § 17.272(b) establishes the “CHAMPVA determined allowable amount,” and paragraph (b)(1) states that the term “allowable amount” is the maximum amount that CHAMPVA will pay an authorized provider for a covered benefit, which is determined prior to cost sharing and the application of deductibles or OHI. (This means, for instance, that the cost-share would be a percentage of the entire CHAMPVA determined allowable amount.) However, this is merely a definition and not a statement of coverage limitation or exclusions. We would revise paragraph (b) to clearly indicate that amounts above the CHAMPVA determined allowable amount are excluded from CHAMPVA coverage. The actual payment methodology—the amount to which cost sharing and deductibles will be applied—is addressed in proposed § 17.274(e) and is discussed below.

Proposed § 17.272(b)(1) would explain that the CHAMPVA determined allowable amount is the maximum level of payment to an authorized non-VA provider for CHAMPVA-covered services and supplies and that this allowable amount is determined before cost sharing and the application of deductibles or OHI is considered. This is a restatement of current § 17.272(b)(1), except that we would use the term “authorized non-VA provider” to encompass all those providers listed in current § 17.272(b)(1) and include the term “supplies” after “covered services” to underscore they too can be covered. See current 38 CFR 17.272(b)(1) (referencing “a hospital or other authorized institutional provider, a physician or other authorized individual professional provider, or other authorized provider for covered services”). We believe use of the one term “authorized non-VA provider” as defined in proposed § 17.270(b) properly captures all provider types now listed in § 17.272(b)(1) and simplifies the regulatory reference to providers for the benefit of CHAMPVA beneficiaries. Proposed § 17.272(b)(1) would also clearly state that the CHAMPVA determined allowable amount is payment made by VA to an authorized non-VA provider for the provision of CHAMPVA-covered services and supplies to a CHAMPVA beneficiary.

Current § 17.272(b)(2) states that a Medicare-participating hospital must accept the CHAMPVA determined allowable amount for inpatient services as payment in full and references 42 CFR parts 489 and 1003. While this is a true statement of law under 42 CFR 489.25, the references to 42 CFR parts 489 and 1003 are vague, and part 1003 is not relevant to the issue of what amounts Medicare-participating hospitals must accept as payment in full from CHAMPVA. See 42 CFR part 1003 (describing civil money penalties, assessments, and exclusions generally for individuals who violate provisions of or agreements with Federal health care programs). Proposed § 17.272(b)(2) would state that inpatient services are “provided to a CHAMPVA beneficiary” and use a single, clarifying reference to 42 CFR 489.25.

Section 503 of The Caregivers and Veterans Omnibus Health Services Act of 2010, Public Law 111-163, revised 38 U.S.C. 1781 by adding new subsection (e), which states: “Payment by the Secretary under this section on behalf of a covered beneficiary for medical care shall constitute payment in full and extinguish any liability on the part of the beneficiary for that care.” Current § 17.272(b)(3) states that: “An authorized provider of covered medical services or supplies must accept the CHAMPVA determined allowable amount as payment in full.” Proposed § 17.272(b)(3) would state more clearly that “accepted assignment” refers to the action of an authorized non-VA provider who accepts responsibility for the care of a CHAMPVA beneficiary and thereby agrees to accept the CHAMPVA determined allowable amount as full payment for services and supplies rendered to the beneficiary. The provider's acceptance of the CHAMPVA determined allowable amount extinguishes the beneficiary's payment liability to the provider with the exception of applicable cost shares and deductibles. Proposed § 17.272(b)(3) would not be substantively different than current paragraph (b)(3) but would clarify that the action of accepting payment is the equivalent of accepting assignment. The term “accepted assignment” is used currently in the administration of CHAMPVA payments, and we believe using it in this regulation as described would increase clarity in payment practices for both CHAMPVA beneficiaries and authorized non-VA providers.

Current § 17.272(b)(4) provides that a provider who has collected and not made an appropriate refund, or attempts to collect from the beneficiary any amount in excess of the CHAMPVA determined allowable amount may be subject to exclusion from Federal benefit programs. The underlying authority for this rule is 42 CFR 1003.105, which establishes the terms for a health care provider's permissive or mandatory exclusion from participation in the Medicare program and other Federal health care programs. Exclusion may result, for instance, if a provider files false claims under these programs. We would move this information to proposed § 17.272(b)(3) for increased clarity and would remove mention of providers not making an appropriate refund of amounts collected from beneficiaries, as the purpose of 38 U.S.C. 1781(e) and proposed § 17.272(b)(3) is for these amounts to never be collected by the provider. By moving this information to proposed paragraph (b)(3), we would also remove current paragraph (b)(4).

CHAMPVA preauthorization requirements for certain medical care and services are based on CHAMPVA needs and are substantially the same or similar as those required by TRICARE. See 32 CFR 199.4 passim. We propose to revise the preauthorization requirements by adding language to indicate when a beneficiary has “other health insurance” that provides primary coverage for the benefit, preauthorization requirements will not apply. TRICARE waives preauthorization requirements in all instances when OHI, to include Medicare, is the primary payer. See TRICARE Policy Manual 6010.60-M, Chapter 1 (“Administration”), section 6.1 (“Special Authorization Requirements”) (April 1, 2015). To provide benefits in a similar fashion, we would waive any requirement for preauthorization where OHI (as defined by this rulemaking) covers the benefit. We would also revise current § 17.273(d) to refer to dental coverage limitations in § 17.272(a)(21)(i)-(xii) to avoid a potential misconception that preauthorization is generally required for dental services. CHAMPVA clearly excludes all dental services, except for those listed in current § 17.272(a)(21)(i)-(xii). We would remove current § 17.273(e) and not require preauthorization for durable medical equipment as a covered service or supply. Removal of § 17.273(e) would be consistent with TRICARE policy. See TRICARE Policy Manual 6010.60-M, Chapter 8 (“Other Services”), section 2.1 (“Durable Medical Equipment: Basic Program”) (April 1, 2015). Based on this removal, we would redesignate current § 17.273(f) as § 17.273(e).

Finally, we would add new proposed § 17.273(f) to detail the reviews of medical necessity. Since CHAMPVA is a secondary payer, VA would be required to perform reviews of medical necessity on a retrospective basis. If during the coordination of benefits process it is determined that CHAMPVA would be the responsible payer for the services and supplies but CHAMPVA preauthorization was not obtained prior to delivery of the services or supplies, we would obtain the necessary information and perform a retrospective medical necessity review. We would also propose that any claims, where a retrospective review occurs, are filed within the appropriate one-year period.

Current § 17.274(a) provides in general that CHAMPVA is a cost sharing program in which the cost of CHAMPVA-covered services and supplies is shared with the beneficiary, with the exception of services obtained through VA medical facilities. This provision would remain substantively the same, but we would add new paragraphs (a)(1)(i) and (ii) to explicate, respectively, that the former language “services obtained through VA facilities” refers to services and supplies provided both through MbM and through CITI. That is, the exception to this cost-share requirement would extend specifically to each of these initiatives (as these initiatives would be defined by this proposed rulemaking).

Subsections (d)(1)(A) through (d)(1)(F) of section 711 of the 2009 NDAA, as discussed earlier, set forth certain preventive services for which TRICARE waives all out-of-pocket costs, even if the beneficiary has not paid the amount necessary to cover the beneficiary's deductible requirement for the year. We propose to revise § 17.274(a) to make clear that there will be no associated cost share for CHAMPVA beneficiaries for such services. (We address waiving the associated deductible requirement later in the discussion of proposed § 17.274(b)). We would add new paragraphs (a)(1)(iii)(A)-(G) to § 17.274 to waive CHAMPVA beneficiary cost-share requirements for the same preventive services identified in paragraphs (d)(1)(A) through (F) of section 711 of the 2009 NDAA. Section 711 also authorizes, but does not require, the Secretary of Defense to extend the waiver of beneficiary costs to other preventive services. As such, we state in regulation that the list of services is not all-inclusive, enabling us to add supplemental items to the list in the future if needed, while enabling us to be sufficiently similar to TRICARE. See Public Law 110-417, section 711(d)(1)(G). TRICARE regulations and policy guidance extend this waiver to well-child visits for children under 6 years of age. See 32 CFR 199.4(e)(28)(iv), (f); TRICARE Reimbursement Manual 6010.61-M, Chapter 2 (“Beneficiary Liability”), section 1 (“Cost-Shares and Deductibles), 1.3.3.10.1.6 (Preventive Services”). We would include this same waiver in proposed paragraph (a)(1)(iii)(G) of § 17.274. We would waive any cost-share requirement for hospice services in proposed § 17.274(a)(1)(iv). This waiver is similar to the cost-share waiver for hospice services in TRICARE regulation. See 32 CFR 199.14(g)(9). Lastly, to remain similar to TRICARE, in § 17.274(a)(1)(v), we would add a waiver for other services as determined by the Secretary of Veterans Affairs.

For TRICARE, the waiver of beneficiary costs associated with preventive services in proposed § 17.274(a)(1)(iii)(A) through (G) do not apply to any TRICARE beneficiary who is also Medicare-eligible. See Public Law 110-417, section 711(b). We would not exclude Medicare-eligible beneficiaries from cost sharing waivers for preventive services as this would unfairly disadvantage them as compared to other CHAMPVA beneficiaries with OHI. By not including this waiver, CHAMPVA will treat all beneficiaries with OHI the same. Additionally, we believe most preventive services provided to Medicare-eligible beneficiaries will be paid in full by Medicare, and, therefore, CHAMPVA will not assume any payment responsibility. In the event a cost share or deductible is applied for preventive services, CHAMPVA will treat those claims as it would the claims for any other beneficiary with OHI.

The general provisions in current § 17.274(b) related to establishing an annual deductible requirement (in addition to beneficiary cost share) would remain substantively the same. We would move the exception to this general requirement in current § 17.274(b) (last sentence) for services obtained through VA facilities to a new § 17.274(b)(1) and also explain that it refers to services and supplies provided through MbM or CITI under the same rationale as expressed above for proposed new § 17.274(a)(1)(i) and (ii), respectively. We would also move the exception to the deductible requirement in current § 17.274(b) (last sentence) for any inpatient services to a new § 17.274(b)(2). Proposed § 17.274(b)(3) would except the listed preventive services in proposed § 17.274(a)(1)(iii)(A)-(G) from the general deductible requirement in current and proposed § 17.274(b), in accordance with the mandate in section 711 of the 2009 NDAA. See Public Law 110-417, section 711(a)(2) (mandating that a beneficiary not be charged for preventive services during a year even if the beneficiary has not paid the amount necessary to cover the beneficiary's deductible for the year. See 32 CFR 199.4(f)(12)). Proposed § 17.274(b)(4) would waive the CHAMPVA beneficiary deductible requirement for hospice services, as is done similarly under TRICARE regulations. See 32 CFR 199.14(g)(9). Lastly, to remain similar to TRICARE, in § 17.274(b)(5), we would add a waiver for other services as determined by the Secretary of Veterans Affairs.

Current § 17.274(c) establishes a calendar year limit on the “cost-share amount” incurred by a CHAMPVA beneficiary through the payment of both cost-shares and deductible amounts (See current 38 CFR 17.274(c), indicating that the cap is “limited to the applied annual deductible(s) and the beneficiary cost-share amount.”). Proposed § 17.274(c) would retain this basic information but would refer instead to a cap on “out-of-pocket costs” instead of “cost-share amounts” so that it is clear that both cost share and deductible amounts apply to this cap. Current § 17.274(c)(i) establishes an annual cap of cost sharing of $7,500 per CHAMPVA eligible family “through December 31, 2001”, which is an outdated provision. Current § 17.274(c)(ii) further establishes a current cap of $3000 per CHAMPVA eligible family, which was “[e]ffective January 1, 2002.” Under proposed § 17.274(c), we would establish an annual (calendar year) cap on out-of-pocket costs of $3,000 per CHAMPVA eligible family. The annual cap amount would be unchanged from what currently exists but would use the new terminology proposed above for the sake of clarity. We would also remove current § 17.274(c)(i) and (ii).

We do not propose any substantive changes to current § 17.274(d) as this provision is legally adequate, and we are not proposing to revise policies related to it. However, we are adding a subject heading in an effort to mirror the cost share calculation in proposed paragraph (e) to § 17.274.

We propose to add a new paragraph (e) to § 17.274 which would set forth the principles found in current policy manuals that VA uses to establish CHAMPVA beneficiary cost-share amounts. The calculation methodologies that would be described in proposed § 17.274(e) represent current CHAMPVA practice and therefore would not increase or decrease the out-of-pocket costs for CHAMPVA beneficiaries. The methodologies described in proposed § 17.274(e) are also consistent with TRICARE cost-share calculation methodologies for the same or similar types of care, except as indicated below.

In accordance with current practice, and as proposed in § 17.274(e), the CHAMPVA beneficiary's cost-share amount, if applicable, is 25 percent of the CHAMPVA determined allowable amount in excess of the annual calendar year deductible for most CHAMPVA-covered services and supplies. This calculation is similar to that used in TRICARE to determine cost-share amounts for a majority of TRICARE covered services. See 32 CFR 199.4(f)(3)(ii)(C) and (f)(3)(iii). Proposed § 17.274(e)(1) and (2) would establish the services for which the general rule of a 25 percent cost share does not always apply. Proposed paragraph (e)(1) would establish in regulation the current calculation VA uses to determine CHAMPVA beneficiary cost share for inpatient facility services and supplies that are subject to the CHAMPVA Diagnosis Related Group (DRG) payment system. The CHAMPVA DRG system, like that used by TRICARE under 32 CFR 199.14, is based on the Centers for Medicare and Medicaid Services (CMS) prospective payment system for hospital services, as set forth in 42 CFR part 412. For services based on the CHAMPVA DRG system, the CHAMPVA beneficiary cost share would be the lesser of the per diem rate multiplied by the number of inpatient days; or, 25 percent of the hospital's billed amount; or, the base CHAMPVA DRG rate. This calculation is similar to that used in TRICARE regulation. See 32 CFR 199.4(f)(3)(ii)(A) and (f)(8)(ii).

Proposed § 17.274(e)(2) would establish the CHAMPVA beneficiary cost share for covered inpatient facility services and supplies that are subject to the CHAMPVA mental health low volume per diem reimbursement methodology. This methodology covers mental health inpatient services for lower volume hospitals and units (less than 25 mental health discharges per federal fiscal year). For these services, the CHAMPVA beneficiary cost share would be the lesser of a fixed per diem amount multiplied by the number of inpatient days or 25 percent of the hospital's billed charges. This calculation is similar to that used in TRICARE regulations. See 32 CFR 199.4(f)(3)(ii)(B) and (f)(8)(ii).

Although, as noted above, a majority of the CHAMPVA cost-share methodologies are the same or similar as TRICARE's, we would not adopt a recent TRICARE exception to its general 25 percent cost-share rule for prescription medications. Section 712 of the 2013 NDAA requires the Secretary of DoD, through regulations, to establish specified fixed dollar amounts for cost shares for pharmacy benefits (e.g., generic, formulary, and non-formulary agents or medications). We would not establish similar fixed cost-share amounts because CHAMPVA does not have an established uniform formulary and, therefore, is unable to identify all medications which may be prescribed or approximate their standard retail pricing to determine, with certainty, that a fixed dollar amount would satisfy beneficiaries' cost-share liability. Generally, CHAMPVA coverage of medications depends upon whether medications are approved by the FDA for the indications for which they are prescribed (as explained above in connection with new proposed § 17.272(a)(83)). Additionally, the fixed cost-share amounts required by section 712 of the 2013 NDAA would apply even to medications administered through TRICARE's mail order service; whereas, under proposed § 17.274(a)(1), as revised for clarity, cost-sharing requirements would not apply to services and supplies provided through VA's MbM. As a matter of policy, VA does not wish to apply a cost share for mail order pharmacy supplies provided to CHAMPVA beneficiaries. We believe that this departure from TRICARE is necessary to ensure the most appropriate care for CHAMPVA beneficiaries. Although we would not establish fixed cost-share amounts for medications similar to those set forth in section 712 of the 2013 NDAA, we would revise our regulations to clarify the methodology CHAMPVA uses to determine allowable amounts paid for outpatient medications obtained in the community (explained later in the discussion of proposed § 17.275(f)), upon which the 25 percent CHAMPVA beneficiary cost share is based. We believe these clarifications would provide more transparency related to pharmacy costs and subsequent CHAMPVA beneficiary cost-share amounts for pharmaceutical supplies obtained in the community, which we believe is a reasonable interpretation of the goals of section 712 of the 2013 NDAA in establishing fixed cost-share amounts.

We propose to add a new § 17.275 to describe the various payment methodologies used by CHAMPVA to calculate the CHAMPVA determined allowable amount for covered services and supplies. CHAMPVA uses the same or similar payment methodologies to establish allowable reimbursement amounts for providers as TRICARE. See 32 CFR 199.14. As with the cost-share methodologies that would be described in § 17.274(e), proposed § 17.275 represents current practice except as noted below and would not cause changes for CHAMPVA beneficiaries. The reason that § 17.274(e) (regarding cost share) and § 17.275 (regarding CHAMPVA determined allowable amount) would be separated is to clarify for CHAMPVA beneficiaries how much of the CHAMPVA determined allowable amount they are responsible for as a cost share (e.g., 25 percent) and additionally to provide beneficiaries and providers with an idea of how such allowable amounts are calculated.

Proposed § 17.275(a) would establish in regulation the CHAMPVA determined allowable amount for reimbursement of inpatient hospital services based on the CHAMPVA DRG-based payment system. Proposed paragraph (a) would explain that, unless exempt or subject to a methodology in proposed paragraph (b) or (c), hospital services provided in the 50 States, the District of Columbia, and Puerto Rico are subject to the CHAMPVA DRG-based payment system. The CHAMPVA DRG system, similar to that used by TRICARE under 32 CFR 199.14, is also based on the CMS prospective payment system as set forth in 42 CFR part 412. Certain services provided in a DRG reimbursed facility will be reimbursed under the CHAMPVA Cost-to-Charge (CTC) payment method. See, e.g., 32 CFR 199.14(c). However, we will not list these specifically in regulations as the list of services may change more often than regulations can be updated.

Proposed § 17.275(b) would establish in regulation the current CHAMPVA inpatient mental health per diem payment system used to calculate reimbursement for inpatient mental health hospital care in specialty psychiatric hospitals and psychiatric units of general acute hospitals that are exempt from the CHAMPVA DRG-based payment system. The per diem rate would be calculated based on the daily rate times the number of days (length of stay). CHAMPVA's mental health per diem rates are updated each fiscal year for both high volume hospitals (25 or more discharges per fiscal year) and low volume hospitals (less than 25 discharges per fiscal year). The per diem rates used by CHAMPVA are determined by TRICARE per diem rates. See 32 CFR 199.14(a).

Proposed § 17.275(c) would establish in regulation the CHAMPVA CTC payment system that is used to calculate the CHAMPVA determined allowable amount for inpatient services furnished by hospitals or facilities that are exempt from the CHAMPVA DRG-based payment system or the CHAMPVA inpatient mental health per diem payment system. TRICARE establishes an alternate methodology to calculate payments for inpatient services that are exempt from its DRG and inpatient mental health per diem payment systems. See 32 CFR 199.14(a)(4). Proposed § 17.275(c)(1) would establish the CHAMPVA CTC methodology used to calculate costs for hospitals or facilities by multiplying a CTC ratio by billed charges. We would further propose that the billed charges from the applicable hospitals and facilities must be customary and not in excess of rates or fees the hospital or facility charges the general public for similar services in a community. This requirement that the applicable billed charges not be in excess of what is charged of the general public is similar to TRICARE's requirements. See 32 CFR 199.14(a)(4)(i). Proposed § 17.275(c)(2)(i) through (x) would establish the types of hospitals and services subject to the CHAMPVA CTC methodology, similar to TRICARE at 32 CFR 199.14(a)(1)(ii)(D)(1) through (10) and (a)(1)(ii)(E). We would also add in proposed § 17.275(c)(2)(xi) that hospitals and services as determined by the Secretary of Veterans Affairs may be subject to the CHAMPVA CTC methodology.

Proposed § 17.275(d) would establish in regulation the CHAMPVA outpatient prospective payment system (OPPS) used to calculate the allowable amount for outpatient services provided in a hospital subject to Medicare OPPS. This will include the utilization of TRICARE's reimbursement methodology to include specific coding requirements, ambulatory payment classifications (APCs), nationally established APC amounts, and associated adjustments (e.g., discounting for multiple surgery procedures, wage adjustments for variations in labor-related costs across geographical regions, and outlier calculations). The CHAMPVA OPPS is the same as that utilized by TRICARE under 32 CFR 199.14, which is similar to Medicare's basic OPPS methodology. There are differences between TRICARE's OPPS methodology and Medicare's basic OPPS methodology due to variations in benefit structure and beneficiary population. CHAMPVA is adopting TRICARE's OPPS because the CHAMPVA beneficiary population is more similar to the TRICARE beneficiary population than to the Medicare beneficiary population. See 32 CFR 199.14(a)(6)(ii).

Proposed § 17.275(e) would establish in regulation the reimbursement methodology for services and supplies provided by authorized non-VA providers on an outpatient or inpatient basis where the services are distinct from facility-type charges in proposed § 17.275(a) through (d). Proposed § 17.275(e) would explain that the CHAMPVA determined allowable amount paid to authorized non-VA providers (not hospitals) for services and supplies provided on an outpatient or inpatient basis is the lesser of: The CHAMPVA maximum allowable charge (equivalent to the maximum allowable charge for similar services provided by other than hospitals and skilled nursing facilities under TRICARE, see 32 CFR 199.14(c)); the prevailing amount, which is the amount equal to the maximum reasonable amount allowed providers for a specific procedure in a specific locality; or the billed amount. Certain services that typically may be provided within a hospital setting, but not billed as a facility-type charge under proposed paragraphs (a) through (d), would be included as examples in proposed paragraph (e), namely anesthesia services; laboratory services; and other professional services associated with individual authorized non-VA providers. These examples are not all-inclusive.

Proposed § 17.275(f) would establish in regulation the current payment methodology for outpatient CHAMPVA pharmacy points of service. CHAMPVA negotiates rates with retail pharmacies through its contract with the pharmacy benefit manager. For services and supplies obtained from a retail “in-network” pharmacy, proposed § 17.275(f)(1) would establish that VA pays the lesser of the billed amount or the contracted rate. For supplies from a retail “out-of-network” pharmacy, proposed § 17.275(f)(2) would establish that VA pays the lesser of the billed amount plus a dispensing fee or the average wholesale price plus a dispensing fee.

Proposed § 17.275(g) would set forth in regulation the current CHAMPVA reimbursement methodology for the provision of services in a Skilled Nursing Facility (SNF). This methodology is based on the CMS prospective payment system for SNFs under 42 CFR part 413, subpart J (Medicare Resource Utilization Group (RUG) rates), which is the same methodology used in TRICARE regulations to calculate SNF payments. See 32 CFR 199.14(b).

Proposed § 17.275(h) would set forth in regulation the current reimbursement methodology for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Reimbursement of DMEPOS would be based on the same amounts established under the CMS DMEPOS fee schedule under 42 CFR part 414, subpart D, which is the same methodology used in TRICARE regulations to calculate DMEPOS payments. See 32 CFR 199.14(k). The allowed amount would be that which is in effect in the specific geographic location at the time CHAMPVA-covered services and supplies are provided to a CHAMPVA beneficiary.

Proposed § 17.275(i) would establish in regulation the current payment methodology for all ambulance services. CHAMPVA adopts Medicare's Ambulance Fee Schedule (AFS) for ambulance services, which is based on the same methodology used by TRICARE. See TRICARE Reimbursement Manual 6010.61-M, Chapter 1 (“General”), section 14 (“Ambulance Services”) (April 1, 2015). Ambulance services are paid based on the lesser of the Medicare AFS or the billed amount. Payments for ambulance services furnished by a Critical Access Hospital (CAH) are paid on the same basis as the CTC method under paragraph (c) of this section.

Proposed § 17.275(j) would establish in regulation the current reimbursement methodology for hospice care. This methodology uses rates in the CMS hospice per diem rate payment system, which is the same methodology used in TRICARE regulations to calculate hospice payments. See 32 CFR 199.14(g)(9).

Proposed § 17.275(k) would establish in regulation a reimbursement methodology for intermittent or part-time home health services similar to the methodology used in TRICARE, which is based on Medicare's payment methods and rates. See 32 CFR 199.14(h). Under this methodology, a fixed case-mix and wage-adjusted national 60-day episode payment amount will act as payment in full for costs associated with furnishing home health services with exceptions allowing for additional payment to be established. This would be a new limitation in payments for services but is in line with the 60-day episode amount specified in the TRICARE regulation. See 32 CFR 199.14(h).

Proposed § 17.275(l) would establish in regulation the current reimbursement methodology for facility charges associated with procedures performed in a freestanding surgery center, which is the basis of a prospectively determined amount, similar to that used by TRICARE. See 32 CFR 199.14(d). These facility charges would not include physician fees, anesthesiologist fees, or fees of other authorized non-VA providers; such independent professional fees would be submitted separately from facility fees and calculated under the methodology in proposed § 17.275(e). Ambulatory surgery procedures performed in CAHs or in hospital outpatient departments are to be reimbursed in accordance with the provisions of paragraph (c) or (d) respectively of this section.

Proposed § 17.275(m) states that VA shall determine the appropriate reimbursement method or methods to be used in the extension of CHAMPVA benefits for otherwise covered medical services and supplies provided by hospitals or other institutional providers, physicians or other individual professional providers, or other providers outside the United States. The authority to establish these reimbursement methods is similar to that in TRICARE regulation. See 32 CFR 199.14(n).

Proposed § 17.275(n) would establish in regulation the reimbursement methodology for inpatient services provided in a Sole Community Hospital (SCH). TRICARE reimbursement approximates Medicare reimbursement for SCHs. TRICARE reimburses on a two-step process. TRICARE makes an initial payment based upon multiplying the billed amount by the applicable TRICARE percentage, which is the greater of the SCH's most recently available cost-to-charge ratio from the CMS inpatient Provider Specific File or the TRICARE allowed-to-billed ratio. The second step is a year-end adjustment to compare the aggregate allowable cost under the first method to the aggregate amount that would have been allowed for the same care using the DRG method. In the event that the DRG method amount is the greater, the year-end adjustment will be the amount by which it exceeds the aggregate allowable costs. See 32 CFR 199.14(a)(7). Due to certain limitations, CHAMPVA cannot be the same as TRICARE but can be similar. CHAMPVA would compare the cost-to-charge ratio reimbursement amount versus the DRG reimbursement amount and then pay the higher of the two methods.

Proposed § 17.276 is a revision and renumbering of current § 17.275. First, we propose to remove the reference to “the Center” and “[t]he Director, Health Administration Center, or his or her designee” in § 17.276(a) and (b), as renumbered by this rulemaking. Our intent is to indicate that VA is responsible for administering CHAMPVA and has discretion to assign claims processing responsibility within the Department.

Proposed § 17.276(c) would clarify that claims for services and supplies provided to an individual before the date of the event that qualifies the individual as eligible under § 17.271 are not reimbursable.

We further propose to add new paragraph (d) to proposed § 17.276 to clarify CHAMPVA policy concerning double coverage situations. We would clearly state that CHAMPVA is the last payer to all OHI, with the exceptions noted previously, which would mean that in cases of double coverage, any CHAMPVA benefits would generally not be paid until the claim has first been filed with the OHI and a final payment determination or explanation of benefits has been issued by the other insurer or payer. This is consistent with the purpose of TRICARE's double coverage provisions in 32 CFR 199.8, which address double coverage situations with OHI. Once CHAMPVA, as the last payer, makes its payment to the authorized non-VA provider, the CHAMPVA beneficiary's personal liability for the cost of care is then fully extinguished, as discussed earlier. However, TRICARE has special rules for double coverage situations involving TRICARE beneficiaries who also have Medicare benefits. See 32 CFR 199.8(e)(1). In the case of double coverage based on the availability of both CHAMPVA and Medicare benefits, the provisions of current § 17.271(b) would still apply and be unchanged by this proposed rulemaking. Under current § 17.271(b), VA is the secondary payer to Medicare, as required under 38 U.S.C. 1781(d)(2).

Proposed § 17.277 is a revision and renumbering of current § 17.276. We would make two minor revisions to current § 17.276. First, we would remove references to “Director, Health Administration Center, or his or her designee” (an outdated reference within the current Office of Community Care) and replace it with a reference to “VA.” This is necessary to ensure that VA is effectively put forth as the general administrator of CHAMPVA. In addition, we would clarify when a beneficiary has OHI, an appeal must first be filed with the OHI, and a determination made, before submitting an appeal to CHAMPVA. We would also like to note that there may be instances where we would not require a beneficiary to appeal with their OHI first, such as when the OHI deems the issue non-appealable. Neither of these revisions are substantive changes. We will also keep the note located in current § 17.276, relocating it to the body of new § 17.277.

We propose to renumber current §§ 17.277-17.278 to §§ 17.278-17.279. Additionally, as with proposed § 17.277, we would remove reference to “the Center” in current § 17.277 and in its place insert “VA.” This revision would clarify that it is VA, and not HAC independently, that has the authority to pursue medical care cost recovery in accordance with applicable law. We would also remove the reference to third-party liability in proposed § 17.278 because it is unnecessary. VA's specific authority to recover for medical care costs applies to responsible third parties. We would not make any substantive changes to proposed § 17.279.

The Code of Federal Regulations, as proposed to be revised by this proposed 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 proposed rulemaking 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).

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. The new proposed payment methods in this rulemaking will include new reimbursement rates for the Outpatient Prospective Payment System (OPPS), Home Health Prospective Payment System (HH PPS), and Sole Community Hospitals (SCHs) reimbursement methodologies. These revised methodologies would not significantly affect small businesses due to the following reasons: (1) The health care industry, to include Medicare and TRICARE, is currently using these payment methods and most providers are used to these reimbursement rates, if not expecting to receive them; (2) CHAMPVA's beneficiary population is relatively small compared to these other health care payers. Further support and data can also be found in VA's impact analysis as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of this rulemaking and its impact analysis are available on VA's website at http://www.va.gov/orpm/, by following the link for “VA Regulations Published from FY 2004 Through Fiscal Year to Date.” Therefore, pursuant to 5 U.S.C. 605(b), this amendment would be exempt from the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604.

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,” which requires 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 OMB has determined the regulatory action to be economically significant, because it will have an annual effect on the economy of $100 million or more. As noted above, VA's impact analysis is available as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of this rulemaking and its impact analysis are available on VA's website at http://www.va.gov/orpm/, by following the link for “VA Regulations Published from FY 2004 Through Fiscal Year to Date.”

This proposed rule is not expected to be subject to the requirements of EO13771 because this proposed rule is expected to result in no more than de minimis costs.

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, or 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, or tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; and 64.011, Veterans Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; and 64.019, Veterans Rehabilitation Alcohol and Drug Dependence.

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. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on October 2, 2017, for publication.

For the reasons stated in the preamble, The Department of Veterans Affairs (VA) proposes to amend 38 CFR part 17 as follows:

Background

On March 15, 2015, a multi-agency Presidential task force published an Action Plan for combatting IUU fishing and seafood fraud. This Action Plan called for the identification of the seafood species most “at-risk” for IUU fishing or subject to significant seafood fraud, and the development of a traceability program to track these “priority” species from point of harvest to entry into U.S. commerce, with eventual expansion of the program to all seafood species imported into the United States. A final rule containing measures to address imported fish and fish products as part of this traceability program—called the SIMP)—became effective on January 9, 2017, with a compliance date of January 1, 2018 for most priority species (81 FR 88975; December 9, 2016).

The Action Plan also called for the development of a voluntary Commerce Trusted Trader Program (CTTP) for importers of species that are subject to the SIMP. The CTTP is intended to provide the benefits of reduced reporting and recordkeeping requirements and streamlined entry of applicable species into the United States for importers who are approved as Commerce Trusted Traders (CTTs).

U.S. Customs and Border Protection (CBP) and the U.S. Food and Drug Administration (FDA) are both developing their own voluntary Trusted Trader programs designed to reduce costs to both the government and industry, and streamline processing of imports. While the CTTP shares many features with these programs, it is designed and intended to apply only to the SIMP.

A critical element of the CTTP is the assurance that the entire supply chain for species covered by SIMP, from point of harvest to entry into U.S. commerce, is legal and documented, and that the entry of illegally harvested and misrepresented fishery products into the U.S. market is prevented. The program is intended to increase the security of the supply chain while reducing the burden of compliance for those importers who qualify for CTT status. This proposed rule, if adopted, would establish the qualifying criteria and application procedures for approval as a CTT. It would also establish requirements for a Trusted Trader Compliance Plan, recordkeeping, and third-party audits for CTTP participants. Under the proposed rule, a CTT would be required to establish a secure supply chain (free of IUU fish or fish product and falsely labeled seafood product) and maintain, either directly or through a third party, the records necessary to verify the legality of all seafood products subject to SIMP that he or she enters into U.S. commerce. Compliance with these requirements would replace the SIMP requirement to enter harvest event data into the International Trade Data System (ITDS) at the time of filing an entry, and would provide increased flexibility for complying with SIMP recordkeeping requirements.

The CTT would be expected to produce all traceability documentation associated with an entry filing subject to the SIMP within 14 days upon request by NMFS to support an audit and to make such documentation available for inspection, but would have significantly reduced reporting requirements for imports of SIMP species. With the exception of any records or documents required by other state or Federal programs, such as the Tuna Tracking and Verification Program (TTVP) or FDA's Prior Notice of Imported Food the CTT would only be required to enter their International Fisheries Trade Permit (IFTP) number and species codes into the ITDS at the time of entry filing.

The CTTP, as proposed, is a voluntary program for U.S. importers of record who import, or intend to import, species subject to the SIMP (50 CFR 300.324(a)(2)). This proposed rule provides that certain criteria must be met in order for an importer to be approved as a CTT. In addition to other requirements specified below, an applicant must be a holder of a valid IFTP, which can be obtained via online registration through the NMFS National Permitting System at https://fisheriespermits.noaa.gov/npspub/pub_cmn_login/index_live.jsp. IFTP regulations are at 50 CFR 300.322. A single IFTP issued to an importer of record is valid for imports of all seafood species that require an IFTP. Separate permits are not required, for example, if the imported species are covered under more than one NMFS import monitoring program or the importer trades in more than one covered species. Note, however, that for some commodities, permits issued by other agencies may also be required (e.g., U.S. Fish & Wildlife Service permits for products of species listed under the Convention for International Trade in Endangered Species (CITES)).

In addition to being an IFTP holder, the applicant must submit an online application for the CTTP at a website designated by NMFS. Incomplete applications will not be reviewed by NMFS. A complete application must contain the following:

(1) The applicant's IFTP number;

(2) An affirmation that the applicant has no history, during the previous five years, of noncompliance (i.e., violations that resulted in a finding of liability and assessment of a civil monetary penalty or criminal fine) with Federal regulations related to the importation of fish or fish products and is currently in compliance with all licensing, permitting, and reporting requirements applicable to the importation of fish or fish products;

(3) An affirmation that the applicant is in compliance with other state and federal programs, such as the Highly Migratory Species (HMS) International Trade Program, Antarctic Marine Living Resources (AMLR) Import Export Certification, and the TTVP, as applicable, including license and/or registration number(s) applicable to the importation of fish or fish products;

(4) Electronic submission of the applicant's Trusted Trader Compliance Plan (see details below); and

(5) Application fee.

The amount of the fee is calculated, on at least an annual basis, in accordance with the procedures of the NOAA Finance Handbook, available from NMFS, for determining the administrative costs of each special product or service. The fee may not exceed such costs and is specified on each application form. At present, the fee is expected to be approximately $30.

The NMFS Office of International Affairs and Seafood Inspection (IASI) will review a CTTP application, as well as the applicant's history of compliance with state and federal regulations related to the importation of fish or fish products, in determining whether to approve the application. If the application is complete and the applicant does not have a history of non-compliance with applicable regulations, NMFS will approve the application and will issue a letter to the applicant that will serve as official documentation of CTT status. If the application is incomplete or complete but not approved, NMFS will issue a letter to the applicant explaining the reasons why. If NMFS issues such a letter, the applicant may respond in writing with additional information to address the issues NMFS identified in its letter. After reviewing such information, NMFS will issue a letter to the applicant indicating if CTT status is approved or explaining the reasons why such status continues to not be approved. NMFS' decision is final upon issuance of this letter and is not appealable. NMFS looks forward to receiving comments on the nature and extent of the application and Compliance Plan review.

While the IFTP must be renewed annually (see 50 CFR 300.322(d)), approval under the CTTP remains in effect unless it is revoked (see Section IV below).

For each entry containing species or species groups subject to the SIMP, the CTT or designated entry filer must file electronically, at the time of entry, the CTT's IFTP number and species to be entered, as required under 50 CFR 300.323(a). No further SIMP data needs to be provided. NMFS IASI will notify CBP of the decision to grant CTT status so that CBP will know that the complete SIMP data set is not required. See proposed 50 CFR 300.324(f) for CTT exemptions from SIMP requirements.

Under this proposed rule, CTTP applicants must have a written Trusted Trader Compliance Plan (Compliance Plan) showing that they have a secure and controlled supply chain, including, but not limited to, harvest, purchase, landing, shipping, processing, storage, and import entry. Importers, regardless of IFTP status, that do not meet these requirements will not be approved as CTTs.

The Compliance Plan must be designed to meet the objective of the SIMP in preventing the importation of illegally harvested or misrepresented fish and fish products into United States commerce. The Compliance Plan may delegate entry filing, recordkeeping and other responsibilities to other persons, but such roles must be clearly defined in the Compliance Plan, as detailed below. Ultimately, the CTT is responsible for adherence to the Compliance Plan and compliance with all NOAA import requirements, including all applicable requirements of the SIMP and the CTTP, if finalized, and for ensuring the prevention of illegally harvested or misrepresented seafood entering U.S. commerce through the CTT's import activities.

The Compliance Plan must, at a minimum, include the following components:

(1) An Internal Control System (see below for requirements);

(2) Procedures for ensuring that the Compliance Plan and the CTT's adherence to it is audited by a certified third party at least annually (see below for audit requirements);

(3) The applicant's written policy and related supporting materials on preventing the import of illegally harvested and misrepresented seafood, including a description of how the policy is communicated to any affected employees, entry filers, representatives, and suppliers or other parties in the supply chain, and corrective actions to be taken as needed;

(4) An organizational chart that identifies the persons with responsibility for: entry filing; custodianship of recordkeeping documents; developing, administering, and implementing the Compliance Plan and its component measures; and conducting training to ensure effective implementation of the Compliance Plan;

(5) A signature page completed by the applicant and the individual at the highest level of authority in the applicant's organization assuming responsibility for implementing the Compliance Plan; and

(6) Any changes to the Compliance Plan, along with an updated signature page and organizational chart must be included in the mandatory annual audit report required (see below).

The Internal Control System, which must be documented in the Compliance Plan described above, must include traceability monitoring procedures for seafood products subject to the SIMP (50 CFR 300.324(a)(2)). The CTT is responsible for ensuring implementation of the Internal Control System, which must include:

(1) Procedures to verify the legal harvest and landing of fish or fish products subject to the SIMP that the CTT enters into U.S. commerce. Verification may rely on flag-state or port-state harvest and landing records. Certification of legal harvest by the flag-state may also be used. In any case, the procedures must be capable of verifying the legal harvest and landing of any fish or fish products imported by the CTT of species that fall under the SIMP by providing the harvest and landing information required by the SIMP regulations at 50 CFR 300.324(b)(1)-(3). A CTT may establish separate procedures for verifying legal harvest and landing from known and trusted fishery sources and for verifying legal harvest and landing from new fishery sources, and may establish separate measures for each fishery source, as appropriate;

(2) Procedures to enable verification of the full chain of custody from point of first landing (or point of aggregation for small-scale fisheries) to entry into U.S. commerce (See 50 CFR 300.324(e)). These procedures should describe the process(es) that will be followed, and documentation that will be used, to verify chain of custody, and measures in place to periodically verify the accuracy of that documentation;

(3) Procedures to ensure that chain of custody documentation will be provided to NMFS, upon request, within 14 days to support an agency audit. Under 50 CFR 300.325(f) of the proposed rule, the Compliance Plan must identify who is responsible for maintaining chain of custody documentation, the point along the supply chain at which the chain of custody documents are stored and how the CTT will ensure access to them when necessary. The documentation must be maintained and made available for inspection as required under § 300.325(i) of the proposed rule. The CTT must be able to access records for no less than two years from the date of entry of the product into U.S. commerce, and records must be made available for inspection, upon request by NOAA to support an agency audit and as necessary for purposes of the annual audit required under § 300.325(j);

(4) Procedures for the CTT (or designee) to perform at least one trace-back annually for each species covered by the SIMP imported by the CTT. A trace-back is a document review of all industry records that follow the product from the point of entry into U.S. commerce backwards through all steps of processing, shipping, and storage to the point of harvest (or point of first aggregation for small scale fisheries);

(5) Procedures to be taken in response to information that illegally harvested or misrepresented fish or fish products have entered the supply chain (e.g., notice from NOAA's Office of Law Enforcement (OLE) or inclusion of the harvesting vessel in a regional fishery management organization's list of vessels that have engaged in illegal, unreported and unregulated fishing), measures to ensure that such fish or fish products are removed from commerce and further shipments are prevented from entering commerce, and procedures for promptly informing OLE whether such products are inbound to the United States or have entered U.S. commerce;

(6) Procedures to be taken in response to any supplier in the CTT's supply chain for SIMP species being placed on an FDA Import Alert.. Import Alerts inform FDA field staff and the public that the Agency has enough evidence to allow for Detention Without Physical Examination (DWPE) of firms and products that appear to be in violation of FDA laws and regulations. These violations could be related to the product, manufacturer, shipper and/or other information. More information is available online at https://www.fda.gov/ForIndustry/ImportProgram/ActionsEnforcement/ImportAlerts/ucm516428.htmand

(7) Procedures to regularly review internal controls and update procedures in response to changes in the fish or fish products that the CTT wants to enter into U.S. commerce, suppliers, or operating conditions or non-conformities identified in an audit.

The CTT must ensure that all information and documentation used for internal controls related to the Compliance Plan and Internal Control System must remain available for U.S. government audit for no less than two years from the date of import entry.

NMFS seeks comment generally on the required elements of the Trusted Trader Compliance Plan, including the Internal Control System. NMFS also invites comment on establishing a species-specific CTTP. As currently drafted, this proposed rule would allow a CTT to import all species subject to SIMP and benefit from reduced reporting requirements at the time of import. As an alternative, an applicant for CTT status could specify in the CTTP Application and Compliance Plan that it has a secure and controlled supply chain for some, but not all, SIMP species and request that CTT status be limited to that subset of SMP species. Under this species-specific alternative, a CTT would be required to comply with all SIMP reporting and recordkeeping requirements for imports of SIMP species not specifically included in its Compliance Plan. NMFS' analysis of the species-specific CTTP, set out in Section 1.3.5 of the regulatory impact review (available from NMFS; see ADDRESSES), indicates higher compliance costs for CTTs under the species-specific CTTP. Since the per entry reporting and recordkeeping costs are projected to be greater under SIMP than under CTTP, a CTT who chooses to comply with CTTP requirements for only a subset of the priority species would be assuming the higher fixed costs of CTTP compliance while reducing the economic benefit of that investment that accrues to every import entry of a priority species by a CTT through the reduction of per entry, incremental costs.

Additionally, NMFS estimates that its costs for both ITDS/ACE programming and effective long-term compliance auditing would be higher with a species-specific CTTP. NMFS seeks comment on its assumptions and conclusions related to a species-specific CTTP.

As noted in Section II, this proposed rule provides that the CTT's Compliance Plan must include procedures for a third-party audit. The CTT is responsible for ensuring that this third-party audit is conducted annually. Paragraphs 300.325(j) and (k) of the proposed rule set forth requirements for the audit and auditor certification.

At least once annually, the CTT must ensure that an audit is conducted by a certified third-party auditor, consistent with the requirements of the rule. The purpose of the audit is to evaluate the adequacy of the CTT's Compliance Plan in meeting the requirements of 50 CFR 300.325(f) and the CTT's adherence to that plan. A third-party audit should include an opening meeting, during which the auditor will discuss audit objectives with the CTT and any personnel supporting the audit.

During each audit, the third party auditor must review the Compliance Plan and relevant documents. The CTT must make all records, written and electronic, that are pertinent to the Compliance Plan and Internal Control System described therein available to the auditor at the time of the audit. The auditor will select a minimum of three import entries containing SIMP species to serve as the subject of the audit. He or she must verify that all processes in the CTT's Compliance Plan are being followed and that the Internal Control Plan effectively meets the requirements of the CTTP. The auditor must also verify that the audited entries can be traced back to legal harvest (or production) and landing and that the species contained in the shipment are truthfully represented. The auditor must conduct interviews as necessary with CTT staff, suppliers, and individuals delegated responsibilities under the Compliance Plan and may conduct other activities as necessary.

A CTT must notify NMFS at least 30 days in advance of each third-party audit. NMFS, at its discretion, may attend a third-party audit as an observer or conduct a side-by-side audit. In a side-by-side audit, NMFS will review the same documentation as the third party auditor at the same time as the third party auditor to evaluate both the shipment(s) and performance of the third party auditor. NMFS may also conduct an independent audit of a CTT at any time.

The auditor must have a closing meeting with the CTT or designee to review observed weaknesses and any non-conformities with the Compliance Plan, and issue a written audit report within 30 calendar days of the audit. In the audit report, the auditor must assess the reliability of the CTT's Compliance Plan and the CTT's adherence to it, provide results of the audit, and identify any non-conformities with the Compliance Plan or its implementation. The audit report must include the auditor's certifying credentials (see below) and attestations that the auditor (i.e., individual auditor(s) and auditing firm): (1) Was not involved in developing the CTT's Compliance Plan, and (2) has no financial relationship with, or substantial interest in, the CTT retaining their services beyond performing the audit and any related follow up.

The CTT is responsible for ensuring that the auditor provides a signed and locked electronic copy of the audit report (in .pdf format) to the CTT and NMFS IASI no later than 30 days following completion of the audit. If the auditor determines that no corrective action is needed, the report is considered the final audit report. If the auditor determines that corrective action is required to address non-conformities with the written Compliance Plan or its implementation, the report is considered an initial audit report. In that case, within 60 days following the audit, the CTT must ensure that a signed and locked electronic copy of the final audit report (in .pdf format) is provided to NMFS IASI. The final report must include an explanation, along with relevant documentation, of corrective action taken by the CTT and approved by the auditor.

If the CTT fails to provide the audit report to NMFS as required above or take acceptable corrective actions as identified in the report, NMFS may conduct additional audits at its discretion. NMFS may also take additional measures up to and including revocation of CTT status, as deemed appropriate by NMFS. CTT third-party audits may be combined with other Global Food Safety Initiative (GFSI) or chain of custody audits, provided the combined audit is in full compliance with the requirements of the CTTP.

Beyond conducting the audit and any related follow up for a CTT, a third-party auditor (i.e., individual auditor(s) and auditing firm) must not have any other financial relationship with, or substantial interest in, the CTT. In addition, an auditor must not have been involved in developing the CTT's Compliance Plan. A third-party auditor should have some familiarity or experience with the seafood trade to ensure accurate and critical review of a CTT's written Compliance Plan and the CTT's adherence to it. The third party auditor must be certified with respect to, and affirm his or her knowledge of current auditing practices and proficiency in conducting process audits, identification of non-conformities and review of corrective actions taken by the CTT. A third-party must be certified by a competent certifying body, as evidenced by one or more of the following:

(1) Current accreditation or certification by the American Institute of Certified Public Accountants (AICPA);

(2) Current accreditation or certification by the Institute of Internal Auditors;

(3) Current accreditation or certification by the American Evaluation Association;

(4) Current accreditation or certification by a chain of custody certifying body;

(5) Current accreditation or certification by Accreditation Services International; or other nationally recognized certifying organizations;

(6) Evidence of current peer-review certification such as Certified Quality Auditor (CQA), Certified Internal Auditor (CIA), Certified Public Accountant (CPA), and Certified HACCP Auditor (CHA);

(7) Successful completion of auditor training recognized by the International Register of Certified Auditors (IRCA) or Registrar Accreditation Board and Quality Society of Australasia (RABQSA), in environmental management standards (EMS); quality management standards (QMS); or Global Food Safety Initiative (GFSI), and registration with IRCA or RABQSA as an EMS or QMS auditor; or

(8) Other training or certification approved in writing by NMFS.

While the IFTP must be renewed annually (see 50 CFR 300.322(d)), approval under the CTTP remains in effect unless revoked under this section. If a CTT fails to comply with requirements of the Program as detailed above, NMFS may issue a Notification Letter to the CTT that:

(1) Identifies the alleged failure to comply with Commerce Trusted Trader Program regulations and requirements;

(2) Describes the indications and evidence of the alleged failure;

(3) Sets a Response Date by which the CTT must submit to NMFS a written response to the Notification Letter, including, if applicable, a proposed solution; and

(4) Explains the CTT's options if the CTT believes the Notification Letter is in error.

NMFS will establish a Response Date between 14 and 30 calendar days from the date of the Notification Letter. The CTT's response must be received in writing by NMFS on or before the Response Date. If the CTT fails to respond by the Response Date, CTT status will be revoked. A CTT who has submitted a timely response may meet with NMFS within 21 calendar days of the date of that response to discuss a detailed and agreed-upon procedure for resolving the alleged failure to comply with the Commerce Trusted Trader Program regulations and requirements.

If the CTT disagrees with the Notification Letter and believes that there is no failure to comply with CTTP regulations and requirements, NMFS has incorrectly defined or described the failure, or NMFS is otherwise in error, the CTT may submit a written Objection Letter to NMFS on or before the Response Date. Within 21 calendar days of the date of the Objection Letter, the CTT may meet with NMFS to discuss a resolution or redefinition of the issue. If modifications to any part of the Notification Letter are required, then NMFS will issue a revised Notification Letter to the CTT; however, the Response Date or any other timeline in this process would not restart or be modified unless NMFS decides to do so.

The total process from the date of the Notification Letter to the date of final resolution should not exceed 90 calendar days, and may require a shorter time frame, to be determined by NMFS, depending on the seriousness of the alleged failure. In rare circumstances, NMFS, at its discretion, may extend the time for resolution of the alleged failure. In such a case, NMFS will provide a written notice to the CTT informing him or her of the extension and the basis for the extension. If the failure to comply with CTTP requirements cannot be resolved through this process, NMFS will issue a Revocation Letter to the CTT that:

(1) States that CTT status has been revoked;

(2) Summarizes the failure to comply with CTTP requirements;

(3) Summarizes any proposed procedures, or attempts to produce such procedures pursuant to sub-paragraph (3) of this section, to resolve the failure;

(4) Explains why resolution was not achieved; and

(5) Advises the importer that (1) the importer is no longer exempt from the requirements of the SIMP, and (2) the importer may not reapply for CTT status for a period of one year. NMFS' decision is final upon issuance of the Revocation Letter and is not appealable.

The proposed rule would amend the existing prohibitions section in subpart Q to add five new prohibitions. Specifically, the proposed rule would prohibit: (1) Making a false statement on an application for the CTTP; (2) the falsification of records required to be maintained under 50 CFR 300.324(d) or (e) or 300.325; (3) failure to make records available for inspection, as required under 50 CFR 300.324(d) or (e) or 300.325(i); (4) a CTT from failing to maintain records containing information on the chain of custody and custodian of fish or fish products, provide access to such records to support an agency audit, and make such records available for inspection as required (see 50 CFR 300.325(g)(3) and (i)); and (5) a CTT from failing to implement or follow the Trusted Trade Compliance Plan they are required to have in place as a condition of being granted, and retaining, that status (see 50 CFR 300.325 (f) and (g)).

More information and any updates on the proposed CTTP can be found on our website at http://www.iuufishing.noaa.gov/.

This proposed rule is published under the authority of the Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. 1801 et seq. The NMFS Assistant Administrator has determined that this proposed action is consistent with the provisions of this and other applicable laws, subject to further consideration after public comment.

This proposed rule has been determined to be significant for the purposes of Executive Order 12866. NMFS has prepared a regulatory impact review of this action, which is available from NMFS (see ADDRESSES). This analysis describes the economic impact this proposed action, if adopted, would have on businesses and consumers. NMFS invites the public to comment on this proposal and the supporting analysis.

The regulatory action being considered is described in the preamble of this proposed rule. For importers subject to the SIMP, this proposed rule would create a voluntary program that includes exemptions from SIMP reporting and recordkeeping requirements. NMFS anticipates that U.S. persons would not have any significant adverse economic effects as a result of this action, because it does not pose any new burdens with regard to existing reporting and recordkeeping requirements. On the contrary, this rule, if adopted, would reduce reporting and recordkeeping requirements under the SIMP for importers who are approved as CTTs, and result in positive economic benefits for them. NMFS seeks comment on whether there could be economic impacts that have not been addressed in this proposed rule, or that could be difficult to anticipate.

This proposed rule is expected to be an E.O. 13771 deregulatory action. As discussed below, this proposed rule would create cost savings of approximately $806,810 industry-wide on an annual basis. Further details on the estimated cost savings of this proposed rule can be found in the regulatory impact review analysis.

An Initial Regulatory Flexibility Analysis (IRFA) was prepared, as required by section 603 of the Regulatory Flexibility Act (RFA) and is available from NMFS (see ADDRESSES). 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.

For this proposed rule, NMFS looked at two alternatives: No action and a CTTP, as called for in the March 15, 2015, Presidential task force Action Plan (see Background). By not joining the CTTP, importers will need to fully comply with the SIMP rule and report information pertaining to the harvest of species covered under SIMP via the ITDS prior to entry, and maintain those records as well as records documenting the supply chain from point of harvest to entry into U.S. commerce for a period of no less than two years. For importers who do not apply to become a CTT, there would be no change from current SIMP requirements and thus no economic impacts. In the SIMP final rule, NMFS estimated annual compliance costs of $6,075,000 including permit fees, reporting, recordkeeping, and data storage for 2,000 importers who, combined, filed 215,000 entries through the International Trade Data System (ITDS). There were 216 importers who filed more than 250 entries in 2014 (comprising roughly 72% of all entries). NMFS expects these high volume importers would benefit financially from the CTTP. NMFS seeks public comment on the accuracy of these baseline conditions used in the development of this proposed rule.

In the Final Regulatory Flexibility Analysis for the SIMP rule, NMFS concluded that all persons subject to the program requirements could be classified as small businesses. Likewise, all importers who choose to apply and be approved as CTTs would also be classified as small businesses. CTTs would realize the benefits of reduced reporting and recordkeeping and streamlined entry into U.S. commerce of their fish and fishery products. The increased cost of annual third-party auditing required under the CTTP would be offset by the reduction in reporting costs at time of entry. Consequently, importers with a higher annual volume of entries would accrue greater benefits. In comparing entry reporting cost savings to estimates of the costs to contract with a third-party auditor, NMFS estimates that importers making more than 250 entries per year would benefit from becoming a CTT. Considering the same baseline as that used for the SIMP analysis (entries of priority species seafood products made in 2014), approximately 2000 importers would be required to report harvest event data upon entry. NMFS estimates that 216 of these importers, who each filed more than 250 entries in 2014, would benefit from the reduced reporting burden of becoming a CTT. Assuming all of these importers would elect to become CTTs, cost savings of approximately $806,810 would be realized industry-wide on an annual basis.

Under NOAA Administrative Order (NAO 216-6A), the promulgation of regulations that are administrative, financial, legal, technical or procedural in nature are categorically excluded from the requirement to prepare an Environmental Assessment. These proposed regulations to implement a Commerce Trusted Trader Program are procedural and administrative in nature in that they would modify recordkeeping and auditing requirements for ongoing authorized catch and trade activities. Fishing activity and trade in seafood products are not further restricted relative to any existing laws or regulations, either foreign or domestic. Given the procedural and administrative nature of this rulemaking, an Environmental Assessment was not prepared.

This proposed rule contains a collection-of-information requirement subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been submitted to OMB for approval. The information collection burden for the requirements proposed under this rule (CTTP application; Compliance Plan development or modification; third-party audit; and traceability documents recordkeeping) are estimated to result in a significant reduction in both time and costs for CTTs relative to the burden associated with compliance with the reporting and recordkeeping requirements of the SIMP.

NMFS estimates that approximately 216 International Fisheries Trade Permit holders would apply for the CTTP, and that they would need approximately 10 minutes to fill out the online application, at an hourly rate of $25, for a total of 36 hours and labor costs of $900. NMFS considers that most of the 216 entities estimated to apply for CTT status will already have some form of internal control plan in place, so the development of a Compliance Plan specific to the CTTP will take no more than 8 hours. If a Compliance Plan needs to be developed from square one, NMFS estimates no more than 24 hours will be required, at an hourly rate of $50. Assuming that this rule would affect 216 importers, the total one-time burden for application and Compliance Plan development and submission amounts to between 1,764 hours and 5,220 hours, and labor costs of between $87,300 and $260,100.

Because the CTTP removes the requirement of reporting harvest data prior to entry into U.S. commerce, a CTT is expected to realize the cost savings of not entering such data. NMFS has calculated the time and cost of a CTTP entry filing (header record only) to be 12 minutes at $25 per hour, for a cost per entry of $5, versus 36 minutes per SIMP filing (header and all harvest vessel and landing records) and a cost of $15 per filing. Using available data from 2014, the average number of entries for the 216 importers filing 250 or more entries, which is the point at which NMFS believes an entity would likely choose to become a CTT, is 750. This equates to 162,000 entries. The annual burden of contracting with a third-party auditor is estimated to be one hour at the hourly rate of $50, for a total of 216 hours and $10,800 annually. The cost of the actual audit is estimated to be between $1,120 and $3,600, with an average cost of $2,190, for a total of $473,040. These burdens would be offset by the reduced cost benefit of the program, which cuts out 64,800 hours of data entry filing at a cost savings of $1,620,000.

Public comment is sought regarding: whether this proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; the accuracy of the assumptions used in calculating the burden estimate; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the collection of information, including through the use of automated collection techniques or other forms of information technology. Send comments on these or any other aspects of the collection of information to the NOAA Fisheries Office of International Affairs and Seafood Inspection at the ADDRESSES above, and by email to [email protected] or fax to (202) 395-7285.

Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number.

For the reasons set out in the preamble, 50 CFR part 300, subpart Q, is proposed to be amended as follows: